On January 11, 2024, an administrative law judge for the NLRB issued an opinion holding that the employment agreement used by a major mortgage lender for all of its approximately 6,000 employees violates the National Labor Relations Act (NLRA). The mortgage lender’s standard employment contract included provisions that: 1) restricted disclosure of confidential information; 2) governed the use and return of company property, information, and communications; and 3) required that certain disputes be resolved through arbitration. Many of these provisions are common in employment agreements between lenders and their employees. Nevertheless, the ALJ found that parts of these provisions violated the NLRA because they had a reasonable tendency to interfere with, restrain, or coerce an employee contemplating engaging in activity protected by the statute.Continue Reading NLRB Finds Common Provisions in Mortgage Lender Employment Contract Illegal
On September 27, the CFPB released its annual report on residential mortgage lending activity and trends for 2022. Under the Home Mortgage Disclosure Act (HMDA), the CFPB requires financial institutions to collect and provide loan-level information on mortgage loan applications and originations. Not surprisingly given the dramatic rise in interest rates last year, the report found that overall affordability is declining, that borrowers spent more of their income on mortgage payments, that loan fees increased dramatically due primarily to many borrowers electing to buy down their interest rate by paying discount points, and that lenders more often denied applications for insufficient income.Continue Reading CFPB 2022 Loan Data: Decrease in Originations; Increase Loan Payments, Fees
On April 26, 2023, the CFPB issued an advisory opinion, which reiterated that the FDCPA and Regulation F prohibit certain debt collectors from suing to collect on debt or threatening to foreclose on homes with mortgages past the statute of limitations, or “time-barred” debt. Such guidance is a result of actions by certain debt collectors to foreclose on silent second mortgages, referred to as “zombie mortgages,” that consumers thought had been satisfied and that are likely not enforceable in court.Continue Reading CFPB Issues Guidance to Protect Homeowners from Zombie Mortgages
On February 27, the California Department of Financial Protection and Innovation (DFPI) issued new guidance with respect to the performance of remote work by mortgage loan originators (MLOs) working for licensees under the California Residential Mortgage Lending Act (California Financial Code Sections 50000 et seq., the “CRMLA”). The CRMLA does not expressly prohibit employees of a licensee from working at a remote location, such as an employee’s home. A licensee may authorize an employee to perform limited functions at a remote location that is not considered a branch office, provided that the location does not have the indicia of a branch office and is not advertised to the public as a business location. However, the guidance noted that a branch manager must continue to supervise employees who are working remotely, and that the DFPI will continue to examine the supervisory activities of a branch manager to ensure that the branch manager is adequately supervising each MLO and employee regardless of whether they are working at a remote location or a branch office.Continue Reading California DFPI Publishes New Guidance on Remote Work by MLOs
On March 9, the FTC unanimously voted to block the proposed merger between the nation’s largest provider of home mortgage loan origination systems (LOS) and other key lender software tools, and its top competitor that offers the same services. In its complaint, the FTC alleged that one company owns the country’s dominant LOS platform, while the other company owns and operates the second-largest platform. In a press release announcing the administrative complaint, the FTC stated that the deal “would drive up costs, reduce innovation, and reduce lenders’ choices for tools necessary to generate and service mortgages.”Continue Reading FTC Seeks to Block Deal Between Top Mortgage Loan Technology Providers
On February 7, the CFPB issued an Advisory Opinion to address the applicability of RESPA section 8 to operators of certain digital technology platforms that enable consumers to comparison shop for mortgages and other real estate settlement services, including platforms that generate potential leads for the platform participants through consumers’ interaction with the platform. Continue Reading CFPB’s RESPA Advisory Addresses Digital Mortgage Comparison-Shopping Platforms, Lead Generation
The FDIC recently announced a consent order with an Oregon regional bank for violations of Section 8 of RESPA, the FTC Act, and the FRCA, resulting in a civil monetary penalty totaling $425,000. After conducting its investigation, the FDIC found:Continue Reading FDIC Settles with Bank for Repeat RESPA Violations, Doubling Previous Fine
Recently, the FTC and California Department of Financial Protection (DFPI) sued several companies and owners for allegedly operating an illegal mortgage relief operation. This action alleges that the defendants’ conduct violated the California Consumer Financial Protection Law (CCFPL), the FTC Act, the FTC’s Mortgage Assistance Relief Services Rule (the MARS Rule or Regulation O), the Telemarketing Sales Rule, and the Covid-19 Consumer Protection Act.
Continue Reading FTC, DFPI Shut Down Mortgage Relief Operation
On September 29, the CFPB released its annual report on residential mortgage lending activity and trends for 2021. Notably, the report shows a shift from refinance loans in 2020 to home purchase loans in 2021—with a greater share of home purchase loans going to Asian, Black, and Hispanic white borrowers relative to the share of home purchase loans for non-Hispanic white borrowers. Additionally, the top 25 closed-end lenders by loan volume held nearly half of the market share of residential mortgage lending; continuing a trend that has risen each year since 2018. Key findings from this year’s report includes:
Continue Reading CFPB Annual Report: End to Mortgage Refinancing Boom, Increase in Home Purchase Loans
Recently, the House of Representatives passed the SECURE Notarization Act of 2022 (H.R. 3962). The legislation that creates federal minimum standards to allow notaries in all states to perform remote online notarization transactions. Highlights from the bill include the following:
Continue Reading House Passed SECURE Notarization Act of 2022
On July 27, the CFPB and DOJ proposed a settlement with a nonbank mortgage lender for its discriminatory “redlining” lending practices against minority families living in the greater Philadelphia area. If approved by the court, the mortgage lender would be required to pay more than $22 million in civil penalties, and would be the CFPB’s first nonbank mortgage redlining settlement.
Continue Reading CFPB, DOJ Propose $22 Million Penalty Against Nonbank Mortgage Lender for Illegal Redlining