The U.S. Court of Appeals for the Sixth Circuit recently took on Molosky v. Washington Mutual Inc., which addressed the preemption of certain state law claims under the federal Home Owners Loan Act. The plaintiffs in this case alleged that certain fees charged by their loan servicer in connection with the prepayment of their mortgage violated both the Michigan Usury Act and their mortgage contract.The lower court had previously rejected the suit on the basis of HOLA preemption, prompting the borrowers to appeal. The Sixth Circuit basically split the difference. On the one hand, the ...

In Marr v. Bank of America, N.A., the U.S. Court of Appeals for the Seventh Circuit has affirmed that borrower testimony alone can overcome the Truth in Lending Act’s “rebuttable presumption” that a borrower has received two notices of his right to rescind a refinance transaction, despite a written acknowledgement by the borrower to the contrary. In this case, the borrower argued that he wasn’t given two right-to-rescind notices as required under TILA, even though he had signed a document indicating he had. He said he had filed away and left undisturbed the documents he received when ...

California. In Balderas v. Countrywide Bank, N.A., the U.S. Court of Appeals for the Ninth Circuit recently ruled that the Truth In Lending Act’s delivery obligation requires borrowers be permitted to keep written copies of the right-to-rescind notice. The court noted that to “deliver” the notice as per TILA requires a “permanent physical transfer from one party to another,” as opposed to momentary delivery. Illinois. Earlier this month, the Department of Financial and Professional Regulations published amendments to the state’s mortgage originator licensing requirements. One change ...

Consumer Financial Protection Bureau. Comments Wanted on Mortgage-Related Rules. The Consumer Financial Protection Bureau is asking for public comment on currently approved information collections associated with certain recently published interim final rules having to do with mortgage lending. One such rule has to do with the Secure and Fair Enforcement for Mortgage Licensing Act (Regulation G) 12 CFR Part 1007.“The information collection will improve the flow of information to and between regulators; provide accountability and ...

Insurance companies will likely increase their investment in non-agency residential MBS, with market and regulatory influences encouraging movement toward hybrid and floating-rate securities as opposed to fixed-rate bonds, according to some top securities industry analysts. The primary driver on the regulatory level is the anticipated slight rise in capital requirements expected to result from a recent action by the National Association of Insurance Commissioners, the association of state insurance regulators. On Dec. 27, 2011, the NAIC released updated pricing designations that...

Principal reduction to ease negative equity situations may have a lot of positive effects for homeowners, but recent research suggests it may have little impact on worker mobility. A forthcoming working paper by Sam Schulhofer-Wohl, of the Federal Reserve Bank of Minneapolis, contends that research showing underwater borrowers are 33 percent less likely to move to better employment markets is flawed because it ignores key data. In an analysis of Census Bureau housing data, Schulhofer-Wohl reached the opposite conclusion, that underwater borrowers are more likely to move, suggesting that principal...

Well-known jumbo originators contributed most of the collateral for Redwood Trust’s pending $415.73 million non-agency mortgage-backed security, but a handful of smaller lenders also benefitted from Redwood’s jumbo correspondent program. These lenders have little securitization experience but received strong endorsements from rating services and due-diligence firms. Redwood purchased most of the loans to be included in Sequoia Mortgage Trust 2012-1 on a flow basis, according to Kroll Bond Rating Agency. Flagstar Bank led the smaller originators, with $31.84 million of its loans included in the security ...

Analysts are divided regarding the outlook for Ocwen Financial as the special servicer has grown significantly in the past two years. Fitch Ratings and Moody’s Investors Service recently downgraded Ocwen and Saxon Mortgage due to concerns about Ocwen’s growth strategy and financial standing while others have endorsed Ocwen and its practices. Ocwen handled a $106.1 billion portfolio at the end of the third quarter of 2011, including $74.9 billion in subprime mortgages. The total included some of the $38.6 billion in subprime loans the servicer acquired from Litton Loan Servicing. At the beginning of February, the company is set to close acquisitions of the Saxon platform and its $26.6 billion portfolio as well as $15.0 billion in non-prime mortgage servicing rights from ...

Nationstar Mortgage’s servicing portfolio has grown significantly in the past year due to acquisitions from banks, a trend the company’s officials suggest will continue. “There is significant room for market penetration as larger banks dispose of servicing assets,” the nonbank servicer said in a recent presentation to investors. Nationstar is touting its growth prospects even after increasing its servicing portfolio to $102.7 billion at the end of the third quarter of 2011 from $12.7 billion at the end of 2007. The company owns 49.2 percent of the holdings, with the rest being subserviced for others ...

Carrington Holding Company this week announced a partnership with Oaktree Capital Management to purchase up to $450 million in real estate-owned properties and offer them as rentals. The plan is not specific to loans owned by the government-sponsored enterprises, according to Carrington officials. “Whether this inventory comes from the GSEs, banks or directly from the [multiple listing service] isn’t a primary concern at the moment,” said Rick Sharga, an executive vice president at Carrington Mortgage. “We’ll put together the portfolio based on properties that meet the criteria we’ve established to ensure a reasonable return for the investors.” ...