Inside the beltway types have resurrected discussions about a possible broad government refinance initiative to more definitively bring financial relief to large swaths of struggling homeowners. But given the possible costs involved and the bitter partisan wrangling and brinkmanship seen over the latest round of debt ceiling negotiations, political observers see the introduction of yet another government mortgage program as improbable. A year ago, a team of analysts at Keefe Bruyette & Woods led by Bose George thought talk of a broad-based government refi program would ultimately go nowhere. They still do.

To promote openness and transparency, the Consumer Financial Protection Bureau has adopted a new policy governing ex parte (one party only) presentations, generally requiring public disclosure of such presentations made to CFPB staff concerning a pending rulemaking. The rule essentially requires anyone who communicates with the CFPB about a pending rulemaking to submit a written copy of the presentation (or a summary of an oral presentation) on the public rulemaking record within three days after the communication to the CFPB. The stated purpose of the rule is to “promote openness and transparency” and to give the public “access to the input that CFPB is receiving.” However, the CFPB’s policy has two significant exceptions that call into question how transparent the CFPB’s rulemaking process will really be, according to Ballard Spahr attorney Christopher Willis.

The Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators jointly provided input to the Consumer Financial Protection Bureau on defining “larger participants” of a market for other consumer financial products or services. Their first main point was that the CFPB ought to pay close attention to state legal definitions of the market, state jurisdictional coverage, and the overall consumer protection priority of the market. Second, the two agencies suggested that, when deciding how to define what entities are “larger,” the criteria and thresholds ought to be flexible, determined on an industry-by-industry basis, and based on aggregated institutional ownership.

Lender Processing Services is disputing robo-signing allegations recently made against it and its DOCX LLC subsidiary in a lawsuit filed by American Home Mortgage Servicing Inc. related to the surrogate signing practice at DOCX. “As LPS has previously disclosed, when it discovered the practice at DOCX, LPS immediately notified AHMSI of its discovery of the practice; immediately discontinued the practice; and voluntarily reviewed and remediated assignments of mortgage executed by DOCX using this practice,” LPS said. Once it completed the remediation in January 2010, LPS returned the remediated documents to the attorneys who had originally requested them on AHMSI’s behalf, the company said.

Lex Consulting’s mortgage fraud examiners’ project is warning foreclosure attorneys to be extra careful to identify contract breaches and/or tortious conduct or face malpractice or at least disgorgement of fees from their own client. “Only exposure of contract breaches and/or tortious conduct underlying a mortgage transaction provides a sound strategic basis for liberating homeowners from the bondage of mortgage foreclosure,” said Storm Bradford, founder of the project. “Homeowners and attorneys need to understand a promissory note/mortgage/deed of trust is nothing more, nothing less than a contract. Moreover, attorneys need to be extra careful,” he added. “According to several ethics

Illinois. The U.S. Attorney’s Office for the Northern District of Illinois announced that a former South Holland, IL, man, Kenneth Steward, was sentenced to 17 years and six months in federal prison for allegedly directing a $35 million mortgage fraud scheme involving more than 120 residences on Chicago’s south side. The scheme caused various lenders and financial institutions to lose approximately $16 million on mortgage loans that were not repaid by the borrowers or fully recovered through subsequent foreclosure sales, federal law enforcement officials said. The sentence that was imposed is one of the longest ever given to a mortgage fraud defendant in federal court in Chicago, according to officials.

Senate Banking Committee. Richard Cordray nomination. The Senate Banking, Housing and Urban Affairs Committee has planned a Sept. 6, 2011, hearing to consider the nomination of Richard Cordray to be director of the Consumer Financial Protection Bureau. Political observers will look for signs from Republican members of the committee, particularly Alabama Sen. Richard Shelby, of any potential easing of opposition to the appointment. Thus far, GOP members of the Senate have uniformly remained adamant to the naming of any director to the CFPB until some significant changes are made to its structure, the most notable of which would be the replacement of a single director with a board leadership structure.

The Arizona Department of Insurance has put PMI Mortgage Insurance Co. and PMI Insurance Co. under the department’s supervision, and required them to cease issuing new mortgage insurance commitments effective as of the close of business Aug. 19, 2011, unless otherwise approved by the director or the supervisor that has been appointed over the firms. Under the order, MIC and PIC may issue mortgage insurance policies under pending commitments through the close of business on Sept. 16, 2011. In addition, PMI Mortgage Insurance Co. must cease making interest payments on the $285 million in aggregate principal amount of surplus notes that it has issued. During the period of supervision, the two companies are prohibited from taking a variety of actions without approval, including lending funds, merging with another company, entering into reinsurance contracts ...

Officials with Bank of America maintain that a proposed $8.5 billion settlement related to non-agency buybacks and servicing is fair, even as opposition continues to mount. BofA also continues to take action to distance itself from “legacy” assets acquired from Countrywide Financial. “Obviously there aren’t many days when I get up and think positively about the Countrywide transaction in 2008,” BofA’s CEO Brian Moynihan said this month in a conference call with investors. “In each quarter, we continue to put risk behind us ...

The amount of subprime mortgages outstanding as of the second quarter of 2011 has declined by nearly 50 percent compared with the market’s peak of $1.0 trillion in the second quarter of 2007, according to an analysis by Inside Nonconforming Markets. However, subprime servicers have reasons to be optimistic, according to industry analysts.Subprime mortgage delinquencies increased in the first and second quarters of 2011 after declining throughout 2010 ... [includes one data chart]