The U.S. Attorney General’s recently released 2011 annual report to Congress on the Equal Credit Opportunity Act Amendments of 1976 provides some useful insight as to what prompts it to litigate referrals from other agencies, as opposed to bumping them back for administrative resolution. Referrals that are most likely to be returned generally share a few characteristics, such as whether the practice at issue had ceased and there is little chance that it will be repeated. Another characteristic is whether the violation may have been accidental or stemmed from ignorance of the...
The Federal Reserve Board recently brought a consent order against Morgan Stanley to deal with what it characterized as a pattern of misconduct and negligence in residential mortgage servicing and foreclosure processing at the Wall Street firm’s Saxon Mortgage Services subsidiary, once the 34th largest mortgage servicer in the United States. “As noted in the announcements relating to the 2011 enforcement actions, the Federal Reserve believes monetary sanctions are appropriate and plans to announce monetary penalties in these cases,” the Fed said. The monetary penalties...
The Securities and Exchange Commission has charged two officials of Houston-based bank holding company Franklin Bank Corp., with setting up increasingly aggressive loan modification programs during the last six months of 2007 to hide from investors the true amount of the bank’s nonperforming assets and to artificially inflate Franklin’s net income and earnings. According to the SEC, CEO Anthony Nocella and CFO Russell McCann instituted three loan modification schemes that caused Franklin to account for its significantly increasing portfolio of delinquent...
An unusual coalition of dozens of lender, realtor, consumer and civil rights groups late last week urged the Consumer Financial Protection Bureau to write a broadly defined “qualified mortgage” as part of the ability-to-repay final rule it’s putting together as per the Dodd-Frank Wall Street Reform and Consumer Protection Act. The CFPB is expected to issue a proposed rule defining a QM shortly. As per the ability-to-repay standards of Dodd-Frank Section 1412, a qualified mortgage cannot have points and fees in excess of 3 percent of the loan amount. The groups are worried...
Four mortgage- and financial services-related trade groups told the Consumer Financial Protection Bureau they’re unhappy the CFPB hasn’t adopted more of the suggestions they’ve made over the numerous iterations the bureau has put out of its Know Before You Owe consolidated consumer disclosure project. The CFPB is currently on the ninth version of its evolving disclosures model. “During the Know Before You Owe iterations, we have submitted a large number of comment letters that walk the CFPB through a large number of very technical, but important details,” the groups said...
U.S. District Court for the District of Columbia. Mortgage Servicing Settlement Approved. Earlier this month, the U.S. District Court for the District of Columbia gave its approval to the consent orders that make up the $25 billion mortgage servicing settlement by federal regulators and 49 state attorneys general into alleged mortgage-related violations by the nationfs five largest mortgage servicers. The federal agencies that signed on to the settlement are the Department of Justice, the Department of Housing and Urban Development, the Department of Treasury...
Bank and thrift holdings of home-equity loans continue to decline, particularly holdings of closed-end second liens. Even though performance on the loans currently remains strong, industry analysts warn that these assets could cause major losses. Banks and thrifts held $1.18 trillion in home-equity lines of credit, unused HELOC commitments and closed-end seconds at the end of 2011, according to the Inside Mortgage Finance Bank Mortgage Database. That was down 1.5 percent from the third quarter of 2011 and down 8.8 percent from the end of 2010 ... [Includes one data chart]
The Consumer Financial Protection Bureau this week detailed servicing rules it will soon propose regarding disclosures to borrowers and servicing procedures. “The mortgage servicing rules we are considering reflect two basic, common sense standards – no surprises and no runarounds,” CFPB Director Richard Cordray said. “They would apply to all mortgage servicers regardless of how they are organized, including banks, thrifts, credit unions and nonbank servicers.” The rule, which will amend the Truth in Lending Act and Real Estate Settlement Procedures Act, is required by the Dodd-Frank Act. The CFPB said it will publish a proposal ...
Ocwen Financial last week completed its acquisition of mortgage servicing rights from Morgan Stanley’s Saxon Mortgage Services. Ocwen won some concessions from the seller since the sale was announced in October, though the servicer also faces criticism regarding its expanding portfolio. Ocwen acquired MSRs with an unpaid principal balance of $22.2 billion, largely comprised of non-agency mortgages. Ocwen had been subservicing $9.9 billion of the MSRs. Ocwen also acquired $2.7 billion in subservicing agreements from Saxon. The base purchase price for the Saxon transaction was ...
First Republic Bank – the primary source of loans for Redwood Trust non-agency mortgage-backed securities – has received high marks for its jumbo originations. FRB’s originations are concentrated around San Francisco, largely for wealthy borrowers. After relying on CitiMortgage for all of the loans in its first post-bust non-agency MBS issuance, Redwood has relied heavily on FRB. The lender accounted for a slight majority of the four securities totaling $1.41 billion Redwood has issued in 2011 and at the beginning of 2012 ...
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