Goldman Sachs will likely have no appetite to wade back into the mortgage servicing business anytime soon, following the enforcement action taken against it last week by the Federal Reserve Board – a regulatory move that still leaves monetary penalties on the table and likely to be imposed before long. The action orders Goldman Sachs to retain an independent consultant to review foreclosure proceedings initiated by Litton Loan Servicing LP, Goldman’s former mortgage servicing platform, that were pending at any time in 2009 or 2010. The review is intended to provide remediation to borrowers who suffered financial injury as a result of wrongful foreclosures or other deficiencies identified in a review of the foreclosure process, according to the Fed.

The Stauffer and Nathan, P.C. law firm of Tulsa, OK, recently filed a federal class action in the U.S. District Court of the Northern District of Oklahoma against Wells Fargo and Experian, Equifax and Trans Union. The complaint accuses Wells of engaging in illegal mortgage servicing practices and “ramrod unlawful foreclosures” and alleges the major credit bureaus participated in erroneous credit reporting due to their “reckless failure to conduct independent investigations and just parroting the false and negative information supplied to credit bureaus by Wells Fargo.” The plaintiffs contend Wells Fargo “continues to engage in a free-for-all campaign to harass and disparage Oklahoma homeowners with unjustified foreclosure proceedings.” They also claim abuse of process, malicious prosecution, intentional infliction of emotional distress, and numerous violations of state and federal consumer protection statutes.

The Federal Housing Finance Agency’s legal action late last week against many of the nation’s largest financial institutions on the grounds they misled Fannie Mae and Freddie Mac about the quality of subprime and Alt A MBS purchased by the government-sponsored enterprises has few positives but plenty of negative potential consequences for the market, experts say. The 17 separate lawsuits filed by the FHFA seek unspecified damages on $196 billion in mortgage securities the two GSEs purchased, mostly between 2005 and 2008. The agency conducted extensive loan-level reviews that allegedly revealed widespread discrepancies between... [Includes two pages of data]

Private investors in agency MBS could lose $13 billion to $15 billion from a new government effort to help current Fannie Mae, Freddie Mac and FHA borrowers refinance, according to a new Congressional Budget Office staff working paper. The Obama administration is expected to announce a revved-up refinance program as part of a new strategy to strengthen economic growth. A “stylized” refinance program analyzed by the CBO would have a relatively small impact on the overall economy, the analysts said. The biggest impact would be on private MBS investors and the estimated 2.9 million households that would likely be brought into the...

Goldman Sachs has been ordered to retain an independent consultant to review foreclosure proceedings initiated by its former subsidiary, Litton Loan Servicing LP, under a formal enforcement action announced by the Federal Reserve Board last week. The firm was also required to provide financial remediation to affected borrowers. Additional monetary penalties are likely to be announced shortly. The Fed said it was acting against Goldman Sachs “to address a pattern of misconduct and negligence relating to deficient practices in residential mortgage loan servicing and foreclosure processing” involving Litton. Goldman sold...

The Department of Housing and Urban Development is pondering its next move after discussing with mortgage industry representatives their concerns about extending the current forbearance period for unemployed homeowners to a maximum of 12 months. HUD and FHA officials met recently with the Mortgage Bankers Association and several small mortgage servicers, which took issue with FHA’s recently revised forbearance policy. HUD declined to discuss the outcome of the meeting, saying it was more about understanding the industry’s concerns and discussing solutions. “No decision has been made as to whether we can or will make any changes, but we are looking into the issues they have raised,” said a HUD spokesman. On July 7, the FHA announced ...

Recent changes to Ginnie Mae’s repurchase policy are getting positive reviews from analysts. Announced on Aug. 26, the revised loan buyout policy will make it easier for servicers and issuers to buy delinquent home loans out of Ginnie Mae pools without having to wait 90 days for the loan to become eligible for repurchase. Before the change, pool repurchases were allowed only if a borrower missed three consecutive mortgage payments. Under the revised policy, issuers can buy delinquent loans out of the pool while the borrower is making partial payments under an FHA or VA trial payment plan as a prerequisite for a permanent modification. On the surface, the revised policy would appear ...

As part of a new jobs and economic growth plan to be announced this week, the White House is expected to include a bid to invigorate a mortgage refinance effort that has failed to live up to expectations. Most observers think the Obama administration will opt for targeted changes to the Home Affordable Refinance Program. In a speech last week, Federal Reserve Board Governor Elizabeth Duke said HARP has been only marginally effective despite Fed estimates that as many as 4 million borrowers meet HARP’s basic eligibility requirements. Through the end of June, some 830,552 borrowers had refinanced their home loans under HARP, which allows... [Includes one data chart]

Despite a continuing glut of distressed properties in the housing market, investors have started dialing back their purchase activity. And the primary reason appears to be a shifting business model that is forcing investors – at least for the time being – to rent rather than flip properties. That’s one of the major findings of the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, which found that the investor share of home purchase transactions slipped to 19.6 percent in July. That was not only down from 21.3 percent in June but also the lowest investor market share recorded in a year. The inability of most investors to...

Iowa Attorney General Tom Miller this week sought to allay concerns of the New York congressional delegation, denying that Empire State’s attorney general was ousted from an executive committee negotiating a nationwide foreclosure settlement with major banks to silence legitimate opposition. Responding to a letter from NY House Democrats, Miller said New York AG Eric Schneiderman was invited to join the core negotiating team of state AGs in June but refused. Miller, who is leading the negotiations, said Schneiderman “voluntarily” walked away from the negotiating table to “pursue another path.” Miller said Schneiderman was asked to...