Thanks to the ongoing domination of the MBS market by Fannie Mae, Freddie Mac and Ginnie Mae, securitization continued to fund the overwhelming majority of home loans originated during the first three months of 2012. A new Inside MBS & ABS analysis revealed that the volume of securitized newly-originated residential mortgages equaled a whopping 97.0 percent of home loans originated during the first quarter of this year. That came close to the record 99.7 percent securitization rate set back in the first quarter of last year. The delay between primary market origination...(Includes one data chart)

The Supreme Court of the United States last week sided with Quicken Loans while unanimously rejecting the legal arguments of two federal agencies in affirming a lower court’s determination that a plaintiff must prove a settlement fee was split by two or more persons in order to successfully stake a claim under the Real Estate Settlement Procedures Act. The relevant portion of RESPA at issue in Freeman et al. v. Quicken Loans Inc. is the provision that “[n]o person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the rendering of a...

The Consumer Financial Protection Bureau has proposed procedures it plans to use in exercising its supervisory and enforcement authority over how nonbank consumer financial service companies (like mortgage lenders and mortgage servicers) control their third-party vendors, such as subservicers, foreclosure trustees and law firms, and force-placed insurers. It’s all about controlling the potential risk to consumers. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has authority to supervise any nonbank that it has “reasonable cause” to determine is posing a risk...

In Hogan v. Washington Mutual Bank, N.A. et al, the Arizona high court has dismissed the ‘show me the note’ claim in foreclosure litigation, throwing out a legal argument often used to block an impending foreclosure. “We granted review to decide whether a trustee may foreclose on a deed of trust without the beneficiary first having to show ownership of the note that the deed secures,” explained Arizona Supreme Court Chief Justice Rebecca White Berch. “We hold that Arizona’s non-judicial foreclosure statutes do not require the beneficiary to prove its authority or...

Last week, the Federal Reserve Board put out action plans for Citigroup and HSBC Finance Corp. to correct deficiencies in their residential mortgage loan servicing and foreclosure processing. These enforcement actions require the mortgage servicing subsidiaries to provide appropriate remediation to borrowers who suffered financial injury as a result of errors by the servicers. The Fed also released the engagement letter between Ally Financial Inc. and its independent consultant to review foreclosures that were in the firm’s pipeline in 2009 and 2010...

The U.S. Court of Appeals for the 11th Circuit recently reversed and remanded a lower court’s rejection of a Fair Debt Collections Practices Act claim, determining in Reese v. Ellis, Painter, Rattertree & Adams, LLP that the contents of a “dunning” notice from the lender’s foreclosing law firm amount to an effort to collect a debt under the act. In this case, the borrowers, Izell and Raven Reese of Roswell, GA, purchased a piece of property in 2004 with the help of a $650,000 loan from Provident Funding Associates, LP. To get that loan, the Reeses signed a promissory note and...

With his home state of Nevada leading the nation in foreclosures, Republican Sen. Dean Heller has introduced legislation that seeks to simplify and speed up the short-sale process via an amendment to the Truth in Lending Act. Heller has recently introduced SB 3177, the Stopping Ongoing Lender Delays Act (or SOLD Act). His legislation would require each servicer of a home mortgage to respond in writing within 30 calendar days to a mortgagor of a residential mortgage loan who has requested in writing a short sale of the dwelling or residential real property that is subject to the mortgage...

Improved subprime performance and a lack of new originations have prompted major nonbank firms involved in subprime servicing to expand their portfolios with acquisitions of nonperforming agency mortgages. Ocwen Financial, Nationstar Mortgage and Walter Investment Management, among others, have all recently acquired large volumes of nonperforming agency mortgages. An estimated $525.0 billion in subprime mortgages were outstanding as of the end of the first quarter of 2012, according to an Inside Nonconforming Markets analysis ... [Includes one data chart]

Residential Capital’s bankruptcy filing last week was part of an effort to settle repurchase claims sought by non-agency mortgage-backed security investors. In conjunction with the bankruptcy, 17 institutional investors agreed to an $8.7 billion claim that will need approval by the court and is unsecured, suggesting that the final settlement payout could be much lower. ResCap is a subsidiary of Ally Financial. Michael Carpenter, CEO of Ally, said the bankruptcy gives Ally further distance from “very large” rep and warrant claims ...

While non-agency mortgage-backed security investors did not file a formal challenge to the $25.0 billion servicing settlement, they remain concerned with the implementation of principal forgiveness loan modifications. The latest qualms were raised last week in a letter to Shaun Donovan, secretary of the Department of Housing and Urban Development, from Sens. Sherrod Brown, D-OH, and Bob Corker, R-TN. “Because any settlement could dramatically affect [pension funds and retirement funds], their managers should ...