$7.5 Million FHA Mortgage Fraud Scheme. The Department of Justice has filed charges against top executives of a real estate brokerage for their participation in a mortgage fraud scheme that may cost the FHA $7.5 million in losses. Indictments were unsealed earlier this month in Manhattan federal court charging Mitchell Cohen and Erin Davis, the owner and sales manager, respectively, of Buy-A-Home, a real estate brokerage business in Queens, NY. The criminal charges follow a civil fraud lawsuit filed by the U.S. Attorney’s Office for the Southern District of New York last December against ...

The streamlined short sale programs announced last week by Fannie Mae and Freddie Mac could increase losses on bank holdings of second liens, according to industry analysts. The changes, directed by the Federal Housing Finance Agency, include the ability for the government-sponsored enterprises to offer up to $6,000 to second-lien holders to expedite a short sale. “Previously, second-lien holders could slow down the short sale process by negotiating for higher amounts,” the FHFA said. Overall ...

Ocwen Financial announced last week that its executive chairman has relocated to the U.S. Virgin Islands as part of the company’s efforts to reduce its tax rate. William Erbey, the executive chairman of Ocwen, said the company worked for nearly three years on the tax maneuver, which will reduce Ocwen’s effective tax rate by more than half. The strategy included the establishment of a new corporation, Ocwen Mortgage Servicing, in February. The wholly owned subsidiary of Ocwen was formed under the laws of ...

The Consumer Financial Protection Bureau has come out with an extensive set of proposed rules addressing numerous mortgage servicing issues in the form of two related notices designed to protect homeowners from surprises and costly mistakes by their mortgage servicers. The first proposal aims to give borrowers clear and timely information about their mortgages so they can avoid costly surprises, and would bring greater transparency to the market, according to the bureau. The proposed rule would try to do this...

Boosted by its acquisition of Saxon Mortgage Services, Ocwen Financial was the only major servicer to increase its subprime portfolio in the second quarter of 2012. And after three consecutive quarters of improvement, subprime performance deteriorated in the second quarter. An estimated $505.0 billion in subprime mortgages were outstanding as of the end of the second quarter of 2012, according to Inside Nonconforming Markets, down 3.4 percent from the previous quarter as subprime mortgage originations ... [Includes one chart]

Two servicing rules proposed last week by the Consumer Financial Protection Bureau could shift more business to special servicers, according to industry analysts. While senior CFPB officials said that was not the intent of the proposals, special servicers appear to be better equipped than others to handle the complex new requirements. “The inadequate performance of many mortgage servicers has helped widen the misery for many Americans,” said CFPB Director Richard Cordray. He noted that the regulator ...

Home Affordable Modification Program servicers are increasingly offering principal reduction loan modifications to non-agency borrowers, according to the Treasury Department. The increase comes after the Treasury tripled the incentives that can be paid to investors beginning in March, though principal reduction mods have yet to increase significantly due to the change. In recent months, about 70.0 percent of eligible non-agency HAMP borrowers received some form of principal reduction ... [Includes one chart]

Ginnie Mae is reportedly considering increasing its minimum net worth requirement in response to an onslaught of requests by smaller banks for new issuer approvals. Quoting agency officials, reports indicate that Ginnie Mae is being swamped with applications from smaller mortgage lenders seeking authority to issue agency-backed mortgage backed securities. With large aggregators like Bank of America, MetLife and Ally Financial opting out of the correspondent and reverse mortgage businesses, many smaller lenders lost access to the Ginnie Mae program. However, many of these lenders are stepping into the breach on their own or with partners to ...

Chase Home Finance knocked Bank of America off its second-place perch and joined top-ranked Wells Fargo as the dominant Ginnie Mae mortgage-backed securities issuers in 2012, according to the Inside Mortgage Finance Database. Together, Wells Fargo and Chase accounted for 53.3 percent of the $100.6 billion Ginnie Mae MBS market in the second quarter of 2012, which grew 24.4 percent from the first quarter and a whopping 42.2 percent from the same period a year ago. Wells led with $42.6 billion and a commanding 42.2 percent piece of the Ginnie Mae MBS market, thanks to ... ( 2 charts)

The Department of Housing and Urban Development is working in tandem with the Consumer Financial Protection Bureau to align servicing standards for both FHA and non-FHA mortgage loans. In a statement issued after the CFPB’s recent issuance of proposed national mortgage servicing standards, HUD underscored the importance of uniform servicing standards. “Given CFPB’s rulemaking, HUD does think it is important to not revise its servicing rules in a vacuum but to consider the work being done by the CFPB,” he said. “To that end, HUD is in communication with the CFPB and reviewing their materials.” The department is collaborating with an ...