Articles Tagged with Mortgage Compliance

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The Federal Housing Administration “FHA” published Mortgage Letter (ML) 2022-22 on December 15, 2022, which provides new clarifications on its Conflicts of Interest Policy and Dual Employment Policy for most Title II Single Family FHA-Insured Mortgage Transactions.

The new Mortgage Letter revisions have taken a dramatic change in that FHA Policy now permits individuals who do not have a “direct impact on the mortgage approval decision” to have various compensated positions for services performed and allowed by the Department of Housing and Urban Development “HUD”, provided that the transaction complies with all applicable federal, state, and local laws, rules, and requirements.

The 2022-22 Mortgage Letter now consolidates various conflicts of interest and dual employment subsections in the Single-Family Housing Policy Handbook 4000.1 into one subsection and provides clarification on FHA policy regarding prohibited conflicts of interest by individuals that directly impact the mortgage approval decision and permitted dual employment for other individuals who perform services in a single FHA-insured transaction.  FHA believes the policy consolidation and clarification will help facilitate an easier understanding of existing FHA requirements given feedback from the real estate industry and from confusion internally at FHA with how to apply the past Policy.

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Marx Sterbcow, the Managing Attorney at the Sterbcow Law Group, will be speaking at the National Settlement Services Summit in Orlando, Florida with Kris Kully, Partner at Mayer Brown, along with moderator Tracey Read, Editor of RESPA News.  The session “RESPA Step by Step” will discuss the step-by-step process of how to properly structure affiliated business arrangements from start to finish.  The presentation will talk about the important issues in the operating agreement to operation compliance concerns to what the CFPB and state regulators want and don’t want when they are looking at these types of arrangements.  The presentation is from 11:20-12:10 AM in the International Ballroom.  NS3 is considered the premier annual conference in the real estate settlement services industry.  The conference is being held at the Omni Orlando Resort at Champions Gate.

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Marx Sterbcow, Managing Attorney of the Sterbcow Law Group, will be discussing “Lender Affiliated Business Arrangements as Easy Targets for Fair Housing and Fair Lending Regulators” at the RESPRO Conference on March 31, 2022 in the Four Seasons Hotel, in Las Vegas.  The session will discuss racial equity under the Biden Administration and discuss how this focus has accelerated Fair Lending Act and Fair Housing Act enforcement by the Consumer Financial Protection Bureau, Federal Trade Commission, and the Department of Justice.  Joining Marx will be Charles Cain who is the SVP of National Agency for the FNF Family of Companies and Trip Riley, Partner at Saul Ewing.

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Today, the Consumer Financial Protection Bureau (CFPB) announced it has rescinded the highly controversial Compliance Bulletin 2015-05, “RESPA Compliance And Marketing Services Agreements” and issued new  the Real Estate Settlement Procedures Act (RESPA) guidance on Section 8 on the topics of “Gifts and Promotional Activities” and “Marketing Services Agreements“.  The rescission of Compliance Bulletin 2015-05 clears up the widespread confusion that former CFPB Director Richard Cordray created when he issued the MSA bulletin.  The CFPB’s Brian Schneider wrote the “CFPB provides clearer rules of the road for RESPA marketing service agreements” on the Bureau’s blog “[I]n order to provide clearer rules of the road and promote a culture of compliance, the Bureau is publishing guidance in the form of Frequently Asked Questions (FAQs) on the RESPA Section 8 topics.  The FAQs provide an overview of certain provisions of RESPA Section 8 and respective Regulation X sections,  and addresses the application of certain provisions to common scenarios described in Bureau inquiries involving gifts and promotional activities, and marketing services agreements (MSAs).”

Schneider wrote “the Bureau determined that Compliance Bulletin 2015-05, Compliance and Marketing Services Agreements, does not provide the regulatory clarity needed on how to comply with RESPA and Regulation X and therefore is rescinding it.  The Bureau’s rescission of the Bulletin does not mean that MSAs are per se or presumptively legal.  Whether a particular MSA violates RESPA Section 8 will depend on specific facts and circumstances, including the details of how the MSA is structured and implemented.  MSAs remain subject to scrutiny, and we remain committed to vigorous enforcement of RESPA Section 8.”

One of the biggest takeaways in the MSA guidance is in the Bureau’s use of a real estate agent entering into a MSA agreement with a lender.  In the past MSAs where lenders entered into MSAs with individual real estate agents or real estate teams was considered off limits due to the direct consumer interaction that real estate agents and real estate agent teams had so MSAs were largely limited to real estate brokerages since this was seen as a business to business arrangement due to the brokerages limited interaction with consumers.

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Marx Sterbcow will provide a “RESPA Compliance and CFPB Update“ at the Minnesota Land Title Association “MLTA” 2020 Spring Conference at the Marriott Minneapolis Northwest hotel on Monday, April 6, 2020 from 10:15 to 11:15 AM.  The session will first focus on the “Do’s and Don’ts of the Real Estate Settlement Procedures Act (RESPA)” covering such topics as marketing services agreements, affiliated business arrangements, real estate lead generation program compliance, referrals and gifts.  The second part of the presentation will discuss the latest in Consumer Financial Protection Bureau “CFPB” enforcement trends and outlook for the coming year.

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The Federal Deposit Insurance Corporation “FDIC” on November 30, 2019 entered into a Consent Order FDIC-18-0142k which ordered HomeStreet Bank, a Seattle, Washington based bank to pay a civil money penalty of $1.35 million dollars.  The FDIC alleged that HomeStreet Bank’s now discontinued Home Loan Center-based mortgage banking business line violated Real Estate Settlement Procedures Act, 12 U.S.C. § 2607, and its implementing regulation, Regulation X, 12 C.F.R. Part 1024, by entering into certain co-marketing agreements using online platforms and desk rental agreements which resulted in the payment of fees to real estate brokers and home builders for their referrals of mortgage loan business.  The FDIC also stated that all of HomeStreet Bank’s agreements with those real estate brokers and home builders have been terminated.

The FDIC’s Consent Order stated that HomeStreet Bank entered into the settlement without admitting or denying any charges of unsafe or unsound banking practices or violations of law or regulation.

Unfortunately though, the FDIC’s Consent Order did not provide any industry guidance on what it found objectionable in the co-marketing agreements using online platforms or the desk rental agreements.  The Sterbcow Law Group hopes the FDIC will in the future provide more detail in its enforcement actions in order to help provide more clarity to the real estate and mortgage industry.

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Marx Sterbcow with the Sterbcow Law Group’s RESPA Law Resource Center has been invited to speak at the Real Estate Settlement Providers Organization’s “RESPRO” 26th Annual Conference in New Orleans, Louisiana on March 27, 2019 at 8:45 AM at the Ritz Carlton Hotel’s Carrollton Ballroom.  The presentation “Whither the CFPB: State Unfair Deceptive Abusive Acts Practices, Regulatory and Private Sector Compliance Issues, Activities and Requirements” will review the most recent federal and state mortgage, title insurance, and real estate brokerage regulatory actions.”  The session will discuss how the Consumer Financial Protection Bureau and various state mortgage and title insurance regulatory agencies are interpreting UDAAP/RESPA.  The session will also discuss what compliance expectations the CFPB’s Enforcement division will have when a company is under investigation and the general outlook of what is going on or not going on at the CFPB.  The presentation will hit on issues involving private sector mortgage lending compliance involving Affiliated Business Arrangements and those how those expectations extend to class action mitigation risks.

Charles “Chuck” Cain from Cincinnati, Ohio (Executive Vice President Agency at WFG and Of Counsel to the Sterbcow Law Group) and Francis “Trip” Riley from Princeton, New Jersey (Partner with Saul Ewing Arnstein & Lehr, LLP) will co-present with Mr. Sterbcow in this session.

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Marx Sterbcow, the Managing Attorney for the Sterbcow Law Group LLC, has been invited to speak at the 2018 RESPRO 25th Annual Conference in Phoenix, Arizona.  The session titled “CFPB Enforcement and Technology Monitoring Expectations for Affiliated Business Arrangements” is scheduled for 9:00-10:00 AM on April 11, 2018.  This presentation will discusses how a new technology oversight compliance software reporting tool helps RESPA governed Affiliated Businesses Arrangements “AfBA” stay compliant based on the Consumer Financial Protection Bureau’s Meridian Title Consent Order.  The session co-presented with Francis “Trip” Riley, Partner at Saul Ewing, and will be moderated by Charles “Chuck” Cain, EVP WFG National Title Insurance Company and Of Counsel to the Sterbcow Law Group.  Marx Sterbcow and Trip Riley are two members of the Meridian Title legal team who were involved in representing Meridian Title in connection with the CFPB Consent Order.

The presentation will provide critical information which all affiliated businesses should be aware of as it pertains to the monitoring of AfBA disclosure forms in real time.  In addition we will discuss how the use of this new technology also adds operational value to any companies operational compliance and business development needs.  We will explain how the CFPB Enforcement division views this type of technology monitoring as a critical piece for all settlement service companies, especially those in the title industry, as a new expectation for medium to large-sized companies to adopt.  We will provide an in-depth look into how a growing number of title agencies across the United States are already utilizing this title production overlay software compliance and business intelligence technology, and how this technology will help companies stay RESPA compliant, and what the future holds for these types of applications as they enter the marketplace.

To Register for the 25th Annual RESPRO Conference click here

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The Legal Description and Dodd Frank Update have teamed up again to provide their 5th annual Regulatory Outlook Webinar on Wednesday, January 18, 2017 (2:00 – 3:30 P.M. EST) educating mortgage, title and settlement services professionals on the compliance trends and issues to expect in the New Year.  The yearly webinar series has quickly become one of the most important educational sessions each year to find out what in store for the State of the Settlement Service Industry in the coming year.

This webinar features instructors Francis “Trip” Riley of Saul Ewing, Loretta Salzano of Franzén and Salzano, and Marx Sterbcow of the Sterbcow Law Group. These nationally-recognized attorneys will join moderator Danielle Kaiser of NATIC in a discussion of the pressing political, regulatory and compliance issues to watch in 2017 and how to prepare your business.

Instruction will include:

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