Mr. Cooper pay-to-pay suit fallout, new regulations: top mortgage news from last month

September 3, 2024 12:25 PM

In August's roundup of top mortgage news: The Consumer Financial Protection Bureau sides with plaintiffs against Mr. Cooper in alleged "junk fee" lawsuit, updates to 203(k) and more.

leszekglasner - stock.adobe.com

Consumers won't budge until mortgage interest rates get this low: survey

Article by Brad Finkelstein

Nearly two-thirds of consumers are "encouraged" that mortgage rates will be dropping soon and the market is moving closer to the level that will get many to act, a Mphasis Digital Risk survey said.

The survey found that 64% of the 1,818 respondents to the survey taken July 22 and 23 believe rates will be trending down in the near future, with 21% stating they were very encouraged this will be happening, and another 43% claiming to be somewhat encouraged.

In recent weeks, mortgage rates have dropped. The Mortgage Bankers Association's Weekly Application Survey released today put the conforming 30-year fixed at 6.54%, down 1 basis point from the previous week and from 7.03% for the week ended June 28.

Click here to read the full story.

Wall Street Frets Over A Revived CFPB Trump Left Toothless

Ting Shen/Bloomberg

CFPB weighs in on Mr. Cooper's 'pay to pay' suit

Article by Maria Volkova

The Consumer Financial Protection Bureau has chimed in with comments regarding a lawsuit facing Mr. Cooper, which accuses the mortgage lender and servicer of charging borrowers a $25 "junk fee" for payoff quote statements.

The financial watchdog put its support behind the plaintiffs, claiming Mr. Cooper violated the Fair Debt Collection Practices Act by charging customers with a fee that they were not previously aware of.

Mr. Cooper did not mention this specific fee in its mortgage agreement with consumers, so therefore, it can't legally charge it, the CFPB said in an amicus brief filed with a Washington federal court August 8.

Click here to read the full story.

Computer Screen With a Crack, data leak concept background

Nelson - stock.adobe.com

Mr. Cooper data breach victims reveal how they've been affected

Article by Maria Volkova

Customers impacted by Mr. Cooper's data breach late last year continue to feel the aftermath nine months later.

Following the cyber attack, which leaked the Social Security numbers of 14.7 million customers, some have reported being hit by a wave of spam and seeing credit cards opened in their names, a July filing in Texas federal court shows. In one instance, a customer had $25,000 withdrawn from her Charles Schwab account.

An amended complaint for a consolidated class action suit, which now has 22 members, outlines in detail how each customer fared after their information was exposed in late October 2023. The filing also spells out exactly how the cyber attack was carried out by nefarious players.

Click here to read the full story,

Harris Picks Minnesota Governor Walz For Ticket

Hannah Beier/Bloomberg

Kamala Harris' VP pick Tim Walz on housing

Article by Riley Edenbeck

After much speculation, Vice President Kamala Harris announced on Aug. 6 that Minnesota Governor Tim Walz will be her running mate.

Walz may not have been a household name before, but the former social studies teacher's career in politics spans nearly 20 years. He's known for a progressive agenda that has included large investments in affordable housing in Minnesota.

The governor emphasized that housing should be a bipartisan issue in his State of the State address back in March.

Click here to read the full story.

Home renovation concept. Before and after interior in modern style

4Max - stock.adobe.com

Mortgage lenders discuss the impact of 203(k) updates

Article by Brad Finkelstein

For lenders, the changes recently announced for the Federal Housing Administration's 203(k) program are long overdue.

If anything, use of this renovation and rehabilitation product has fallen behind conforming offerings, as well as similar loans from other government agencies, said Jeff Leinan, co-president of Plaza Home Mortgage.

"A lot of renovation is being done with these other products, but you have to have conventional credit reserves and [the debt-to-income ratios]," added James Bopp, vice president, national renovation lending at Planet Home Lending. "So this is really going to help the first time homebuyer, quite a bit."

Click here to read the full story,

MrAshi - stock.adobe.com

How one bank is aiding borrowers facing new broker fees

Article by Andrew Martinez and Brad Finkelstein

A bank lender is promoting a product geared to support homebuyers facing new commission fees following recent National Association of Realtors changes.

The Federal Savings Bank says consumers can borrow up to $50,000 to defray the costs of buyer agent commissions with its Smart Loan product, alongside a mortgage loan. Buyers can't use the loan for extra closing liquidity but rather to avoid spending more savings upfront, when approaching broker fees sellers traditionally paid.

The Chicago-based lender was already offering the product to borrowers, particularly veterans who were previously restricted from paying any agent commissions, said Neil Bader, executive vice president and national director of retail lending at the bank.

Click here to read the full story.

A state-of-the-art call center equipped with AI to optimize customer service and help desk

MAY - stock.adobe.com

How lenders and servicers are using AI in call centers

Article by Maria Volkova

Calling a mortgage servicer or subservicer to find out details about a loan is often time consuming for both the consumer and the company representative aiming to help.

That is why mortgage lenders and servicers are evaluating ways to streamline and automate the experience for customers. Companies operating in the servicing space are starting to dip their toes into using artificial intelligence to solve lingering call center-related problems and shave down the amount of time each call takes.

Companies are largely cautious in their deployment of AI today, opting for functional use cases such as having an internal chatbot help a call center agent answer customer questions, or using AI to pull tidbits of information from a recorded conversation to find areas of customer support improvement.

Click here to read the full story.

Samuel Corum/Bloomberg

CFPB issues $2M penalty against VA lender

Article by Spencer Lee

The Consumer Financial Protection Bureau has issued a $2.25 million dollar fine against a nonbank lender, accusing it of deceiving servicemembers with misleading cost comparisons.

Newday USA, which specializes in Department of Veterans Affairs-backed mortgages, gave consumers incomplete information about housing costs that made the company's own refinances appear less expensive than the consumer's existing loans, the bureau claimed. The civil penalty against the West Palm Beach, Florida-based lender is for transactions in three states.

"Newday USA baited veterans and military families into cash-out refinance mortgages by hiding the true costs of these loans," said CFPB Director Rohit Chopra in a press release. "Newday USA's misconduct has no place in the VA home loan program."

Click here to read the full story.

Real estate agent facilitated sale of property through mortgage loan, ensuring smooth investment process for purchaser with help of skilled broker. Concept of loan, insurance, approval, real estate.

doidam10 - stock.adobe.com

Homeowners insurance a hidden risk for secondary market

Article by Brad Finkelstein

Homeowners insurance is labeled as one of the hidden costs for property owners, and their escalating prices could have an impact on the secondary and capital markets, in terms of loan salability and performance.

While both Fannie Mae and Freddie Mac declined to be interviewed for this article, they jointly created a blog post on May 20 explaining their home insurance requirements, which call for a replacement cost value policy, rather than the alternative, for actual cash value. The latter allows insurers to estimate the cost of things like the age and wear and tear of the property, and then deduct the total depreciation amount from the insurance claim payout.

The premiums for an ACV policy are typically more affordable, but also the payout is likely lower, said the post from Terri Merlino, senior vice president and chief credit officer for Freddie Mac's single-family business, and Cyndi Danko, who holds the same titles at Fannie Mae.

Click here to read the full story.

Vice President Harris And Governor Walz Hold Rally

Bing Guan/Bloomberg

Kamala Harris seeks $25k homebuyer subsidy, but some are skeptical

Article by Maria Volkova

Vice President and Democratic presidential nominee Kamala Harris wants to increase the accessibility of homeownership with a $25,000 subsidy for first-time homebuyers who pay rent on time.

"While we work on the housing shortage, my administration will provide first-time homebuyers with $25,000 to help with a down payment on a new home," she said during a policy speech in North Carolina in mid-August.

But mortgage industry stakeholders are skeptical about the likelihood of such an initiative actually getting implemented if Harris is elected this November.

Click here to read the full story.