Compliance & Regulation

Ahead of the August deadline for lenders to provide new Loan Estimate and Closing Disclosure forms, the Consumer Financial Protection Bureau unveiled a new mortgage shopping toolkit Tuesday.

HSBC Holdings defeated New York's lawsuit alleging its paperwork delays put property owners in foreclosure at an increased risk of losing their homes.

The mortgage application and closing process is once again facing an overhaul. The Consumer Financial Protection Bureau will soon require lenders to provide customers with integrated disclosure forms, which aim to clarify costs associated with real estate transactions. As with any new process, the switch poses a number of challenges for lenders — and could even put business at risk during implementation. Here are five pitfalls to look out for in the process.

Forcing lenders to fund upgrades for HUD through the proposed administrative fee would set a dangerous precedent, essentially taxing the very borrowers they are intending to serve.

The technology, still in its early development stages, will analyze Home Mortgage Disclosure Act files prior to formal submission to the regulator so lenders can spot and fix errors faster.

If lenders can't get the Consumer Financial Protection Bureau to back off its Aug. 1 integrated mortgage disclosures deadline, they're at least hoping to get some leniency while they adjust to the new process.

Some nonbank issuers of mortgage-backed securities are wrestling with capital pressures, and Ginnie Mae has cooperated with their efforts to sell chunks of mortgage-servicing-revenue streams to investors.

Bank of America is asking the Justices to overturn lower-court rulings that mortgage loans with a secondary lien on a debtor's asset can be "stripped down" to zero when the collateral is completely underwater. The decision could affect an even wider range of second liens.

Mel Watt, the former North Carolina lawmaker, has earned praised for his cautious approach to guiding the future of Fannie Mae and Freddie Mac. But critics say he is making it even more difficult to craft a system without them.

Confusion about pre-approvals is rampant and has been the subject of vehement debate.