Game Change

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the latest Or ig i nat ion SERVICING CFPB Proposes Rule Revisions in Response to Industry Concerns The agency spells out specific changes to its regulations. Se r v ic i ng T s e c on da r y m a r k e t a na ly t ic s Ocwen, OneWest Bank Strike Deal in Servicing Rights Ocwen scored $78 billion in servicing rights from the bank. O cwen Loan Servicing, a wholly owned subsidiary of Ocwen Financial Corporation, has entered into an agreement to purchase $78 billion in mortgage servicing rights (MSRs) from OneWest Bank. According to a filing made with the U.S. Securities and Exchange Commission (SEC), the aggregate purchase price for the MSRs will be approximately $2.53 billion, with $446 million paid in respect of the MSRs and approximately $2.1 billion to be paid in respect of the servicing advances. Ocwen plans to finance the transaction primarily with a combination of cash on-hand, cash generated through operations, and available credit, the company said. The transaction is expected to close during the second half of 2013, and Ocwen expects the majority of loans will be boarded onto its primary servicing platform. The purchase is another major growth step for Ocwen, already one of the country's largest servicers. In just the last few months, the company announced the acquisition of agency MSRs from Ally and the purchase of Liberty Home Equity Solutions, the nation's largest reverse mortgage lender. 66 | The M Report he Consumer Financial Protection Bureau (CFPB) announced proposed revisions to its ability-to-repay rule, mortgage servicing rules, and rules regarding consumer protections. "Today's proposal revises and clarifies certain aspects of our rules to ease implementation and to pave the way for more effective consumer protections in the marketplace," said Richard Cordray, director of the CFPB. One of the clarifications specified in the announcement is the definition of a loan originator. CFPB rules detail qualifications and compensation guidelines for loan originators, and industry participants have expressed a need to ensure tellers and administrative staff are not considered loan originators for the purposes of these new guidelines. Also related to compensation, the CFPB specified points and fee thresholds specifically for manufactured housing employees. The proposals also addressed the ban on financing credit insurance premiums, which is set forth in Dodd-Frank and in the CFPB's loan originator compensation rules. "The proposal would provide guidance on when credit insurance premiums are considered to be calculated and paid on a monthly basis for purposes of an exclusion from the statutory prohibition," the CFPB stated. Additionally, the CFPB proposed changing the implementation date of this and other compensation-related rules from January 10, 2014, to January 1, 2014. "The Bureau believes that having the rule take effect at the beginning of a calendar year may help compliance since compensation plans, training, and licensing and registration are often structured on an annual basis," the CFPB said. The CFPB also plans to spend the next two years refining its definitions of "rural" and "underserved" areas for the purposes of encouraging lending and protecting consumers in these areas. Small creditors not operating in these areas would be exempt from some rules, such as the ban on high-cost balloon mortgages. The CFPB also clarified rules relating to loss mitigation. If a loss mitigation application is incomplete, the servicer must notify the applicant and let him or her know what is missing. The proposed revision also protects consumers from falling into foreclosure until they have "had a reasonable time to supply the needed documents or information." NAFCU Calls on CFPB to Expand QM Exemption Threshold Letter from organization calls for Cordray to re-evaluate the current rules. W hile the Consumer Financial Protection Bureau's (CFPB) finalized amendments expanded exemptions for the Ability-toRepay rule issued in January, the National Association of Federal Credit Unions (NAFCU) says those exemptions should go further. In a letter to CFPB director Richard Cordray, NAFCU president and CEO Fred Becker requests Cordray to re-evaluate the rule that exempts credit unions that have $2 billion or less in assets and that originated 500 or fewer mortgages per year. While the change would help many smaller credit unions, Becker's letter notes that there are a number of small lenders already approaching or surpassing the 500-loan threshold. "NAFCU's review of credit unions' call report data as of December 31, 2012, indicates that there are 879 credit unions with an asset size of less than $2 billion that conduct at least 100 mortgages per year. Of these, 244 already extend 500 or more mortgages per year. Of the 244, 198 exceeded the 500 threshold in the past seven years, and their total origination increased by an aggregate 155 percent," Becker explained in his note. "Accordingly, we believe that as consumers continue to turn to credit unions for their mortgage lending, many more will lose their exemption unless the CFPB increases the threshold. Consequently, the relief that the CFPB seeks to provide to small creditors will erode, and fewer small credit unions will likely extend additional mortgages and meet their members' needs," he went on to write. To address that issue and allow small creditors to continue operating, Becker and NAFCU suggest to Cordray to raise the threshold to 1,000 loans.

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