Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 369 8 Mortgage Origination + Servicing During 2016, Goodwin tracked 48 mortgage-related enforcement actions, down from 68 such actions in 2015. Much of this decline is attributable to the CFPB, which was significantly less active in the enforcement sphere in 2016 when compared to 2015 (three actions versus 16 actions). Nonetheless, the CFPB remained a key player by finalizing new mortgage servicing rules and by proposing updates to its TILA-RESPA Integrated Disclosure (TRID) “Know Before You Owe” rule. The DOJ and HUD initiated over half of all mortgage-related actions during 2016, while state attorneys general initiated just under a fourth of all actions. These actions included a continuation from 2016 of claims of fraudulent underwriting involving Federal Housing Administration (FHA)-insured mortgage loans, discriminatory lending, mortgage modification and foreclosure relief schemes, and deceptive advertising. Federal and state agencies enforced a variety of statutes through these actions, including the Fair Housing Act, the False Claims Act (FCA), the Consumer Financial Protection Act (CFPA), the Real Estate Settlement Practices Act (RESPA), and a host of state consumer protection statutes. Civil money penalties and consumer relief in these actions ranged from $25,000 to $1.2 billion. State AG or Agency 71 DOJ/USAO 34 CFPB 50 FTC 25 HUD 22 6 - Action Trends Quarter of Press Release 0 10 20 30 40 50 2016 Q4 2016 Q3 2016 Q2 2016 Q1 OCC 8 FDIC 3 Federal Reserve 3 US Postal Inspection 2 IRS 1 SIGTARP 1 Dept of Ed 1 FBI 1 State Federal State & Federal 15 14 12 13 37 29 19 32 3 4 1 Looking Ahead to 2017 Predicting what the legal environment will look like for the consumer financial services industry in 2017 is chal- lenging because of the change in administration and accompanying enforcement and regulatory priorities, but that change is sure to be significant for the industry. Statements made by President Trump, as well as the proposed appointment of Steven Mnuchin (a former Goldman Sachs partner and investor in One West Financial) as Treasury Secretary indicate that the new administration intends to take a more busi- ness-friendly approach to banking regulation. We are also watching developments on the proposed Financial CHOICE Act; such a law could roll back many aspects of Dodd-Frank and offer certain procedural protections for financial institutions faced with regulatory burdens on enforcement actions. Additionally, a new Supreme Court justice should be appointed this year, though that appointment may not alter the Court’s balance and approach to cases affecting the financial industry as he or she will likely be a conservative justice as was the late Justice Scalia. Another factor affecting the outlook for 2017 is how the PHH v. CFPB case develops. While the appeal of that case is ongoing, speculation abounds regarding how much longer Director Cordray will remain head of the CFPB, and who may replace him. Finally, in light of the change in administration, we expect federal regulators to take a less aggressive regulatory and enforcement stance than they have in the last several years. We expect that, in direct response to decreased federal activity, state attorneys general and other state regula- tory bodies will assume a larger enforcement role over the coming year. The number of state enforcement actions has steadily risen over the last few years, and state offices like the New York Department of Financial Services and the Massachusetts Attorney General have already made clear that they intend to keep up the regulatory pressure on financial institutions notwith- standing the new presidential administration’s priorities. 2016 trends in federal & state actions key Trends The DOJ continued pursuing False Claims Act claims against national banks and regional mortgage lenders, alleging that they recklessly or knowingly violated gov- ernment guidelines when underwriting loans insured by the FHA. While some of these FCA investigations and cases remain ongoing, the DOJ secured 13 sep- arate FCA settlements in 2016 related to FHA lending in 2016, including a landmark $1.2 billion settlement reached in April with a national bank and one of its executives. The DOJ also became slightly more aggressive this year in policing fair lending, securing settlements with four lenders to resolve Fair Housing Act discriminatory lending claims involving lenders’ discretionary pricing policies. In contrast, Goodwin only tracked three such actions involving the DOJ during 2015.