The Department of Housing and Urban Development has announced discrimination settlements with two mortgage lenders accused of denying FHA mortgage loans to expectant mothers. Two women filed separate complaints against Magna Bank in Nashville, TN, and Home Loan Center in Irvine, CA, alleging a violation of the Fair Housing Act. According to the complaints, the women’s loan applications were rejected because they were pregnant and temporarily on leave. The settlement agreement with Magna Bank requires the bank to pay the complainant $14,085 for allegedly ...

Congressional supporters of creating a legislative framework for a covered bonds market in the U.S. fell short in an attempt to get covered bond provisions attached to the Jumpstart Our Business Startups (JOBS) Act approved by Congress before lawmakers broke for spring break. The JOBS Act was signed by President Obama last week and contains provisions to help companies go public, raise capital privately and remain private longer, as well as making a number of significant changes to the Securities Act of 1933 and the Securities Exchange Act of 1934. But it does not contain any of the provisions...

Credit rating agencies (CRAs) should return to their market roots and stop being a regulatory tool for public policy, according to a Moody’s Investors Services top executive. In recent remarks to the American European Community Association, Ray McDaniel, chief executive officer of Moody’s Corp., noted that credit ratings have grown from limited use by banks in the 1920s to something that regulators and politicians have relied upon to serve public-policy objectives for the past several decades. McDaniel said such reliance has got to stop. He said regulatory policies should be geared towards reducing any...

The Home Affordable Refinance Program for underwater Fannie Mae and Freddie Mac mortgages has accelerated sharply in the first quarter of 2012, according to a new analysis and ranking by Inside Mortgage Finance. Based on loan-level data on mortgage-backed securities issued by the two government-sponsored enterprises during the first quarter, HARP activity surged to a record 180,572 loans in the first three months of the year. That was up 93.8 percent from the fourth quarter of 2011, and it featured a huge 56.3 percent jump in activity from February to March. Total HARP activity...(Includes one data chart)

The Federal Housing Finance Agency has concluded that accepting incentive payments from the U.S. Treasury for writing down loan balances on certain Fannie Mae and Freddie Mac mortgages could end up saving taxpayers money, but the agency is not ready to make the controversial change in policy for the two government-sponsored enterprises. What’s holding the FHFA back is the unresolved concern that forgiving principal on GSE loans will encourage unknown numbers of underwater Fannie and Freddie borrowers to deliberately stop making payments or claim hardships so they can get their debt reduced. A...

The mortgage banking industry got some advance notice this week on the direction the Consumer Financial Protection Bureau plans on taking when it issues a mortgage servicing proposed rule later this summer. The CFPB said it wants to design mortgage servicing rules to keep mortgage borrowers from getting stuck with costly surprises because of a lack of transparency or getting the runaround from their mortgage servicer because of a lack of accountability. “In recent years, many borrowers have complained that they did not receive the information they needed to help avoid foreclosure,” CFPB Director Richard...

A conflict-of-interest provision in the $25 billion robo-signing settlement approved by the court last week could make it harder for independent settlement monitor Joseph Smith to organize an oversight monitoring team within the agreement’s timeline. Smith, North Carolina’s former commissioner of banks, may have to issue or seek clarifying guidelines that would allow him to recruit attorneys and other professionals for his monitoring team and begin a phased implementation of the settlement’s servicing standards and mandatory relief requirements, according to an industry attorney. Last week...

Federally regulated banking institutions may now hang the “for rent” sign on houses in their portfolio of residential “other real estate owned” properties as an alternative to selling difficult to move OREOs, according to new guidance released by the Federal Reserve. Last week, the Fed issued a policy statement reiterating that federal statutes and its own regulations permit the rental of residential properties acquired in foreclosure as part of an orderly disposition strategy. “The general policy of the Federal Reserve is that banking organizations should make good faith efforts to dispose of...

Fannie Mae and Freddie Mac have generally made exceptions to their own rule regarding title impediments for properties with oil, gas, water or mineral rights, though new environmental disputes over hydraulic fracturing may change that, with “confounding implications for a particular region’s lenders,” said rating service DBRS. While contracts that allow for parties other than the property owner to utilize the land often complicate matters, the profitability of leases for resources like natural gas make those properties more attractive, because “the lease would generate income the borrower could apply...

Although Bank of America famously shut down its huge correspondent program last year, joining a trend already under way, only two thirds of home mortgages originated in 2011 were manufactured through “direct” channels by retail programs and mortgage brokers. Wells Fargo topped the ranking of direct mortgage originators with $209.8 billion in volume in 2011. That represented 15.5 percent of the industry’s total mortgage originations, significantly lower than the company’s 26.8 percent market share when correspondent production is included. Bank of America’s direct originations...(Includes two data charts)