Revised VA HAMP. The Department of Veterans Affairs has updated the instructions for modifying mortgage loans with a VA guarantee. Changes include clarification concerning occupancy status, an updated reference to another VA guidance on prior approval procedures and extension of the applicability of the said guidance. The changes were announced in Circular 26-10-6. New VA REO Management and Servicing Contractor. The Department of Veterans Affairs has provided details for transferring VA property management (real estate-owned) and portfolio loan servicing contracts for the VA home loan guaranty program from ...

A group of San Francisco-area homeowners has filed a federal RICO class-action lawsuit against JPMorgan Chase, alleging the company charges inflated fees to homeowners who go into default. In a suit filed last week in the U.S. District Court, Northern District of California, the three named plaintiffs, Diana Ellis, James Schillinger and Ronald Lazar, accuse JPMorgan of violating California business standards law. The suit also says JPMorgan’s use of mail and wire communications to perpetuate its fraud against homeowners violates the federal Racketeer Influenced and Corrupt Organizations Act. The homeowners contend that JPMorgan is using...

Subsidiaries of Nationstar Mortgage Holdings announced last week that they intended to sell $100 million in senior notes to help fund future acquisitions and transfers of servicing portfolios, including the potential acquisition of certain servicing assets from Residential Capital. The notes were sold this week in a private placement. The notes are a “follow-on” issue to $275 million in senior notes the company issued in April, due in 2019. Nationstar said the additional notes were issued at an offering price of 105.500 percent, they have an effective yield of 8.396 percent and carry a coupon of 9.625 percent per annum, payable semi-annually in arrears, beginning in November 2012. In May, Nationstar announced that it would pay...

A “bad bank” entity for pooling and standardized restructuring and resecuritization of underwater mortgages may be the best bet for the housing market to pull itself out of the negative equity quagmire of the last several years, according to a proposal by a Georgetown University law professor. In his white paper – Clearing the Mortgage Market Through Principal Reduction: A Bad Bank for Housing RTC 2.0 – Adam Levitin makes the case that the best option for “clearing the market” lies via “negotiated, quasi-voluntary principal reduction” using a privately funded Resolution Trust Corporation-style entity. “Such an RTC 2.0 would provide a framework for implementing ‘quasi-voluntary’ principal reductions in the context of litigation or regulatory settlement or the federal government’s exercise of its secondary market power to exclude...

Fannie Mae and Freddie Mac have adopted a “common language” to improve and help ease lenders’ delivery of loans and appraisals to the government-sponsored enterprises. The GSEs’ full adoption of the Uniform Loan Delivery Dataset (ULDD) on July 23 establishes a common usage and standardizes most of the data required at the time of loan delivery, minimizing differences wherever possible. Freddie Mac hailed the new system as a “critical milestone” of the Uniform Mortgage Data Program, a joint GSE initiative to provide...

The Treasury Department announced harsh penalties this month for fraudulent activity uncovered in the Home Affordable Modification Program. In an unprecedented move for HAMP, the Treasury said that in certain circumstances it will recapture servicer, borrower or investor incentives previously paid. The Treasury said it hired a contractor to look for borrower fraud regarding identity, occupancy requirements, and certain criminal activity that the Dodd-Frank Act determined would make a borrower ineligible for HAMP. If the servicer cannot clear the borrower of the potential HAMP violation, the borrower’s HAMP mod will be rescinded along with any associated incentive payments. Beginning in October, the contractor will review...

Mortgage lending and servicing industry representatives were able to get an advanced look at what the Consumer Financial Protection Bureau is considering imposing on the mortgage servicing sector, and that glimpse has generated a number of significant concerns right out of the box. The American Financial Services Association, the Consumer Mortgage Coalition, the Mortgage Bankers Association and the Residential Servicing Coalition submitted a joint comment letter to the CFPB in response to its April 9 outline of servicing rules...

Judge Michael Simon of the U.S. District Court for the District of Oregon ruled that breach of contract claims brought by tens of thousands of homeowners may proceed in a nationwide class action alleging that Bank of America improperly force-placed high-premium flood insurance policies on homeowners across the country. In Arnett, et al. v. Bank of America, N.A., Civil Action No. 11-cv-1372, plaintiffs Ronda and Larry Arnett allege that Bank of America has a practice of force-placing flood insurance coverage above...

When Mortgage Electronic Registration Systems is in the news, it’s usually racking up another court victory. Not this time. MERS recently agreed to make a number of changes to its practices – including regular reports on the accuracy of its records – as part of a settlement of a lawsuit that Delaware Attorney General Beau Biden filed against it last year. Among the changes MERS agreed to was to maintain a database that will enable homeowners whose mortgages are held by MERS members to see who owns and services...

The Department of Housing and Urban Development this week announced a major expansion of bulk sales of distressed FHA loans. Some 9,000 loans are up for auction on Sept. 12, nearly double the amount HUD initially expected to offer and four times the amount of loans sold through the Distressed Asset Stabilization Program since 2010. In April, HUD completed an auction of 279 FHA mortgages with an unpaid principal balance of $59.0 million. If the loans for sale in September have a similar average balance ...