New legislation introduced in both the House and the Senate would impose tough national mortgage servicing standards, with plenty of sticks and barely a single carrot. Early last week, Sen. Jeff Merkley, D-OR, and Olympia Snowe, R-ME, introduced the Regulation of Mortgage Servicing Act to help homeowners stay in their homes by making the rules for mortgage servicers "more fair and transparent." The bill would require mortgage servicers to create a single point of contact for borrowers, end dual-track processing of foreclosures while homeowners are negotiating a modification, and provide an independent, third-party review before sending a family into...

All the witnesses at a hearing late last week in the Senate Banking Subcommittee on Housing, Transportation and Community Development agreed that national mortgage servicing standards are a necessity, but they acknowledged that the trick is deciding what they will cover and how they will work in an environment ridden with competing problems. "Servicers do not believe that the rules that apply to everyone else apply to them," said Diane Thompson, counsel at the National Consumer Law Center. "This lawless attitude, supported by financial incentives and too-often tolerated by regulators, is the root cause of the failure of...

The much-maligned Home Affordable Modification Program posted modest gains in the number of new trial and permanent modifications started during the first quarter of 2011, according to an Inside Mortgage Finance analysis of data released by the Obama administration. The number of new permanent mods started rose 8.1 percent from the fourth quarter, while the number of new trial mod offers was up 2.2 percent. First-quarter 2011 volume in both categories remained well below the levels set back in early 2010, when the program was still gaining traction. The number of active permanent HAMP modifications rose... [Includes two data charts]

The Government Accountability Office says the Consumer Financial Protection Bureau and other federal regulators should include foreclosure practices in their anticipated national servicing standards, as well as a formal assessment of the risks that are associated with poor documentation practices – the exact repercussions of which are still undetermined. The new GAO report was sparked by widespread criticism of mortgage servicers’ handling of foreclosure documents. It was believed that many affidavits had been improperly notarized or signed, leading to concerns over how these loans were transferred into...

&PTop rating agencies continue to have different requirements for issuers to obtain the most favorable ratings on certain transactions, including the all-important criterion of credit enhancement. The latest manifestation of this dynamic involved a recent $1.45 billion servicer advance receivable transaction by American Home Mortgage Servicing Inc., a deal that passed muster with DBRS and Standard & Poor’s. But AHMS withdrew the deal from consideration at Fitch Ratings because of that company’s more conservative rating criteria. DBRS and S gave most components of the transaction a triple-A rating. That included two $325 million senior term notes and a $600 million senior variable funding note. The deal included subordinate term notes of $150 million and $50 million. The primary assets of...

Government Accountability Office: Foreclosure report: The GAO released a report last week entitled Mortgage Foreclosures: Documentation Problems Reveal Need for Ongoing Regulatory Oversight, which was compiled as a result of a probe House Democrats requested...

One of the most critical factors contributing to the foreclosure documentation debacle was a fundamental failure on the part of many of the nation’s top mortgage servicers to truly manage their foreclosure networks, and that’s one of the deficiencies federal bank regulators are trying to remedy in their recent consent orders, industry experts have concluded...

The mortgage lending industry wants to use favorable legislation in Colorado as a model for other states to use in addressing neighborhood blight prevention via the accelerated transfer of abandoned property, one informed source confided to Inside Regulatory Strategies...

California. State Sen. Alex Padilla, D-Pacoima, is reportedly drafting his own version of anti- "dual track" legislation that would keep lenders and servicers from filing a foreclosure sale until a loan modification that has been requested by the borrower is denied...

The city of Los Angeles on Wednesday filed a civil lawsuit against Deutsche Bank and its subsidiaries for failing to maintain the properties of loans that were pooled in non-agency MBS for which the company served as trustee. City Attorney Carmen Trutanich filed the over 200-page complaint, which accused the bank of...