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 ...

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 ...

Total FHA forward mortgage originations fell to $190.3 million in 2011, a 32.8 percent decline from 2010 even as mounting FHA delinquencies continue to raise concerns of a costly taxpayer bailout. Five lenders accounted for a fourth of total production with a combined $48.2 billion and an aggregate market share of 25.3 percent, according to Inside FHA Lending’s 2011 ranking and analysis of top FHA lenders. The data do not include FHA reverse mortgages. However, the total output of the top five declined on a quarterly and yearly basis by 15.6 percent and a hefty 39.0 percent, respectively. Those five elite lenders included ... (includes one chart)

Congress should repeal legislation raising the FHA’s maximum loan limit before the agency’s losses skyrocket, triggering a massive taxpayer bailout, warned the American Enterprise Institute. In a new research paper, Peter Wallison and Edward Pinto, resident fellows at the AEI, urged Congress to correct its mistake of restoring the pre-Oct. 1 temporary maximum loan limits of $729,750 for FHA while leaving Fannie Mae and Freddie Mac at the lower “permanent” high-cost loan limit of $625,500 set by Congress in 2008. “Congress should bite the bullet – recognize the losses that are already embedded in the FHA’s insurance fund and adopt reforms to the agency’s accounting and underwriting that will stop the bleeding,” the two public policy analysts said. Last fall, the FHA came under fire from Republicans and conservatives after an independent actuarial review of the agency’s Mutual Mortgage Insurance Fund found ...

The Department of Housing and Urban Development has proposed to eliminate an outmoded appeals process for determining the maximum FHA mortgage loan limits in certain areas. Published in the Jan. 13 Federal Register, the proposed rule specifically would do away with regulations that allow HUD to set the area-based loan limits on a yearly basis and permit appeals of these loan limits. The appeals were once an important source of data for HUD because it allows any party to submit documentation in support of alternative mortgage limits if that party believes the limit set by HUD did not reflect the median house prices in an area. The loan limit appeals process was set ...

FHA-approved mortgage lenders are now required to disclose whether a purchase transaction was sold previously as a real estate owned property, including home equity conversion mortgages. In a general notice to lenders, the Department of Housing and Urban Development said all previous REOs sold in a purchase transaction must show their former REO case number in FHA Connection. The notice applies to HECM loans as well because an assigned HECM loan can become an REO property, explained a HUD spokesman. It became effective on Jan. 14. Meanwhile, HUD also announced ...

Early indicators suggest that mortgage origination volume was up significantly during the fourth quarter of 2011, but momentum heading into the new year was relatively weak. In earnings reports, eight top lenders have reported solid increases in production levels over the previous quarter, and as a group they posted their best three-month volume of the year. Wells Fargo, U.S. Bank and BB&T reported hefty increases in production during the fourth quarter, with Citi, PHH Mortgage and PNC also putting up big numbers. Chase managed a much smaller increase than its peers, while...(Includes two data charts)