The FHA Mutual Mortgage Insurance Fund appears poised for another potential settlement infusion following this week’s announcement of a federal lawsuit against Wells Fargo Bank for alleged reckless underwriting and fraudulent loan certifications on thousands of FHA-insured loans that ultimately defaulted. Filed by the U.S. Attorney’s Office in Manhattan, the lawsuit accuses Wells Fargo of engaging in “a long standing and reckless trifecta of deficient training, deficient underwriting and deficient disclosure, while relying on the convenient backstop of government insurance.” Ten years of Wells Fargo’s alleged misconduct ...

The Department of Housing and Urban Development’s Office of the Inspector General is seeking indemnification from a sponsored third-party originator (TPO) for potential losses of more than $1.5 million due to poor loan documentation. The IG also ordered the TPO, Bankers Mortgage Group of Woodland Hills, CA, to reimburse the FHA insurance fund $58,704 for the actual loss on one FHA-insured mortgage loan. The IG also recommended that HUD impose fines on Bankers Mortgage for allegedly signing off on false loan information. IG auditors targeted BMG after internal investigators found significant ...

Endorsements of new loans under the Home Equity Conversion Mortgage program continued to slide as production fell significantly during first half of 2012. HECM production declined by 25.0 percent from the same period last year to $7.1 billion and fell 4.9 percent from the first to the second quarter. In-house originations accounted for almost all originations reported by top HECM lenders. Initial principal amount at loan origination totaled $4.7 billion. MetLife Bank led all lenders with $2.03 billion, an estimated 63 percent originated in house, and captured a 28.5 percent market share. Production rose 21.6 percent ... [One chart]

A California operator of an allegedly bogus foreclosure rescue firm has agreed to a $5 million settlement with the Department of Justice and the Department of Housing and Urban Development. Based on an investigation by HUD’s Office of the Inspector General, the DOJ filed a civil complaint against Terrill Meisinger, focusing on more than 100 properties that were financed through FHA and conventional loans. The complaint alleged that Meisinger contacted individuals facing foreclosure and offered ...

Portfolio lenders held to a cautious strategy for home-equity lending during the first half of 2012, with most companies not doing enough new business to offset runoff in their retained holdings, according to a new Inside Mortgage Finance ranking and analysis. But several large lenders reported significant increases in HEL originations during the second quarter, and some institutions managed to originate enough new business to increase their retained portfolios. The credit union sector continued to show more enthusiasm for the business than commercial banks and savings institutions. As of the end of June, banks, thrifts and credit unions held...[Includes three data charts]

Mortgage bankers are concerned about possible limits on the volume of loans they can sell to Fannie Mae and Freddie Mac, and particularly the lack of information about the development of the new rules by the government-sponsored enterprises and their regulator. Fannie and Freddie are concerned about the ability of some approved seller-servicers to honor repurchase requests and are weighing new volume limits based on a seller’s capital. The Mortgage Bankers Association wants the Federal Housing Finance Agency to bring the issue out into the daylight. “Given the important nature of this issue, the MBA believes that the FHFA should...

The Federal Housing Finance Agency says its proposed new securitization platform could be used now by Fannie Mae and Freddie Mac, as well as by private issuers, but it’s also intended to serve a post government-sponsored enterprise marketplace. Last week, the FHFA issued a call for public comment on a white paper outlining its proposed common securitization platform and a model pooling and servicing agreement. Those plans are also included in the agency’s updated strategic plan issued this week. The 31-page strategic plan – which updates a draft issued by the FHFA in February – sets...

Fannie Mae and Freddie Mac issued separate guidance to their mortgage servicers last week designed to continue the conservator-mandated effort to complement the servicing policies of the two government-sponsored enterprises and to develop a consistent framework for assessing servicer performance. The updated servicing policies seek to harmonize compensatory fee structures, servicer violations and remedies, and servicer terminations and transfer of servicing between Fannie and Freddie. Fannie’s and Freddie’s announcements also include...

The “zero-zero” requirement in the loan originator compensation proposed rule pending at the Consumer Financial Protection Bureau could inadvertently steer borrowers into more expensive mortgage loans, according to a top industry official. “There is absolutely no doubt that forcing a zero-zero option is going to result in higher-priced loans,” said David Stevens, president and CEO of the Mortgage Bankers Association, during an Inside Mortgage Finance webinar this week. “Premium [loans] don’t get the same kind of multiple as a current coupon. So as the yield curve shifts and we see rates move, we’re going to see action that is going to make these numbers move around a lot.” To give a more extreme example, “if we have an interest-rate rally, you can drop...

Rules proposed by the Consumer Financial Protection Bureau in August to revamp servicing practices prompted widely varied reactions from servicers, individual consumers and community banks. Servicers largely sought to keep current servicing rules unchanged while borrowers asked for greater protections and community banks requested an exemption from the proposal. The CFPB said the proposed rules are aimed at ending “surprises and runarounds” for borrowers. The proposed rules incorporated a number of provisions included in the national servicing settlement and consent orders between servicers and federal regulators. Some of those provisions were required by the Dodd-Frank Act. Servicers largely suggested that the CFPB should not implement servicing rules beyond those specifically required by the DFA. However, the Consumer Mortgage Coalition, whose members include the servicers complying with the settlement and consent orders, called...