California. Late last month, the state Department of Real Estate warned consumers about illegal loan modification schemes and urged victims to submit formal complaints. The most common ploy is for a scammer to guarantee a loan mod in exchange for a fee paid ahead of time (which is against the law in the state), and then to do little or nothing to obtain the loan mod for the borrower once the fee has been paid. The DRE advised consumers who are looking for a loan mod to never pay an upfront fee for such services, and to be wary of guaranteed success. Indiana. The state Department of Financial Institutions recently expanded the purpose of Title 750, Article 9 of the Indiana Administrative Code to conform the mortgage lending regulation to state and federal laws, rules and regulations, as well as policies and guidance from state and federal authorities. The DFI also revised the IAC to specify that an expunged criminal conviction does not result in an automatic denial or revocation of a mortgage lender or originator’s license. However, the underlying facts of the crime at issue can still be considered.

In Commonwealth Property Advocates LLC v. MERS, the 10th Circuit Court of Appeals in Denver recently ruled that Mortgage Electronic Registration Systems, Inc. must be granted the right to foreclose.The 10th Circuit Court of Appeals unanimously ruled that “by the clear language of the deeds of trust, MERS has the authority to foreclose and sell the property on behalf of both the original lender and the ‘lender’s successors.’”The judges rejected all of the plaintiff’s arguments that MERS lacked the authority under state law to foreclose, noting that the Utah Court of Appeals had previously decided this issue and found that MERS has the ability to foreclose and act as the beneficiary on a Utah deed of trust. The court also noted that the Utah Supreme Court declined to review the Utah Court of Appeals case.

Dozens of mortgage lender groups have jointly submitted amici curiae briefs before the Supreme Court of the United States in Magner v. Gallagher, a case in which the high court will address whether the disparate impact theory of discrimination is applicable under the Fair Housing Act or whether plaintiffs have to prove intentional discrimination instead.The Independent Community Bankers of America, the Consumer Mortgage Coalition and the American Financial Services Association argued jointly that proof of discriminatory intent is required to establish a violation of the act.The American Bankers Association, the Consumer Bankers Association, the Financial Services Roundtable and the Housing Policy Council joined dozens of state banking groups to argue that the text of the law provides no basis for claims of disparate impact, and that lenders are not subject to disparate-impact claims under the FHA.The International Municipal Lawyers Association, the National League of Cities and the League of Minnesota Cities sided with the mortgage lending industry...

The Countrywide Financial legacy continues to sour for Bank of America, which recently was compelled to agree to pay $335 million to settle charges that Countrywide allowed pricing discrimination against African American and Hispanic borrowers, along with unchecked steering to subprime loans, when similarly qualified Caucasian borrowers were given prime loans at lower cost. It’s the largest fair lending settlement to date. This is the first time that the Justice Department has alleged and obtained relief for borrowers who were steered into mortgages because of their race or national origin, government officials said. The settlement – which requires court approval – mandates that Countrywide implement policies and practices to prevent discrimination if it returns to the lending business during the next four years. Countrywide currently operates as a subsidiary of Bank of America but does not originate new loans.

MGIC Investment Corp. pumped $200 million into its ailing mortgage insurance operation, Mortgage Guaranty Insurance Corp., to increase its statutory capital and enable it to continue writing new business. The capital infusion is part of a survival strategy mapped out by the private MI company two years ago, with the concurrence of the Wisconsin Office of the Commissioner of Insurance (OCI), Fannie Mae and Freddie Mac. The strategy included a waiver from the OCI capital requirements as well as approvals by the two government-sponsored enterprises of MGIC’s subsidiary, MGIC Indemnity Corp. (MIC), as an...

The Department of Veterans Affairs has liberalized the requirements for modification of VA-guaranteed loans and has provided servicers with more options to help veterans avoid foreclosure. Final rules published recently in the Federal Register show changes to requirements related to the calculation of interest rates on modified loans as well as foreclosure costs that may be rolled into the modified loan balance. The rules also give mortgage servicers the flexibility to modify VA loans without seeking prior approval from the VA, thus speeding up assistance to veteran borrowers facing...

While Congress debated the payroll tax cut extension, a tax provision allowing homeowners to deduct private mortgage insurance premiums from their annual federal tax bill quietly expired on Dec. 31. Consequently, mortgage loans with private MI that closed on or after Jan. 1, 2012, will no longer be able to use the deduction, unless Congress passes a bill that extends the deduction through next year retroactive to the beginning of 2012. It is a lapse that occurs almost every year, according to MI industry participants. Tax deductibility of MI premiums is part of a huge legislative package...

The Department of Housing and Urban Development has entered into a partnership agreement with the National Community Stabilization Trust to facilitate the implementation of a “first look” program that will give preference to certain purchasers to acquire FHA real estate-owned properties. In a notice published in the Federal Register, HUD announced the issuance of a universal Name and Address Identification Number (NAID) to the NCST to assist eligible buyers in purchasing REO properties under the National Stabilization Program’s “First Look Sales Method.” The NAID requirement for purchasers is...

The FHA has extended for one more year a temporary waiver of a regulation prohibiting property flipping in order to facilitate faster sale of its bulging real estate-owned inventory. The agency hopes that having the waiver in place until Dec. 31 will stimulate the rehabilitation of foreclosed and abandoned homes for another year, including properties being resold within 90 days of acquisition. The waiver is not limited to the resale of foreclosed properties. “Property flipping” occurs when a property acquired at a discounted price is resold for a considerable profit with an...

Congress has approved legislation directing the Department of Housing and Urban Development to raise FHA mortgage insurance premiums by 10 basis points within the next two years. The FHA premium increase provision was a late addition to the contentious payroll tax cut extension bill, corresponding to an intensely debated 10 bps increase in guarantee fees charged by Fannie Mae and Freddie Mac on single-family mortgage-backed securities. H.R. 3765, the Temporary Payroll Tax Cut Continuation Act of 2011, was approved by unanimous consent in the House and was previously cleared by the Senate. It extends...