Supporters of a controversial plan to use eminent domain to seize underwater mortgages from non-agency MBS pools, write down their balances, refinance them into the FHA program and repackage them for sale to other investors are facing fresh challenges. In California, where the eminent domain plan was first introduced, the Joint Powers Authority formed by the County of San Bernardino and two of its cities, Ontario and Fontana, announced that its next meeting, which was scheduled for Thursday, Oct. 25, 2012, had been cancelled. The only business before the JPA is...

The Federal Housing Finance Agency’s internal watchdog said Fannie Mae and Freddie Mac could mitigate more losses if they recover mortgage deficiencies from borrowers more efficiently. An FHFA Office of Inspector General report found weaknesses in the ability of the government-sponsored enterprises to collect shortfalls from borrowers from post-foreclosure sales. In 2011, the GSEs recovered only a small fraction of the deficiencies they pursued, an estimated $4.7 million collected out of $2.1 billion pursued, the IG reported. The IG blames this on the FHFA’s lack of guidance and oversight of the GSEs’ deficiency recovery efforts. While the FHFA has an opportunity to provide...

Recent efforts by the government-sponsored enterprises and the Federal Housing Finance Agency to offer clarity and consistency about repurchase demands may or may not bear fruit as neither agency officials nor industry observers can speak confidently as to its ultimate effectiveness. According to participants at an Inside Mortgage Finance webinar this week, the GSE representation and warranty framework unveiled by the FHFA last month and the GSEs’ new quality control guidelines announced last week are steps in the right direction but there are a lot of moving parts to take into account. “We tried the best we could to address...

More than a year after the Federal Housing Finance Agency first announced its proposal to sell investors Fannie Mae foreclosed properties in bulk for rentals and two months into its second sale with less than 800 properties moved, market watchers are expressing skepticism about whether the program will ever advance beyond the pilot stage. Earlier this month, the FHFA announced that New York-based Cogsville Group LLC was the winning bidder of 94 Fannie-owned properties. The firm paid $2.1 million for a share in a joint venture with the GSE resulting in a transactional value to Fannie of $11.8 million or 86.2 percent of the properties’ estimated value.

Fannie Mae’s and Freddie Mac’s home retention activity declined for the most part during the second quarter of 2012, according to a new analysis of Federal Housing Finance Agency data by Inside The GSEs. Total loss mitigation activity – total home retention efforts and foreclosure alternatives combined – declined 11.4 percent during the second quarter of the year to 190,315. Total loss mitigation for the first six months of the year fell 18.6 percent to 405,127 compared to the same six-month period in 2011.

There is vast room for improvement in how Fannie Mae and Freddie Mac manage their deficiency collections following foreclosure but it is the GSEs’ regulator that should provide more “guidance” about how to effectively pursue and collect from strategic defaulters, concluded the Federal Housing Finance Agency’s official watchdog this week.The FHFA Office of Inspector General’s latest audit found that in 2011, Fannie’s and Freddie’s vendors pursued 35,231 deficiency accounts, with a combined value of about $2.1 billion. Of this amount, vendors recouped some $4.7 million, a dismal recovery rate of 0.22 percent.

Fannie Mae and Freddie Mac have released new guidelines designed to bring more of the two GSEs’ servicing requirements into alignment. The updated policies, both issued Oct. 3, focus on aligning contracts and the enforcement of remedies with seller/servicers in compliance with a Federal Housing Finance Agency directive. “The requirements announced in this bulletin build on the success [of previous announcements], and through our work with Fannie Mae, provide servicers with greater clarity, consistency and transparency across the enterprises on how servicer performance will be measured,” explained Freddie in its announcement.

A plethora of new servicing rules from federal and state regulators are set to increase costs for servicers – particularly mid-sized and small servicers that have not faced servicing changes required by disciplinary actions. The latest and perhaps most significant proposal for servicing rules came from the Consumer Financial Protection Bureau in August. “Change imposes significant pressure on servicer costs, resources, and capacity,” David Stevens, president and CEO of Mortgage Bankers Association said last week in a comment letter submitted to the CFPB. “The mortgage industry has been going through chronic, piecemeal regulatory changes for some time, with no end in sight. The costs are becoming prohibitive for many smaller, and even larger, companies.” He warned...

Numerous industry representatives are calling upon the CFPB to significantly scale back its ambitious mortgage servicing rulemaking proposal ¨C with at least one trade group urging the bureau to withdraw it entirely. The proposed rules amend Regulation Z (which implements the Truth in Lending Act) and Regulation X (which implements the Real Estate Settlement Procedures Act). The CFPB¡¯s rules aim to bring greater transparency to the mortgage servicing market with: clear monthly mortgage statements, a warning before interest rate adjustments, options for avoiding costly...

Opponents of the Dodd-Frank Wall Street Reform and Consumer Protection Act that created the CFPB are finding some initial success in chipping away at various provisions of the law through legal challenges. So far, authorities of the bureau itself have escaped the crosshairs of such legal challenges. However, the legitimacy of President Barack Obama’s appointment of Richard Cordray as director of the CFPB has been challenged in a round-about manner. So far, federal regulators have twice lost in court in their efforts to defend some of the rules they put in place...