Mortgage – HousingWire

Wells Fargo to pay $250 million for “reckless practices”

Posted: 10 Sep 2021 12:11 PM PDT

Wells Fargo has been slapped with a $250 million civil money penalty by the Office of the Comptroller of the Currency for "unsafe or unsound practices" pertaining to their home lending loss mitigation program this week.

According to the OCC, the fine is also a result of the bank violating the terms of a 2018 compliance consent order, which alleged that Wells Fargo did not implement or maintain a compliance risk management program proportionate with the bank’s size, complexity and risk profile, resulting in “reckless practices.”

Specifically, the agency accused the bank of charging customers mortgage interest rate lock extension fees, even though some of the loan closings failed due to the bank’s own volition. The OCC also alleged that the bank’s auto-lending unit improperly maintained collateral protection insurance policies on automobile loan accounts.

The consent order from three years ago mandated that Wells Fargo appoint and maintain an active compliance committee of at least three members and develop a compliance risk management proposal to address these issues.

However, it seems that the bank did not check all the boxes that were required by the OCC.

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"Wells Fargo has not met the requirements of the OCC's 2018 action against the bank. This is unacceptable,” said Michael J. Hsu, acting comptroller of the currency in a statement.

Concurrently, the agency issued a cease-and-desist order against the bank for it’s failure to establish “an effective home lending loss mitigation program.”

While the order is in effect, the bank is restricted “from acquiring certain third-party residential mortgage servicing and requires the bank to ensure that borrowers are not transferred out of the bank's loan servicing portfolio until remediation is provided, except as required by an investor pursuant to a contractual right,” the OCC said.

“Today's action puts limits on the bank's future activities until existing problems in mortgage servicing are adequately addressed,” Hsu said.

The order requires the bank to take broad and comprehensive corrective actions to improve risk management and oversight of the bank's loss mitigation program, the agency noted.

In response, Wells Fargo's CEO Charlie Scharf issued a statement remarking that OCC's actions "point to the work we must continue to do to address significant, longstanding deficiencies."

Scharf added: "As I've said over the past year, our work to build the right foundation for a company of our size and complexity will not follow a straight line. We are managing multiple issues concurrently, and progress will come alongside setbacks. That said, we believe we're making significant progress, the work required is clear, and I remain confident in our ability to complete it."

Scharf also announced that a separate Consumer Financial Protection Bureau consent order issued in Sept. 2016 regarding the bank's retail sales practices expired a few days prior.

The CEO said that its expiration shows that progress is being made by the company.

“The focus of the transformation we've undertaken is to build a stronger, better company — one that serves customers at the highest standards,” he said. ” Sometimes — as is the case today — we will reach a positive milestone on one set of issues and be reminded that we need to redouble our focus on another. That will not stop us from getting to where everyone expects us to be, and where we expect ourselves to be."

Since 2016, Wells Fargo has paid out close to $4 billion in fines and penalties for sketchy sales practices that encouraged employees to allegedly open millions of unauthorized bank accounts.

Earlier in the year, Wells Fargo also agreed to pay $95.7 million to over 5,300 home mortgage consultants to resolve alleged wage-and-hour violations in California.

The post Wells Fargo to pay $250 million for “reckless practices” appeared first on HousingWire.

The future of the independent mortgage broker channel

Posted: 10 Sep 2021 08:01 AM PDT

Currently, one in five, or roughly 20%, of consumers work with an independent mortgage broker. With their strong, personal relationships, endless loan options and access to technology, we expect that number to continue to grow as more and more consumers become educated on the value brokers add to the home-buying experience.

This past year and a half brought on challenges we never saw coming. And as things return back to normal, we're now looking forward to the next chapter and what is to come in the industry. The special thing about the broker channel is that it's set up to succeed in any market, especially a purchase market.

We also can't ignore that the market is more competitive than ever before with limited inventory coupled with low rates. As we head into the final quarter of the year, let's dig into what we believe the future holds for the wholesale and broker channels.

1. The market will normalize

Rates will continue to fluctuate — that's simply the nature of the mortgage business. But there are a couple of things to keep in mind. First, refinances won't necessarily end if rates increase. They'll simply slow down. Second, when purchase loans increase, mortgage brokers win.

Let's tackle the refinance surge first. After over a year of historically low rates and record production volume in 2020, refinances may be slowing down, but they're not going away. With the average mortgage rate currently in the low 3's, there's still a significant amount of borrowers who have loans locked in at rates in the 4's or 5's, meaning they are still eligible for a refinance. Other borrowers may want a cash-out refinance or may be looking for options to consolidate other high-interest debt. In other words, the opportunities for refinances are still there.

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The post The future of the independent mortgage broker channel appeared first on HousingWire.

Loans And Mortgage

Saturday, September 11, 2021