Some FHA borrowers are still having difficulty obtaining lower-cost streamline refinancing even though the FHA has said it will accept streamline loans with “no credit check, income verification or appraisal.” Borrowers said they are still encountering credit checks, income verification and other obstacles, which indicate that lenders are disregarding FHA instructions regarding the enhanced streamline refi program. Even though FHA guidelines are in place, lenders are adding their credit overlays to the detriment of FHA borrowers seeking to ...

The Consumer Financial Protection Bureau expects to undertake a project to refine and integrate disclosure requirements under the Truth in Lending Act and the Real Estate Settlement Procedures Act for reverse mortgages to improve consumers’ understanding of the product. The In a recent 231-page study submitted to Congress, the CFPB said consumers are still confused about how reverse mortgages work, despite the required disclosures and industry efforts to educate the public on this type of equity-based lending. The rising-balance and falling-equity nature of reverse mortgages is particularly ....

The Department of Housing and Urban Development said it has received $1.2 billion in recent settlements with large mortgage lenders and servicers but HUD’s internal watchdog, which did much of the legwork in the investigations, reveals a much smaller amount. According to recent audit reports published by HUD’s Office of the Inspector General, only Bank of America and Flagstar Bank have made payments under settlement agreements with HUD and the Department of Justice to resolve government claims. In separate memos to HUD’s Office of General Counsel last month, Kim Randall, director of the HUD OIG Civil Fraud Division, sought clearance to ...

Two lenders lost their approval to underwrite and originate FHA loans under Credit Watch while two others may be ordered to indemnify the Department of Housing and Urban Development for potential losses on several ineligible FHA-insured loans. HUD recently stripped Community Central Mortgage Co. of Mount Clemens, MI, and Strategic Mortgage Co. of Columbus, OH, of their direct endorsement approval because of the exceedingly high default and claim rates of FHA-insured loans they originated in their business areas. The Credit Watch Termination Initiative allows HUD to terminate a direct endorsement agreement with any FHA lender if ...

Federal officials deny that they’re growing weary of and disinterested in the ongoing foreclosure crisis, even while observers are calling for more effective solutions. “Folks in Washington tell me there is a general sense of foreclosure fatigue in our nation’s capital,” wrote Jean Braucher, a professor of law at the University of Arizona, in the finance blog Credit Slips. “It’s just so boring to keep thinking about all the people losing their homes year after year. Can’t we move on to something new? This attitude goes along with a failure to do anything meaningful to get out of the five-year-old mortgage crisis, still...

When it comes to modifying non-agency mortgages, early loan modifications greatly increase the rate of success, and principal reductions are the most effective type of loan mod, according to a new study by the MBS strategy group at Amherst Securities Group. “Modification activity has undergone a dramatic reshaping over the past few years, which has dramatically improved modification success,” the study said. “In particular, payment reductions are much larger now, and that is...

Federal banking regulators last week released their Financial Remediation Framework for independent foreclosure review consultants to use in determining the compensation due homeowners financially injured by servicers’ foreclosure practices in 2009 and 2010, generally capping damages at $125,000 but allowing borrowers to pursue litigation if they so choose. “The guidance helps ensure that similarly situated borrowers who suffered financial injury as a result of errors in foreclosure actions on their homes are treated similarly,” said the Office of the Comptroller of the Currency, which issued the guidance in conjunction with the Federal Reserve Board. Under the framework, remediation could include lump-sum payments; suspension or rescission of a foreclosure; the provision of...

The reallocation of hundreds of millions of dollars of funds paid by the nation’s five largest loan servicers to states as part of this year’s whopping $25 billion national foreclosure settlement has ignited intra-state feuding as to how best utilize the cash windfall, according to a mortgage industry attorney. During a webinar sponsored last week by the State Attorneys General Enforcement Network, Jeremiah Buckley, founding partner of BuckleySandler, noted “emerging controversies” among state elected officials as they do battle, in some cases via the courts, to ensure the funds are used for consumer/mortgage-related purposes. The landmark agreement finalized in April between Ally Financial, Bank of America, Citigroup, JP Morgan Chase and Wells Fargo with a coalition of state attorneys general...

The Office of the Comptroller of the Currency and the Federal Reserve Board late last week put out guidance that will be used to calculate the compensation or other remedy that borrowers will receive for financial injury identified during the independent foreclosure review that was set up last spring in the wake of the industry’s foreclosure practice debacle. The Financial Remediation Framework provides examples of situations where compensation or other remediation is required for financial injury due to servicer errors, misrepresentations or other deficiencies...

In Rosenfield v HSBC Bank, the U.S. Court of Appeals for the Tenth Circuit recently ruled that borrowers cannot seek rescission after the Truth in Lending Act’s three-year statute of repose expires, even if the borrower had sent a notice of rescission within the three-year period. Beyond the ruling of the facts of the case, the court’s decision is another blow to the Consumer Financial Protection Bureau. Early this year, the CFPB had argued in a friend-of-the-court brief that TILA Section 125 (U.S.C. Section 1635) gives consumers a statutory right to rescind qualifying mortgage...