Welcome to the California Mortgage Bankers Association s Mortgage Quality and Compliance Committee (MQAC)

Transcription

1 Welcome to the California Mortgage Bankers Association s Mortgage Quality and Compliance Committee (MQAC) April 25, 2013 You have entered the call on mute. If you have a question for Susan or CMBA, please direct a question to her only by typing it into the panel to the left of the screen. The operator will open the lines for audience participation for Introduction of New Members, Alerts and also Q & A at the conclusion of the presentation. To join the audio portion, dial and use passcode 4378

2 CMBA MORTGAGE QUALITY & COMPLIANCE COMMITTEE Michael R. Pfeifer, Esq., Committee Chair Dustin Hobbs, CMBA Communications Director DIAL IN #: Passcode: 4378 AGENDA I. Preliminary Remarks and welcome to the committee II. Introduction of New Members III. IV. Member Alerts / Recent Developments / Upcoming Events Presentation Jason Goldstein, Senior Counsel, Buchalter Nemer IV. Legislative Report Pat Zenzola, CMBA Lobbyist, KP Public Affairs

3 CMBA, MORTGAGE QUALITY AND COMPLIANCE COMMITTEE Monthly Presentation How the FHA s Discriminatory Effects Standard May Affect Your Business Presented by: Jason Goldstein Senior Counsel Buchalter Nemer

4 How The FHA s Discriminatory Effects Standard May Affect Your Business April 25, 2013 Jason E. Goldstein, Esq. Buchalter Nemer

5 The Fair Housing Act The Fair Housing Act was designed to provide for fair housing throughout the United States and to prohibit discrimination because of race, color, religion, sex, handicap, familial status or national origin. The protections provided by the Fair Housing Act include those relating to residential real estate related transactions.

6 What Is The Discriminatory Effects Standard A person may be liable under the Fair Housing Act based on the discriminatory effect of an act even if the practice was not intentional... where it actually or predictably results in a disparate impact on a group of persons or creates, increases, reinforces, or perpetuates segregated housing patterns because of... a protected class. This is not really new law! HUD, which is statutorily charged with the authority and responsibility for interpreting and enforcing the Fair Housing Act... has long interpreted the Act to prohibit practices with an unjustified discriminatory effect, regardless of whether there was an intent to discriminate.

7 Anti-Mortgage Lending Comment Commenters stated that the rule is particularly necessary to maintain protections against discriminatory and abusive practices in the mortgage industry, as the Fair Housing Act covers activities in residential real estate related transactions that may not be covered by the Equal Credit Opportunity Act ( ECOA ). ECOA prohibits any creditor from discriminating in credit transactions on the basis of race, color, national origin, religion, age, sex, marital status or public assistance programs participation. See U.S.C. 1691(a). By comparison, Section 805 of the Fair Housing Act prohibits any person whose business include engaging in residential-related transactions from discriminating in such transactions on the basis of race, color, religion, sex, disability, familial status or national origin. See 42 U.S.C [Note: CFPB has enforcement authority over ECOA]

8 What May Be New? The final rule adds the terms or conditions and the term costs to the list of potentially discriminatory terms or conditions of loans or other financial assistance. [ (b)(2)] Discrimination in residential mortgage servicing may also violate section 804 of the Act. 42 U.S.C

9 Defense The practice is supported by a legally sufficient justification. Necessary to achieve one or more substantial, legitimate, nondiscriminatory interests. Interests which could not be served by some other practice with a less discriminatory effect. In general, this is a case specific inquiry. Experts, experts and more experts!

10 Potential Interesting Issues? Ability to repay? Qualified mortgages?

11 Interesting Cases Simms v. First Gibraltar Bank (5 th Cir. 1996) 83 F.3d 1546 Magner v. Gallagher (challenge to discriminatory effect standard withdrawn after set for hearing before the United States Supreme Court allegedly due to an agreement that the Department of Justice would not pursue a legal claim against the City of Saint Paul. In The Matter Of Township Of Mount Holly, New Jersey v. Mt. Holly Gardens Citizens In Action, Inc. (Petition for certiorari to the United States Supreme Court regarding a disparate impact matter)

12 CMBA State Mortgage Legislation Update April 2013 AB 42 (Perea D) Taxation: cancellation of indebtedness: mortgage debt forgiveness. Current Text: Amended: 4/8/2013 Last Amend: 4/8/2013 Location: 4/9/2013-A. REV. & TAX Summary: The Personal Income Tax Law conforms to specified provisions of federal law relating to the exclusion of the discharge of qualified principal residence indebtedness, as defined, from an individual's income if that debt is discharged after January 1, 2007, and before January 1, 2013, as provided. The federal American Taxpayer Relief Act of 2012 extended the operation of those provisions to debt that is discharged before January 1, This bill would conform to the federal extension. This bill contains other related provisions.

13 CMBA State Mortgage Legislation Update April 2013 SB 30 (Calderon D) Taxation: cancellation of indebtedness: mortgage debt forgiveness. Current Text: Amended: 3/6/2013 Last Amend: 3/6/2013 Status: 4/8/2013-Placed on APPR. suspense file. Location: 4/8/2013-S. APPR. SUSPENSE FILE Summary: The Personal Income Tax Law conforms to specified provisions of the federal Mortgage Forgiveness Debt Relief Act of 2007, relating to the exclusion of the discharge of qualified principal residence indebtedness, as defined, from a taxpayer's income if that debt is discharged after January 1, 2007, and before January 1, 2010, as provided. The federal Emergency Economic Stabilization Act of 2008 extended the operation of those provisions to debt that is discharged before January 1, This bill would extend the operation of the exclusion of the discharge of qualified principal residence indebtedness to debt that is discharged on or after January 1, 2013, and before January 1, This bill contains other related provisions.

14 CMBA State Mortgage Legislation Update April 2013 AB 1164 (Lowenthal D) Liens: employees and workers. Current Text: Amended: 3/21/2013 Last Amend: 3/21/2013 Status: 4/23/2013-From committee: Do pass as amended and re-refer to Com. on L. & E. (Ayes 6. Noes 3.) (April 23). Location: 4/23/2013-A. L. & E. Summary: Existing law grants specified persons, including laborers, as defined, who contribute labor, skill, or services to a work of improvement the right to record a mechanic's lien upon the property so improved. This bill would authorize an employee to record and enforce a wage lien upon specified real and personal property for wages, other compensation, and related penalties and damages owed the employee. The bill would prescribe requirements relating to the recording and enforcement of the wage lien. The bill would require a notice of lien on real property to be executed under penalty of perjury. This bill contains other related provisions and other existing laws.

15 CMBA State Mortgage Legislation Update April 2013 AB 1240 (Jones R) Mortgages: deed of trust. Current Text: Introduced: 2/22/2013 Status: 4/16/2013-In committee: Set, second hearing. Hearing canceled at the request of author. Location: 3/11/2013-A. JUD. Summary: Existing law imposes various requirements prior to exercising a power of sale under a mortgage or deed of trust. Existing law defines "mortgage" for purposes of these provisions to include any security device or instrument, other than a deed of trust, that confers a power of sale affecting real property or an estate for years therein, to be exercised after breach of the obligation secured. This bill would eliminate the exclusion of a deed of trust from the definition of "mortgage" for purposes of these provisions.

16 CMBA State Mortgage Legislation Update April 2013 SB 391 (DeSaulnier D) California Homes and Jobs Act of Current Text: Amended: 4/2/2013 Last Amend: 4/2/2013 Status: 4/16/2013-Set for hearing April 24. Summary: Under existing law, there are programs providing assistance for, among other things, emergency housing, multifamily housing, farmworker housing, home ownership for very low and low-income households, and downpayment assistance for first-time homebuyers. Existing law also authorizes the issuance of bonds in specified amounts pursuant to the State General Obligation Bond Law. Existing law requires that proceeds from the sale of these bonds be used to finance various existing housing programs, capital outlay related to infill development, brownfield cleanup that promotes infill development, and housing-related parks. This bill would enact the California Homes and Jobs Act of The bill would make legislative findings and declarations relating to the need for establishing permanent, ongoing sources of funding dedicated to affordable housing development. The bill would impose a fee, except as provided, of $75 to be paid at the time of the recording of every real estate instrument, paper, or notice required or permitted by law to be recorded. By imposing new duties on counties with respect to the imposition of the recording fee, the bill would create a state-mandated local program. The bill would require that revenues from this fee be sent quarterly to the Department of Housing and Community Development for deposit in the California Homes and Jobs Trust Fund, which the bill would create within the State Treasury. The bill would provide that moneys in the fund may be expended for supporting affordable housing, administering housing programs, and the cost of periodic audits, as specified. The bill would impose certain auditing and reporting requirements. This bill contains other related provisions and other existing laws.

17 CMBA State Mortgage Legislation Update April 2013 SB 803 (DeSaulnier D) False documents: real property: voiding and restitution. Current Text: Amended: 4/2/2013 Last Amend: 4/2/2013 Status: 4/9/2013-Hearing postponed by committee. (Refers to 4/9/2013 hearing) Location: 4/2/2013-S. PUB. S. Summary: Existing law establishes offenses involving falsifying documents, elder abuse, forgery, grand theft, identity theft, and mortgage fraud, among others. Existing law requires a court to order defendants convicted of any crime to pay restitution to the victim or victims as well as a restitution fine, as specified, unless the court finds compelling and extraordinary reasons for not imposing the restitution fine, as specified. This bill would provide that where a defendant is convicted of any of those offenses, or any other offense, in which an instrument affecting the right, title, or interest in real property was forged or false, and where the instrument was filed, registered, or recorded, as specified, the prosecuting attorney or the judge may make a motion for a noticed hearing to adjudge the instrument void, and to order restitution for an affected person. The bill would authorize a person who claims an interest in the affected property to file a claim, as specified, in connection with the motion. The bill would also authorize a person who claims an interest in the property to, in the alternative, file a quiet title action for the affected property. The bill would authorize the court, in its discretion, to stay a decision on the motion until resolution of the quiet title action.

18 We will now take questions for the presenter. If you would like to ask a question, please press the * key followed by the 1 key (*1) on your touch-tone phone now. Questions will be taken in the order in which they are received. If at any time you would like to remove yourself from the questioning queue, press *2.

19 Thank you for joining us today.. Please mark your calendar for our next call which will be held as follows: May 23, 2013 Time: 11:00 a.m. Pacific Topic: Establishing an Effective CMS (Compliance Management System) Presented by: Barb Bechtold, Compliance Manager The Compliance Group