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.

October Research’s RESPA News has invited Marx Sterbcow, with the Sterbcow Law Group, and Francis ‘Trip’ Riley, with Saul Ewing, to speak on its next webinar series.  The Webinar will be held on December 14, 2022 at 2:00 PM EST.   The webinar will be moderated by RESPA News editor Elizabeth Childers.  The webinar will discuss the 5th Circuit Court of Appeals ruling on the CFPB’s funding structure and will address questions the real estate industry has been asking such as: What does this mean? Are the CFPB actions still valid? How should I react?  Trip Riley and I will answer those questions and more.

Register today and get clarification on what this ruling means for the industry.

Marx Sterbcow, Managing Attorney of the Sterbcow Law Group, will be presenting at The National REO Brokers Association‘s (“NRBA”) Business Development Seminar in Orlando, Florida on October, 7, 2022.  The topic of the session will be “You are a CFPB target!  Regulation, Liabilities & Politics” which will focus on the impact of the Consumer Financial Protection Bureau’s lawsuit against Townstone Financial and how the CFPB’s regulation by political enforcement is now taking aim at the real estate brokerage and title insurance industries.    The Seminar is at the Lowe’s Portofino Hotel at Universal Studios.

Marx Sterbcow, Managing Attorney of the Sterbcow Law Group, will be presenting at the Collateral Risk Network event during the Valuation Expo Conference at the Mirage Casino in Las Vegas on September 7, 2022.   The presentation, “The CFPB’s New Equity Agenda” will discuss the Consumer Financial Protection Bureau and US Department of Justice’s focus on fair lending and fair housing.  The session will also focus on the CFPB’s Equal Time Advertising Rule (“EqTar”) and the Demographic Equality Employment Quota Rule (“DEEQR”) theories under the Fair Lending Act and how these concepts will reverberate across all regulated entities as these new expectations on businesses are being imposed by the federal government.  EqTar is defined as the failure to advertise to a specific racial group and DEEQR is defined as job specific hiring practices.

Marx Sterbcow is speaking at the Michigan Land Title Association (“MLTA”) Annual Convention on July 11, 2022 at the Crystal Mountain Resort in Thompsonville, Michigan.  The presentation “Regulatory Update — Joint Ventures & the CFPB” will provide an overview of how to properly set up an affiliated business arrangement, discuss the expectations regulators look for in Marketing Services Agreements, and give insight on where CFPB enforcement is and where it is headed in the future.

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.

The Managing Attorney for the Sterbcow Law Group, Marx Sterbcow, is presenting at the Minnesota Land Title Association‘s 2022 Spring Seminar at the Minneapolis Marriot Northwest.  The presentation will discuss Affiliated Business Arrangement compliance, Marketing Service Agreement & Advertising Services Agreements, and provide an update on where enforcement at the Consumer Financial Protection Bureau is headed.  The session will take place from 10:15 to 11:15.

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.

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.

Consumer Financial Protection Bureau Sues a Chicago Mortgage Company Alleging “Redlining” Violations Based on Political Speech and Social Commentary Broadcast on Conservative Radio Station

The Consumer Financial Protection Bureau (“CFPB”), the controversial brainchild of Senator Elizabeth Warren, filed suit in Chicago yesterday against Townstone Financial, a small mortgage company, charging “redlining” violations based on political speech and social commentary broadcast on a conservative radio station.  The Complaint alleges that statements made about crime in Chicago and support for police discouraged African-Americans from applying to their company and that the fact that their weekly radio show was broadcast on a conservative talk radio station discriminated against African-Americans.

James Bopp, Jr. of The Bopp Law Firm of Terre Haute, Indiana and co-counsel for Townstone, said that “The CFPB is using this case to drive all banking and mortgage companies away from advertising on conservative talk radio and to punish mainstream conservative political speech and social commentary.  The CFPB has long been controversial and just lost a case in the United States Supreme Court for being improperly structured.  They have been waiting years to file a case on the eve of a Presidential election to damage conservative voices.  This is another federal agency weaponized to attack conservatives that needs to be stopped.”

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