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64 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST ORIGINATION Wells Fargo Consents to Pay THE BIG BANK PUTS ITS CONTROVERSIAL VA REFI PROBLEMS IN THE REARVIEW BY NODDING TO A $108 MILLION SETTLEMENT. CALIFORNIA // San Francisco- based Wells Fargo has agreed to pay $108 million to the federal government to settle long-time al- legations that it improperly issued Veterans Administration (VA) refinance loans that weren't actually eligible for VA backing. The govern- ment filed the claim in 2006, seek- ing compensation for the VA, which took losses when many of the loans in question defaulted. According to the suit, the gov- ernment alleged that some of Wells Fargo's VA Interest Rate Reduction Refinance Loans (IRRRLs) were not eligible for VA guarantees because the bank charged certain fees at the time of origination. Though the bank will pay the $108 million to settle the claim, Wells Fargo denies the govern- ment's allegations. The bank settled a related class action suit in 2011, compensating veterans who were issued a VA IRRRL between 2004 and 2010 to make up for the origination fees charged at the time. In total, the suit cost Wells Fargo $10 million in refunds, with about 60,000 mort- gagees receiving $175 each. This new settlement, according to Wells Fargo CEO Tim Sloan, will finally close the door on the issue. "More than six years ago, when questions about fees on Veterans Administration refinance loans were raised, we resolved those concerns by improving our inter- nal controls and made compensa- tion available to VA customers who closed a refinance before that time," Sloan said. "Settling this longstanding lawsuit allows us to put the matter behind us and con- tinue to focus on serving custom- ers and rebuilding trust with our stakeholders. We are committed to serving the financial health and well-being of veterans, and we will continue to honor that commit- ment now and in the future." The two VA-related suits aren't the only legal troubles Wells Fargo has faced as of late. In late July, the bank revealed it would pay out $80 million in remedia- tion funds for forcing auto insur- ance policies on customers, and before that, the bank was accused of opening more than 2 million unauthorized accounts in its customers' names. NAFCU: Credit Unions Need Relief THE CFPB'S PROPOSED RULE WILL SADDLE THEM WITH AN OPPRESSIVE AMOUNT OF COSTS, THE ASSOCIATION SAYS. VIRGINIA // Many proposed changes have taken place within the Consumer Financial Protection Bureau (CFPB) as of late, including those associated with home equity lines of credit (HELOC). As of now, financial institutions are required to report HELOCs if they've made 100 loans in the last two years; how- ever, the CFPB proposal would increase that number to 500 for the 2018–2019 year while it tests if the change should be permanent. In regards to this change, the National Association of Federally- Insured Credit Unions (NAFCU), based in Arlington, Virginia, submitted a letter proposing three changes to the proposed rule. First, according to the NAFCU, the definition of a small credit union needs to be revised. Under the Home Mortgage Disclosure Act (HDMA), the asset-size exemption is $44 million, meaning credit unions with assets at or below this amount are exempt from collecting HDMA data; however, the NAFCU wants this to be in line with the National Credit Union Administration's (NCUA) definition. According to the NCUA, a small credit union has $100 million or less in assets for purposes of the Regulatory Flexibility Act and was set after intense study of the industry. Though the NAFCU supports the increase in required reporting of HELOCs, the group would like to have the change be not only permanent, but raised higher. It would also like the closed-end mortgage loan threshold raised from 25 to at minimum 150 for the next two years. According to the NAFCU, the complexity of the regulatory requirements means the industry goes through a great deal to make sure they are in compliance with the latest rules. With that in mind, the Final Rule will cause more costs to credit unions and the NAFCU would like the CFPB to further delay the HDMA's effective date. Overall, the NAFCU finds compliance a top concern, espe- cially now that 2018 is less than six months away. By implement- ing these suggestions, the NAFCU believes much relief will be provided to credit unions. "As not-for-profit, member-owned financial institutions, credit unions have served a vital role as afford- able and responsible lenders in their communities," Andrew Morris, NAFCU's Regulatory Affairs Counsel, wrote in the comment let- ter. He said the rule "must undergo substantial adjustment to fairly achieve these statutory purposes." Reaching Millennials in a Digital World AS THE LARGEST GENERATION IN U.S. HISTORY, THE COHORT HAS RAPIDLY BECOME AN ECONOMIC FORCE TO BE RECKONED WITH. By Deborah Speed and Jake Tesch UTAH // Commonly defined as people born between 1980 and 2000, millennials are the first generation to come of age during a time of digital revolution. This gives them a unique perspective, which influenc- es every aspect of their lives, from social engagement to global activism to financial interaction. Today, millennials comprise the largest group of consumers in his- tory. As a result, many companies are re-evaluating their aging busi- ness models and making neces- sary adjustments to keep up with the younger generation's expecta- tions. The mortgage industry is no exception—especially when millennials are entering their peak home-buying years. With that in mind, mortgage lenders should be focusing on methods that attract and engage potential borrowers through digital platforms. To be effec- tive, however, it's important to understand the purchasing trends of young people. Product Research Before making purchases, mil- lennials will typically research the product or service on the internet. According to Ellie Mae's 2017 Borrower Insights Survey, 30 percent of millennial homebuy- ers begin the process of buying a home online. Ellie Mae also discovered 25 percent of millen- nials found a lender through an online search, and an additional 23 percent completed some portion of their application online as well. In light of these findings, lenders must realize their online presence will likely be the first impression to a potential borrower. In order to es- tablish trust and capture the atten- tion of potential borrowers, they'll need a strong digital brand identity. That means having visually ap- pealing and informative websites, engaging social media feeds, and user-friendly online platforms. Testing the Brand Once the millennial consumer is convinced of a lender's brand legitimacy, they are likely to test the waters through social media. For lenders, it is not enough to simply be online—they need to be active online. When working to gain traction, consistency is key. Social media followers expect and appreciate regular engagement and unique, interesting content. Remember, social media is not simply a place to spew out promotional pieces about products and services. Millennials want substance, such as information that will simplify the mortgage process and help them in their decision- making process. The idea is not only to satisfy a borrower's digital appetite but to also entice them into coming back for more. Effective social media users humanize their brands, engage with their audiences, and create a distinctive tone, all while providing content that "stops the scroll." When social media is done well, millennials will notice. ORIGINATION LOCAL EDITION