The Supreme Court of the United States has delayed a decision to review a case that rests on the disparate impact theory of discrimination in housing and mortgage lending. The case, Township of Mount Holly, NJ, et al., Petitioners v. Mt. Holly Gardens Citizens in Action, Inc., et al., was listed on the court’s conference schedule at the end of last week, but the justices took no action. Mount Holly is now scheduled to be considered at the court’s next conference on Oct. 26. If certiorari is granted...

The mortgage lending industry is now grappling with a number of potential compliance challenges with the loan originator compensation rule as currently proposed by the CFPB, with the treatment of proxies and the “zero-zero” alternative mortgage near the top of the short list. An earlier Federal Reserve rulemaking prohibited compensation based on the terms of a loan or proxies for loan terms. “The problem there is the existing rule does not define what exactly that is,” said Richard Andreano, practice group leader of the mortgage banking group at Ballard Spahr, during an...

The Federal Trade Commission has called on the bureau to do more consumer testing before it comes out with a finalized version of its streamlined, consolidated Truth in Lending Act and Real Estate Settlement Procedures Act consumer mortgage disclosure rulemaking. The FTC’s Bureau of Consumer Protection, Bureau of Economics and Office of Policy Planning submitted a comment letter to the CFPB stating that the proposed disclosures “will likely improve the information that consumers receive under current federal regulations” because they “are generally simpler and less...

Bank and thrift holdings of home-equity loans continue to decline, according to the Inside Mortgage Finance Bank Mortgage Database, with lenders hesitant to pursue new originations. The low interest rate environment for first liens has not particularly extended to HELs, with interest rates above 5.00 percent often offered to borrowers looking into a home-equity loan. Banks and thrifts held $1.14 trillion in home-equity lines-of-credit, HELOC commitments and closed-end second liens ... [Includes one data chart]

The Federal Deposit Insurance Corp. will implement a new definition for subprime mortgages beginning April 1, 2013. The definition will apply to banks with assets of $10 billion or more as part of the FDIC’s Large Bank Pricing model, which determines deposit insurance rates. The reporting deadline was revealed this week as the FDIC published a final rule to determine Deposit Insurance Fund assessment rates for large and highly complex insured depository institutions. The rule was prompted after ...

Despite problems associated with the program, the FHA 203(k) Rehabilitation Mortgage Program has seen some modest production gains during the last few quarters, according to an Inside FHA Lending analysis of FHA data. Top FHA 203(k) lenders reported $1.8 billion in total originations during the first six months of 2012, with the top five lenders accounting for 46.9 percent of production. Production rose 8.1 percent from the first quarter to the second, from $851.2 million to $920.5 million. Purchase fixer-uppers comprised ... [Includes 1 chart]

The FHA is starting to lose business to private mortgage insurers and the conventional mortgage market because it is no longer the cheaper alternative, a recent industry survey indicated. Numbers released by the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey show consumer preference for conventional home loans rising as a growing number of homebuyers, particularly current homeowners, used mortgages backed by Fannie Mae and Freddie Mac to finance home purchases in August. The survey noted that current homeowners increased their use of mortgages in June this year while investor participation began ...

The FHA Mutual Mortgage Insurance Fund appears poised for another potential settlement infusion following this week’s announcement of a federal lawsuit against Wells Fargo Bank for alleged reckless underwriting and fraudulent loan certifications on thousands of FHA-insured loans that ultimately defaulted. Filed by the U.S. Attorney’s Office in Manhattan, the lawsuit accuses Wells Fargo of engaging in “a long standing and reckless trifecta of deficient training, deficient underwriting and deficient disclosure, while relying on the convenient backstop of government insurance.” Ten years of Wells Fargo’s alleged misconduct ...

The Department of Housing and Urban Development’s Office of the Inspector General is seeking indemnification from a sponsored third-party originator (TPO) for potential losses of more than $1.5 million due to poor loan documentation. The IG also ordered the TPO, Bankers Mortgage Group of Woodland Hills, CA, to reimburse the FHA insurance fund $58,704 for the actual loss on one FHA-insured mortgage loan. The IG also recommended that HUD impose fines on Bankers Mortgage for allegedly signing off on false loan information. IG auditors targeted BMG after internal investigators found significant ...

Endorsements of new loans under the Home Equity Conversion Mortgage program continued to slide as production fell significantly during first half of 2012. HECM production declined by 25.0 percent from the same period last year to $7.1 billion and fell 4.9 percent from the first to the second quarter. In-house originations accounted for almost all originations reported by top HECM lenders. Initial principal amount at loan origination totaled $4.7 billion. MetLife Bank led all lenders with $2.03 billion, an estimated 63 percent originated in house, and captured a 28.5 percent market share. Production rose 21.6 percent ... [One chart]