The Multi-State Mortgage Committee (MMC) published its Report to State Regulators (Report) for 2015.
According to Karyn Tierney, Chair of the MMC, “In 2015, the Multi-State Mortgage Committee (MMC, or the Committee) continued to focus its efforts on a risk-based supervisory approach to the non-bank mortgage marketplace, while applying new data analytics tools. With respect to multi-state supervision, the Committee maintained an open dialogue and continued coordination on examination and enforcement work with fellow regulators, state attorneys general and the industry throughout the year. The MMC was tasked by the State Coordinating Committee (SCC) to facilitate and oversee coordinated examinations with the Consumer Financial Protection Bureau (CFPB), focusing on mortgage origination, mortgage servicing and reverse mortgage activity.” While the Report addresses other initiatives such as prudential standards for non-depository servicers, MMC interaction with various other regulatory partners, risk-profiling analytics tool and CFPB-state supervision coordination, it is the findings servicing and origination examinations that may be most significant to industry.
In the servicing arena the MMC found little difference in the violations of state and federal law in 2015 when compared to the previous year. Significant findings included those related to the servicing requirements of RESPA and TILA that were implemented in January of 2014. Another area of significant findings were issues relating to the ineffective oversight of sub-servicers activity as well as insufficient third-party vendor management. Violations in 2015 (which were not much different than 2014) included: Annual disclosures and timely notices; Records retention; Loan modifications; Loan interest rate adjustments; Error resolution; Allowable fees; Loan transfer disclosures; Default servicing and loss mitigation; Escrow maintenance and analysis; Notices of lender placed insurance; Foreclosure practices; and Timely reconciliation of custodial accounts.
Similarly, in the origination arena the MMC found that inaccurate loan origination data necessary for the use of the automated compliance review system continues to be a major issue. This was serious enough that in September of 2015 the MMC issued an industry bulletin that advised, among other things, failure to provide comprehensive and accurate data in an acceptable format may result in enforcement recommendations in future exams. Other significant findings include licensing violations, more specifically, unlicensed activity; RESPA violations related to Marketing Servicing Agreements, especially in the area of prohibited kickbacks and referral fees. A wide range of state and federal violations cited in 2015 included: Records retention; Timely funding of loans; Timely application disclosures; Accurate application disclosures; Oversight of third-party agents; Advertising; and Collection of unallowable fees.