A federal district court in Minnesota rejected a mortgage securitization trustee’s plea to compel a lender to repurchase defective home loans after finding that the loans no longer existed following the foreclosure and sale of the mortgaged properties. Ruling in MASTR Asset-Backed Securities Trust 2006-HE3 v. WMC Mortgage Corp., U.S. District Court Judge John Tunheim granted the lender’s motion for partial summary judgment after determining that the loans had been extinguished when the trustee foreclosed on the properties and charged off the remaining principal balances. The dispute boiled down...

With the planned acquisition of Homeward Residential, Ocwen Financial fired the latest shot as nonbank special servicers compete to grow their portfolios. While officials at Ocwen noted the “synergistic” benefits of the planned purchase, industry analysts warned that the move puts Ocwen in a shaky financial position. The company announced last week that it plans to acquire Homeward for $588 million in cash and $162 million in Ocwen stock. The acquisition will strengthen Ocwen’s position as the largest ...

“Servicers are less likely to act on the first-lien mortgage owned by investors when they themselves own the second-lien mortgage secured by the same property,” according to a new study based on data collected by the Office of the Comptroller of the Currency from 10 large bank servicers. The study confirms suspicions that bank servicers are conflicted regarding loss mitigation, particularly because their second-lien holdings continue to perform relatively well even as corresponding first liens have ...

Numerous small servicers submitted comments to the Consumer Financial Protection Bureau warning that proposed servicing rules will result in consolidation – to the benefit of large special servicers. The comment period on the proposed rules closed this week, with small servicers seeking exemptions from potential new servicing standards. The CFPB issued proposed servicing rules in August, some of which were required by the Dodd-Frank Act. Industry analysts suggest that large servicers will have fewer problems complying ...

A significant increase in the volume of claims following the announcement of the $25 billion joint servicer settlement earlier this year has created a huge backlog that could potentially threaten the FHA Mutual Mortgage Insurance Fund, warned the Department of Housing and Urban Development’s Office of the Inspector General. Separate OIG audits of the five mortgage servicers that signed the groundbreaking settlement pact with federal agencies and state attorneys general in February found that if those servicers were to file all ...

The FHA Mutual Mortgage Insurance Fund appears poised for another potential settlement infusion following this week’s announcement of a federal lawsuit against Wells Fargo Bank for alleged reckless underwriting and fraudulent loan certifications on thousands of FHA-insured loans that ultimately defaulted. Filed by the U.S. Attorney’s Office in Manhattan, the lawsuit accuses Wells Fargo of engaging in “a long standing and reckless trifecta of deficient training, deficient underwriting and deficient disclosure, while relying on the convenient backstop of government insurance.” Ten years of Wells Fargo’s alleged misconduct ...

The Department of Housing and Urban Development’s Office of the Inspector General is seeking indemnification from a sponsored third-party originator (TPO) for potential losses of more than $1.5 million due to poor loan documentation. The IG also ordered the TPO, Bankers Mortgage Group of Woodland Hills, CA, to reimburse the FHA insurance fund $58,704 for the actual loss on one FHA-insured mortgage loan. The IG also recommended that HUD impose fines on Bankers Mortgage for allegedly signing off on false loan information. IG auditors targeted BMG after internal investigators found significant ...

A California operator of an allegedly bogus foreclosure rescue firm has agreed to a $5 million settlement with the Department of Justice and the Department of Housing and Urban Development. Based on an investigation by HUD’s Office of the Inspector General, the DOJ filed a civil complaint against Terrill Meisinger, focusing on more than 100 properties that were financed through FHA and conventional loans. The complaint alleged that Meisinger contacted individuals facing foreclosure and offered ...

The Federal Housing Finance Agency says its proposed new securitization platform could be used now by Fannie Mae and Freddie Mac, as well as by private issuers, but it’s also intended to serve a post government-sponsored enterprise marketplace. Last week, the FHFA issued a call for public comment on a white paper outlining its proposed common securitization platform and a model pooling and servicing agreement. Those plans are also included in the agency’s updated strategic plan issued this week. The 31-page strategic plan – which updates a draft issued by the FHFA in February – sets...

Fannie Mae and Freddie Mac issued separate guidance to their mortgage servicers last week designed to continue the conservator-mandated effort to complement the servicing policies of the two government-sponsored enterprises and to develop a consistent framework for assessing servicer performance. The updated servicing policies seek to harmonize compensatory fee structures, servicer violations and remedies, and servicer terminations and transfer of servicing between Fannie and Freddie. Fannie’s and Freddie’s announcements also include...