Mortgage borrowers are less satisfied with the origination process, according to the J.D. Power and Associates Among the findings from the report were that new compliance requirements are making the loan process take longer, more applications are being submitted online and fewer borrowers ever meet their loan officers.Responses from 3,401 new borrowers were used in the report.www.mortgagedaily.com/OriginationSurvey111910.asp
HUD Thinking Warehouse Lending is Subject to RESPA
On November 16, HUD posted a notice on its website soliciting comments regarding changes in warehouse lending structures that have occurred since HUD's previous regulations on table funding and secondary market transactions were issued in 1994. Comments will be due not later than 30 days after the notice is published in the Federal Register, which is still pending. For a copy of the notice, please see http://www.hud.gov/offices/hsg/rmra/res/warehouselending.pdf.
FTC Issues Final Mortgage Assistance Relief Services (MARS) Rule.
On November 19, the Federal Trade Commission (FTC) issued a final version of its Mortgage Assistance Relief Services (MARS) Rule to regulate mortgage relief companies. Chiefly, the new rule prohibits mortgage relief companies from collecting fees until they have provided consumers with both (i) a written offer from their lender or servicer that the consumer deems acceptable and (ii) a written document from the lender or servicer describing the key changes to the mortgage that would result if the consumer accepts the offer. Additionally, the rule restricts the advertising practices of mortgage relief companies, requiring them to disclose in all advertisements and communications directed at consumers that (i) they are not associated with the government, (ii) their services have not been approved by the government or the consumer's lender, (iii) the lender may not agree to change the consumer's loan, and (iv) if the company advises the consumer to stop paying on the mortgage, they could lose their home and damage their credit rating. The rule also mandates that mortgage relief companies provide disclosures explaining the total fees the companies will charge and that the consumer will not pay a fee unless they accept an offer from their mortgage company/servicer. Finally, the rule prohibits mortgage relief companies from making certain false or misleading claims. All provisions of the rule except the advance-fee ban will become effective December 29, 2010. The advance-fee ban provisions will become effective January 31, 2011. For a copy of the rule, please see http://www.ftc.gov/os/2010/11/R911003mars.pdf.
FTC Cracks Down on Mortgage Relief Operations. Recently, the Federal Trade Commission (FTC) announced that two fraudulent mortgage relief operations posing as government programs had been shut down and that seventeen marketers were banned from selling mortgage modification and foreclosure relief services. With respect to the two mortgage relief operations, the FTC shut them down for claiming they were part of a "Government Mortgage Relief Program" that could, in return for a large up front fee, reduce consumers' monthly mortgage payments and lower their interest rates. The FTC alleged that consumers would pay a fee without receiving anything in return and would not get refunds. The companies failed to respond to calls or emails and eventually changed the name of their business. The FTC also announced settlements with a number of companies charged with similar practices in 2009. For a copy of the announcement, please see http://www.ftc.gov/opa/2010/11/mortgage.shtm.
Two New Jersey Defendants Plead Guilty to Conspiracy to Commit Mortgage Fraud.
On November 15, 2010, Edivaldo dos Santos and Rosa Damasceno pleaded guilty in federal court to conspiracy to commit wire fraud, and admitted that they forged and attempted to use false documentation and information to obtain a loan on a client's behalf. The defendants admitted to providing false income information in support of an application for a loan intended to return money to the buyer at closing, and to creating fraudulent W-2 forms. Charges against dos Santos and Damasceno were originally brought as part of the prosecution of 28 defendants accused of mortgage fraud schemes in New Jersey in a joint prosecution involving the Financial Fraud Enforcement Task Force. The defendants face up to 30 years in prison and a fine of $1 million, or twice the gain or loss from the conspiracy, at sentencing. For a copy of the press release, please see http://www.stopfraud.gov/news/news-11152010.html.
Inflation fears rekindledThe Times' Floyd Norris writes that fears of deflation were rekindled as the core rate of inflation fell to a record low in the U.S. last month. "Since the collapse of the housing market in the United States and the beginning of the global financial crisis, the Federal Reserve has made avoiding deflation a major priority, recalling the experience of Japan after its bubble burst in the early 1990s. The Fed has set an annual inflation target of 2 percent or a little lower, but is not getting it."
Three more small banks failed Friday, bringing the tally of seized depositories for the year to 149.