Consumers who take out mortgages that are considered high cost currently receive special pro-tections from fees and risky loan terms. The Consumer Financial Protection Bureau this week came out with a proposed rule that would expand what is considered a high]cost mortgage and provide more protections to consumers who take out those loans. Loans that meet high-cost triggers under the Home Ownership and Equity Protection Act are subject to special disclosure requirements and restrictions on loan terms, and borrowers in high-cost mortgages have enhanced remedies ...

Three jurisdictions in California are raising a lot of industry hackles over a plan that could lead to the use of eminent domain to seize currently performing underwater mortgages and force a restructuring of their terms. It’s a plan “more like Grand Theft Mortgage than a silver bullet” for the region’s housing woes, according to former Fannie Mae executive Edward Pinto. At issue is a resolution adopted last week by California’s San Bernardino county and the cities of Ontario and Fontana in which the jurisdictions entered into a joint powers agreement. Under the resolution...

Federal banking regulators and private-sector mortgage servicers have gradually stepped up their efforts to reach out to eligible borrowers facing foreclosure and have taken steps to improve their communication materials. However, they have not undertaken certain “best practices” such as conducting readability tests or using focus groups that might have maximized their potential outreach, the Government Accountability Office said in a new report. “Staff at the Board of Governors of the Federal Reserve System said that this was, in part, a trade off to expedite the remediation...

California is about to become the first state to enact into law a large portion of the national mortgage servicing settlement that state and federal government officials negotiated this year with the nation’s top five banks and apply it to all lenders. The state legislature passed the Homeowner Bill of Rights last week (AB 278/SB 900). The Democrat-controlled state Assembly approved the bill on a 53-25 vote, with the Senate endorsing the measure 25-13. The legislation will force large lenders to provide a single point of contact, eliminate dual tracking and impose significant civil...

Nationstar Mortgage LLC last week finalized its acquisition of more than $63.7 billion worth of servicing assets from Aurora Bank.Aurora Bank, a subsidiary of Lehman Brothers, has been carved up to repay creditors of the bankrupt Wall Street firm that was a major player in the non-agency MBS market. Ocwen Financial had earlier purchased $1.8 billion in commercial servicing rights from Aurora. The Aurora mortgage servicing portfolio is comprised of 75 percent non-conforming loans in non-agency MBS and 25 percent conforming loans in Fannie Mae and Freddie Mac pools, according to...

Delinquencies on home-equity loans increased in the first quarter of 2012 and industry analysts expect further increases even though first-lien mortgage performance has been improving. The top two holders of HELs have differing strategies on HEL originations, and some smaller banks are also pushing the products. The serious delinquency rate on HELs hit 2.83 percent in the first quarter of 2012, according to the Inside Mortgage Finance Bank Mortgage Database. Delinquencies increased 34.1 percent from the end of 2011 and ...

Loan modifications performed on mortgages in bank portfolios perform much better than mods on mortgages included in non-agency mortgage-backed securities, according to an analysis by Inside Nonconforming Markets of new data from the Office of the Comptroller of the Currency. The performance varies significantly even as the two types of non-agency mortgages receive the vast majority of principal reduction loan mods. The 12-month re-default rate on mods implemented from 2008 through the first quarter of 2011 was ...

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 ...