The recent Servicing Resolution Agreements signed by the nation’s top five mortgage servicers with the federal government and state attorneys general may have been clear on the cost of their key provisions but it is the enormous hidden costs of compliance that could bite the financial institutions in the long run, according to compliance experts. Following the recent announcement of the national servicing settlement, it is impossible to put an accurate dollar amount on the myriad things servicers need to do in order to comply, but experts agree that staffing, training, technological upgrades...

Home-equity lending in 2011 fell to its lowest level in more than 20 years as crumbling house prices and rigid underwriting continued to hammer away at second mortgage lending. Banks, savings institutions and credit unions reported a total of $803.6 billion of home-equity loans in their portfolios at the end of the year, down 7.2 percent from the previous December. Depository institutions accounted for the lion’s share, 92.1 percent, of the $873.0 billion home-equity market. Finance companies were the only other significant player in the market, with $49.0 billion at the...(Includes two data charts)

The settlements reached by five major mortgage servicers with a handful of states over their use of the Mortgage Electronic Registration System has not weakened the legal position of MERSCorp itself, according to industry experts. The new agreements signed by New York Attorney General Eric Schneiderman with Wells Fargo, Bank of America, JPMorgan Chase, Citigroup and Ally Financial has the banks paying a total of $25 million to the state in exchange for a release of further claims regarding the banks’ use of MERS throughout the servicing and foreclosure process and a pledge not to challenge...

The feds aren’t done cracking down on mortgage servicers and before the smoke clears, more than a half dozen companies are going to be facing fines that have been pending since federal regulators announced their servicing consent decrees last April, an official from the Federal Reserve told members of Congress this week. Last month, the Fed announced it had assessed monetary sanctions totaling $766.5 million against Ally Financial, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo for failing to appropriately oversee their subsidiaries’ mortgage loan servicing and foreclosure processing...

The emerging consensus among industry analysts and attorneys who are reviewing the finalized documentation of the $25 billion servicing settlement is that state and federal government law enforcement officials are just getting started in their efforts to hold the industry’s feet to the fire over flawed foreclosure practices. Last week, the Department of Justice finally made public the official complaint and consent judgments for the $25 billion servicing settlement that had been announced the month before, the details of which seem to be largely in line with expectations...

A $95 million settlement with the nation’s four largest mortgage servicers – Bank of America, JP Morgan Chase, Wells Fargo and Citigroup – was announced last week by U.S. Attorney Bill Nettles of the District of South Carolina, the largest False Claims Act settlement in the history of the state, according to Justice Department officials. The settlement is part of the $25 billion global resolution announced in February between major banks and state attorneys general to settle claims of abusive mortgage practices, including robo-signing of foreclosures...

Law firm K&L Gates and the National and Washington Lawyers’ Committees for Civil Rights launched a pro bono legal challenge to an allegedly discriminatory and otherwise unlawful foreclosure rescue scam targeting Hispanic homeowners in northern Virginia. Plaintiffs Jose and Margarita Viera allege they have been the victims of defendants Bella Homes LLC and a number of its management officials and agents in a scheme that zeroes in on Hispanic homeowners who were having difficulty making their mortgage payments. “The crux of the complaint is that ...

Earlier this month, private-equity firm Fortress took its mortgage servicer unit, Nationstar Mortgage Holdings Inc., public, the second such offering for a mortgage servicer in a month, even as some large bank servicers increasingly look for the exits. The move might look like healthy creative vs. destructive capitalism to some, but it’s a disturbing trend on at least one public policy level, according to housing policy expert Karen Shaw Petrou, managing partner at Federal Financial Analytics, a Washington, DC, think tank. “From a purely market perspective, there’s no problem if banks lose and PEs win ...

Federal Housing Finance Agency.FHFA Office of Inspector General. FHFA’s Supervision of Freddie Mac’s Controls over Mortgage Servicing Contractors Faulted. The Federal Housing Finance Agency’s Office of Inspector General found some areas in which the Finance Agency could improve its supervision of Fannie Mae’s and Freddie Mac’s controls over its mortgage servicing contractors. “FHFA has not clearly defined its role regarding oversight of servicers, sufficiently coordinated with other federal banking agencies about risks ...

The documents governing a proposed $25.0 billion settlement involving five major banks include greater incentives for principal reduction loan modifications on portfolio loans rather than loans in non-agency mortgage-backed securities. However, non-agency MBS investors remain concerned that they could take losses due to the settlement. The consent judgments against Ally Financial, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo were filed in federal court this week, a month after the settlement was announced by 49 state attorneys general and the federal government ...