The number of major fair lending settlements brought by federal regulators over the last year highlights the increasing importance of mortgage lenders properly evaluating their risk of being out of compliance and responding appropriately and preemptively, according to top banking agency officials. Since November 2011, the Department of Justice has settled seven fair lending cases – against Bank of America, Countrywide Financial, GFI Mortgage Bankers, Luther Burbank Savings, Mortgage Guaranty Insurance Corp., SunTrust Mortgage, and Wells Fargo – mostly related to steering, pricing and underwriting. In the aggregate, these settlements have produced more than $550 million in monetary relief in compensation for more than 250,000 victims, according to Jon Seward, head of housing and civil enforcement for the Justice Department. “All seven cases resulted from referrals” as the regulators are...

The Supreme Court of the United States has delayed a decision to review a case that rests on the disparate impact theory of discrimination in housing and mortgage lending. The case, Township of Mount Holly, NJ, et al., Petitioners v. Mt. Holly Gardens Citizens in Action, Inc., et al., was listed on the court’s conference schedule at the end of last week, but the justices took no action. Mount Holly is now scheduled to be considered at the court’s next conference on Oct. 26. If certiorari is granted...

Consumer complaints about mortgages and credit cards accounted for more than 70 percent of the roughly 79,200 complaints made to the CFPB from July 21, 2011, through Sept. 30, 2012, according to the latest data from the bureau. Mortgage-related complaints again led the way, with approximately 36,300 submitted during the period reviewed. Credit card complaints were next, with roughly 23,400, followed by 12,900 for bank accounts and services, and 2,900 for private student loans. The most common type of mortgage complaint is about problems consumers have when they can’t pay their...

Numerous industry representatives are calling upon the CFPB to significantly scale back its ambitious mortgage servicing rulemaking proposal ¨C with at least one trade group urging the bureau to withdraw it entirely. The proposed rules amend Regulation Z (which implements the Truth in Lending Act) and Regulation X (which implements the Real Estate Settlement Procedures Act). The CFPB¡¯s rules aim to bring greater transparency to the mortgage servicing market with: clear monthly mortgage statements, a warning before interest rate adjustments, options for avoiding costly...

The mortgage lending industry is now grappling with a number of potential compliance challenges with the loan originator compensation rule as currently proposed by the CFPB, with the treatment of proxies and the “zero-zero” alternative mortgage near the top of the short list. An earlier Federal Reserve rulemaking prohibited compensation based on the terms of a loan or proxies for loan terms. “The problem there is the existing rule does not define what exactly that is,” said Richard Andreano, practice group leader of the mortgage banking group at Ballard Spahr, during an...

The Federal Trade Commission has called on the bureau to do more consumer testing before it comes out with a finalized version of its streamlined, consolidated Truth in Lending Act and Real Estate Settlement Procedures Act consumer mortgage disclosure rulemaking. The FTC’s Bureau of Consumer Protection, Bureau of Economics and Office of Policy Planning submitted a comment letter to the CFPB stating that the proposed disclosures “will likely improve the information that consumers receive under current federal regulations” because they “are generally simpler and less...

Opponents of the Dodd-Frank Wall Street Reform and Consumer Protection Act that created the CFPB are finding some initial success in chipping away at various provisions of the law through legal challenges. So far, authorities of the bureau itself have escaped the crosshairs of such legal challenges. However, the legitimacy of President Barack Obama’s appointment of Richard Cordray as director of the CFPB has been challenged in a round-about manner. So far, federal regulators have twice lost in court in their efforts to defend some of the rules they put in place...

Unanticipated complications with the Dodd-Frank Act appear to have caused Fannie Mae and Freddie Mac to miss a Sept. 30 deadline set by the Federal Housing Finance Agency to initiate risk-sharing transactions with non-agency investors. However, FHFA officials said they continue to work with the government-sponsored enterprises on the issue. “Risk sharing is a complex process that requires time to assess market opportunities, structural considerations, make operational changes, and develop proper risk metrics and controls,” an FHFA spokesman said. “We are moving forward steadily and expect to continue making progress in the coming months.” FHFA officials would not comment...

New issuance of single-family MBS by Fannie Mae, Freddie Mac and Ginnie Mae jumped by 16.9 percent from the second quarter of 2012 to the third quarter, according to a new market analysis and ranking by Inside MBS & ABS. The three agencies issued a total of $436.0 billion of single-family MBS during the third quarter, raising year-to-date issuance to $1.194 trillion. That was up 45.6 percent from the first nine months of 2011. Over half (50.3 percent) of the agency production in 2012 has come...[Includes one data chart]

A federal district court in Minnesota rejected a mortgage securitization trustee’s plea to compel a lender to repurchase defective home loans after finding that the loans no longer existed following the foreclosure and sale of the mortgaged properties. Ruling in MASTR Asset-Backed Securities Trust 2006-HE3 v. WMC Mortgage Corp., U.S. District Court Judge John Tunheim granted the lender’s motion for partial summary judgment after determining that the loans had been extinguished when the trustee foreclosed on the properties and charged off the remaining principal balances. The dispute boiled down...