What Are The Biggest Issues In Mortgage Lending?

May 8, 2018 at 8:48 am Leave a comment

Early last week I spent some time on the West Coast mingling with the dark side. The mortgage bankers had their annual Legal and Compliance Conference which in my ever so humble opinion is a must attend for anyone deeply involved in, you guessed it, mortgage lending. I have to say the force was strong, particularly when I got to co-mingle with counsels who oversee hundreds of compliance people. But I’ve resisted its pull and now that I’ve had a week to think about it, here are my key takeaways.

How Well Do You Know Your Successors In Interest?

The biggest compliance issue by far was how to implement the successors in interest regulations which are now in effect. These new regulations call for nuanced responses depending on the type of bankruptcy a homeowner has declared the type of documents received from a relative claiming to have been willed their dead mother’s house or the terms of a divorce settlement. These are just a few examples. In concept, the regulations are simple. The CFPB understandably wants to make it easier for people to decide whether they are going to take over legal responsibility for a house they are entitled to by operational law. But converting this conceptual framework into an operational one requires well trained staff that is ready to deal with these issues on an ongoing basis.

The CFPB Is Dead, Long Live The CFPB

There wasn’t too much dancing in the aisles about the new more humble CFPB. One of the key themes was that administrations come and go and that, unless you want to believe that the CFPB is going to disappear, a new administration with a vastly different regulatory approach will once again be overseen the most powerful agency in the country. Besides, contrary to popular belief, the CFPB is moving forward with most of its existing legal actions.

To The States!

As long as the Trump Administration remains ascendant, expect states like New York, Pennsylvania, New Jersey and Maryland to try to pick up the slack. This reminded me of just how fortunate credit unions are to have a cohesive system, not only of Federal lobbyists but State ones as well. It also means that issues of preemption are going to become a hot bed of legal analysis as financial institutions argue over whether or not they have to comply with state law, particularly given some of the language of the Dodd-Frank Act.

Is HAL The Ideal Mortgage Originator?

Everyone agrees that technology will play an increasingly dominant role in mortgage lending; it is already. But you still have those who argue that members will always run the advice of a trusted assistant when making an investment as large as a house and others who argue that people will get all the consultation they need from their smart phones. For the record, I’m firmly in the latter camp. But no matter what side you’re on, technology is changing the role of your frontline originator from someone whose primary responsibility was to guide you through the process of buying a home into someone whose primary value is as a consultant who helps people decide what mortgages are right for them.

Entry filed under: Compliance, Regulatory. Tags: , , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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