Category Archives: Lending

Your top 10 HMDA questions answered: Part 8

The Home Mortgage Disclosure Act deadline looms closer, but many questions still remain unanswered.

To combat this, HousingWire set to work to bring readers answers to the most asked questions as we countdown to the end of the year.

Most of the 2015 updates to HMDA take effect in January 2018.

However, lenders also have a bit more breathing room now, as regulators announced they will not be assessing any penalties for 2018 HMDA data filed in 2019.

Before reading today’s question, make sure you’re all caught up in the series by the previous parts of this series:

Part one 

Part two 

Part three 

Part four

Part five

Part six

Part seven

This is part eight.

Where should lenders currently be in the process of preparing for HMDA?

In short, experts explain that with the HMDA deadline nearly here, lenders should be ready.

“Lenders should have all of their LOS and downstream system implementation and testing completed,” said Scott Dunn, Wipro Gallagher Solutions head of product management, strategy and compliance.

“As well, all production systems should now be live with HMDA programming,” Dunn told HousingWire. “As most entities have a year-end code freeze and the deadline is looming, all systems and training should be complete.”

As 2017 draws to a close, Beji Varghese, Navigant Capital Advisors managing director, explained lenders should be running their final checks to quality control, and by 2018, they should have completed all system enhancements required for the new HMDA rule.

Here is what Varghese told HousingWire lenders should be doing in 2017 and into next year:

2017: Lenders should be in the process of quality control checking their Loan Application Registry for this year’s filing.  Special attention should be given to “Action Taken Date” and “Action Taken Reason” especially around web applications where the lenders have lost contact with the borrower and the applications are stale or where the borrower has withdrawn and the lender did not correctly document that action. 

2018: Lenders should have completed all system enhancements required to support HMDA 2018. User acceptance testing should be completed for the new required data elements. Additionally, they need to update policies, procedures, process maps and training documents. Partner with industry experts to provide detailed training to staff on unique scenarios that could arise due to the new requirements. Testing process should be in place to validate live data if possible.

And one expert agreed lenders should be done, or almost done, updating their systems for the 2018 changes.

“With the January 1, 2018 effective date less than two weeks away, lenders should be done, or almost done, with all software calibrations and staff trainings,” Digital Risk Staff Attorney Meaghan James said. “At this point, lenders should have already consulted with their legal counsel and compliance departments, should have reported changed to upper-management and executives, should have all updated processes and procedures in place, and should currently be testing systems and staff to ensure all new data capture and reporting is working as expected.”

“Lenders should also be considering and implementing the use of outside vendors to conduct quality control testing on their HMDA data capture and reporting; this extra level of QC is important when implementing such a widespread change,” James said.

Check back Thursday to read part nine of this series as we count down until the end of 2017.

Article source: https://www.housingwire.com/articles/42154-your-top-10-hmda-questions-answered-part-8

Japan’s SoftBank completes $3.3 billion acquisition of Fortress Investment Group

SoftBank Group’s move into the U.S. financial markets took a huge step forward on Wednesday, as the Japanese technology company completed its previously announced $3.3 billion acquisition of Fortress Investment Group, the global investment giant.

Fortress is the parent company for New Residential Investment, which buys up mortgage servicing rights by the truckload.

At the end of last year, PHH announced that it planned to sell off its entire mortgage servicing rights portfolio in a massive deal with New Residential.  The company also bought up nearly all of CitiMortgage’s mortgage servicing rights in a deal earlier this year.

New Residential is also buying $117 billion in mortgage servicing rights from Ocwen Financial in a deal that includes New Residential making an equity investment in Ocwen and becoming a 4.9% owner of the nonbank.

Fortress is also the majority shareholder in Nationstar Mortgage, the nonbank now known as Mr. Cooper. Per the latest data from Nasdaq, Fortress owns slightly more than 70% of Nationstar. 

And now, SoftBank owns Fortress thanks to an all-cash $3.3 billion deal.

The move to acquire Fortress is just the latest in a string of U.S. real estate and finance moves for the Japanese company.

Earlier this month, SoftBank Vision Fund, SoftBank’s investment arm, invested $450 million in Compass, a real estate technology company based in New York City. The company called SoftBank’s investment the “largest real estate technology investment” in the history of the U.S.

Two years ago, SoftBank led a $1 billion funding round in SoFi, the San Francisco-based lending startup.

In this deal, SoftBank and its wholly owned subsidiaries now own all of Fortress’ outstanding shares. Fortress’ shareholders approved the deal back in July.

As a result of the deal, each outstanding Fortress Class A share was converted into the right to receive $8.08 per share in cash. Fortress’s common stock has also ceased trading and will be delisted from the New York Stock Exchange.

Prior to the deal being announced, Fortress’ stock traded around $5 per share. Upon the deal’s announcement, the stock rose to nearly $8 per share and stayed in that range, before closing its final day of trading at $7.85.

Now that the deal is completed, Fortress will operate within SoftBank as an independent business headquartered in New York. Fortress Principals Pete Briger, Wes Edens and Randy Nardone will continue to lead the company.

“SoftBank is committed to maintaining the leadership, business model, brand, personnel, processes and culture that have supported Fortress’s success to date,” the company said in a release.

Article source: https://www.housingwire.com/articles/42157-japans-softbank-completes-33-billion-acquisition-of-fortress-investment-group

HMDA enforcement defanged by Trump-led regulators

The Home Mortgage Disclosure Act has caused its fair share of grief among mortgage lenders who stress over the new risks it will bring to compliance in 2018. But there is some relief on the horizon as HMDA enforcement was just defanged by the now Trump-led regulators.

It’s been a major issue for our industry. In fact, one of our feature stories for the December magazine, written by our Managing Editor Sarah Wheeler, details the new risks HMDA reporting represents for lenders.

And earlier this year HousingWire warned lenders that if they think compliance is hard now, just wait until the new HMDA regulations kick in.

Most of the 2015 updates to HMDA take effect in January 2018.

However, now, both the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau — both now led by Trump-administration leaders (more, below) — announced they will not be assessing penalties on HMDA data collected in 2018 and reported in 2019.

What’s more, the CFPB also intends to open a rulemaking to reconsider various aspects of the new 2015 updates to the rule, such as institutional and transactional coverage tests and the rule’s discretionary data points.

“The Bureau recognizes the significant systems and operational challenges needed to meet the impending requirements under the rule,” the CFPB stated. “Accordingly, for HMDA data collected in 2018 and reported in 2019, the Bureau does not intend to require financial institutions to resubmit data unless data errors are material, or to pay penalties with respect to data errors.”

And the OCC, which regulates national banks, made a similar announcement, saying it did not intend to require data resubmissions unless the error was material.

The CFPB said lenders should take this time to identify any cracks in their systems and make good faith efforts to fall in line with the new HMDA reporting requirements.

These changes come after former CFPB Director Richard Cordray stepped down from his position as director, and, after a short power struggle, was replaced by President Donald Trump’s pick for acting director, Mick Mulvaney. The new acting director has long been outspoken about his dislike for the CFPB.

And over at the OCC, Thomas Curry stepped down as comptroller of the currency on May 5 after sitting in the position for more than five years. The position was then filled by Keith Norieka, who resigned recently after serving in the position for approximately six months. Finally, Joseph Otting, who the Trump administration nominated back in June, was officially sworn in in late November as the next Comptroller of the Currency.

Upon taking over as comptroller, Otting issued a statement that laid out his vision for how the agency should regulate the banking industry. Namely, it appears that Otting will seek to reduce the regulatory “burden” that banks currently face.

And of course, the decision has garnished support from the housing industry, who otherwise may have had to face penalties or long resubmission processes.

“NAFCU supports the CFPB’s decision not to require credit unions to resubmit HMDA data where submission errors are not material, with NCUA taking a similar approach,” said Brandy Bruyere, vice president of regulatory compliance. “We also appreciate that the bureau will reconsider the scope of HMDA in a future rulemaking.”

“The 2015 HMDA rule requires collecting a significantly greater number of data points than what was mandated by Dodd-Frank, and relief for smaller institutions was only temporary,” Bruyere said. “NAFCU is glad to see the CFPB, under acting Director Mulvaney’s leadership, is willing to hear credit unions’ concerns. In the new year, we will continue to advocate for more credit union exemptions from this burdensome rule.”

Article source: https://www.housingwire.com/articles/42142-hmda-enforcement-defanged-by-trump-led-regulators

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