The Federal Reserve fined Wells Fargo $85 million last week over high-pressure compensation policies in the firm’s finance company that allegedly led to steering of prime borrowers to more lucrative non-prime mortgages. The $85 million fine is the largest ever levied by the Federal Reserve in a consumer enforcement case. Wells has since shut down Wells Fargo Financial, its subprime subsidiary that was the focus of the Fed’s charges. CEO John Stump said in a statement the “alleged actions” were “committed by a relatively small group of team members.” The Fed said Wells Fargo Financial’s incentive compensation and sales quota programs fostered ... [includes one data chart]

Some federally regulated depository institutions are scrambling to meet a July 29 deadline to register with the Nationwide Mortgage Licensing System and Registry to avoid possible sanctions by the Consumer Financial Protection Bureau. Although the covered institutions have begun registering their mortgage loan originators as required by the Secure and Fair Enforcement for Mortgage Licensing Act, there is some confusion about other employees whose mortgage-related responsibilities are not as clear cut as those of MLOs, said compliance experts. Such employees include those who ...

The U.S. Court of Appeals in Washington last week struck down a recent federal rule drafted to implement provisions in the Dodd-Frank Act, claiming that the agency did not properly weigh the economic costs and benefits of the new rule. As regulators across Washington, including the new Consumer Financial Protection Bureau, press to meet their Dodd-Frank mandates, opponents of the controversial law are turning to litigation over the rulemaking process to stymie new regulations. The appellate court action involved a Securities and Exchange Commission rule intended to allow ...

Thanks to low mortgage rates, the government share of the home purchase market rose in June, according to new numbers compiled from the Campbell/Inside Mortgage HousingPulse Tracking Survey. But the latest survey also highlighted several factors that are likely to put downward pressure on home prices in the balance of this year. Mortgage rates have been falling for the past several months, dipping to below 4.5 percent in June for 30-year fixed-rate mortgages financed through Fannie Mae, Freddie Mac and FHA, Inside Mortgage Finance’s weekly sampling of rates reveals. This has helped ... [contains one graph]

Mortgage industry officials are pressing the Consumer Financial Protection Bureau to create a true legal safe harbor as it takes over a rulemaking project to implement ability-to-pay requirements enacted as part of the Dodd-Frank Act. Although the Federal Reserve drafted the proposed ability-to-pay rule, it did not take a firm stand on defining the legal protection lenders will get from originating “qualified mortgages.” Late last week, the project – which implements amendments to the Truth in Lending Act – was passed on to the CFPB. The Fed proposed rule contains ...

Residential mortgage lending fell sharply in the second quarter, sinking to levels not seen since the depth of the financial market meltdown in late 2008. Lenders originated an estimated $265.0 billion in 1-4 family mortgages during the second quarter, down 18.5 percent from the first three months of the year. Production barely topped the $260.0 billion in mortgage originations posted in the fourth quarter of 2008, which was the lowest quarterly out-put since early 2000. Third-quarter production appears to be ... [includes two data charts]

Closing and origination costs on a sample $200,000 purchase mortgage rose by almost 9 percent in 2011 nationwide, according to a survey by Bankrate, an online aggregator of financial rate information. In its annual closing cost survey, the group found that nationwide closing costs averaged $4,070, up from $3,741 last year. New York’s closing costs were highest at $6,183, followed by Texas at $4,944 and Utah at $4,906 on the same size mortgage. Arkansas had the lowest closing costs with $3,378, followed by ...

More borrowers who have remained current on their mortgage are choosing strategic defaults, raising fears of a renewed increase of underwater borrowers with higher origination balances walking away from their mortgage obligations, according to a recent report by Moody’s Investors Service. Moody’s analysts found that between 12 to 24 percent of performing mortgage loans, depending on the asset type, have loan-to-value ratios that are higher than those of defaulted mortgages. They also have risen more steeply compared to other ...

Purchase-mortgage lending has been in a slump since the housing market crashed three years ago, but a downturn in refinance activity is pushing lenders across the country to push financing for homebuyers with special deals and incentives. Last week, Fifth Third Mortgage Company, a subsidiary of Fifth Third Bank and the 13th largest mortgage originator according to Inside Mortgage Finance, announced reduced interest rates for purchase-money borrowers. During the first quarter, only 22 percent of the company’s production came from purchase mortgages, below ...

Illinois Governor Pat Quinn (D) announced late last week the creation of a special fund that will use the state’s allocation of federal Hardest Hit Fund dollars to purchase distressed loans in the Chicago area and permanently modify them to affordable levels. The Mortgage Resolution Fund will extract $100 million of Illinois’ $445.7 million of HHF resources for the cause. The MRF will buy delinquent loans from lenders and capital markets trading desks at net present value, and each qualifying debt will be “brought into alignment with current values.” Chicago has suffered a ...