The Association of American Retired Persons hit the Department of Housing and Urban Development again with another class-action lawsuit for allegedly failing to protect four surviving spouses of Home Equity Conversion Mortgage borrowers against foreclosure and eviction.The complaint was filed in the U.S. District Court for the District of Columbia, where last September a federal judge found HUD in violation of federal law in a similar case. The court remanded the case to HUD to determine the appropriate remedy for the problem. The AARP Foundation Litigation and the law firm of Mehri & Skalet, the same entities that successfully litigated last year’s reverse mortgage case, represented the plaintiffs, none of them younger than 65 years of age. The suit challenges HUD’s promulgation of HECM regulations, which allegedly is ...

A mortgagee that no longer wishes to participate in FHA programs must submit a letter requesting voluntary withdrawal of its FHA approval, signed by a senior executive of the company, according to guidance published in the March 2014 issue of FHA’s Lender Insight. Lenders may not simply let their FHA approval expire by failing to complete FHA’s required annual recertification process, the guidance warned. “Failing to recertify will result in a referral to the Mortgagee Review Board for administrative action,” it said. The board’s withdrawal of a lender’s FHA approval could have an adverse impact on the lender should it reapply for FHA approval in the future. A lender requesting voluntary withdrawal of FHA approval is subject to a review before the agency signs off on the request. The request would be denied if the lender has an MRB administrative action pending against it or if it is behind on its mortgage insurance premium payments. A lender whose FHA approval has been withdrawn may ...

Old Republic Cancels Recapitalization Plan for its Mortgage Guaranty Subsidiaries. Old Republic International Corp. has withdrawn plans to secure capital market funding for its beleaguered consumer credit indemnity and mortgage guaranty subsidiaries for lack of investor interest. Both business segments are housed within the Republic Financial Indemnity Group and have been in a run-off mode since 2008 and 2011, respectively. ORI Chairman/CEO Al Zucaro said holding company funds would be used to shore up the regulatory capital of the mortgage guaranty subsidiaries. The completion of the recapitalization plan hinged on regulatory approvals in North Carolina, Florida and Vermont, as well as from the government-sponsored enterprises and the Federal Housing Finance Agency. ORI said that with all the complications, it could not be certain of getting the necessary approvals. A primary investor concern is that new capital would be used to pay for RMIC’s legacy problems, and investors want their money to ...

Old Republic International has abandoned plans to recapitalize its mortgage guaranty subsidiary for lack of investor interest and will tap its own resources to boost the regulatory capital of its ailing MI companies while trying to pay off remaining claims, according to top company executives. The decision was due to ORI’s unsuccessful bid to attract new investors under the terms and conditions laid out by the RMIC Companies, which constitutes Old Republic’s consumer credit indemnity and mortgage guaranty lines of business. The two operations are currently in runoff mode and have not written any new business since 2008 and 2011, respectively. While the failure to attract fresh funding was disappointing, it does not change...

Bipartisan mortgage-finance reform legislation from leaders in the Senate focuses on replacing Fannie Mae and Freddie Mac securitization programs with a new government MBS guaranty, but it also includes options for MBS issued outside the proposed agency-like structure. Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID, this week revealed the text of their Housing Finance Reform and Taxpayer Protection Act, which may have little chance of passage this year but may be the starting point for reform in the next Congress. Johnson-Crapo would create...

The mortgage securitization sector is pleased that the bipartisan agreement between Senate Banking, Housing and Urban Affairs Committee Chairman Tim Johnson, D-SD, and Ranking Member Mike Crapo, R-ID, on housing-finance reform includes a small but critical provision to support the to-be-announced market. The 442-page draft sets a five-year timeline to shut down Fannie Mae and Freddie Mac and in their place create a new Federal Mortgage Insurance Corp., a utility that securitizes and guarantees mortgages. The government’s MBS guaranty would be supported by a 10 percent first-loss piece funded by private investors. The FMIC would approve...

Fannie Mae and Freddie Mac continue to develop their new common securitization platform in relative secrecy, although the concept has become a key component of mortgage-finance reform recently unveiled by the leadership of the Senate Banking, Housing and Urban Affairs Committee. Under the bill drafted by Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID, the CSP would operate as a privately-owned utility through which single-family MBS would be issued, with or without the new explicit government guaranty. Regulated by the new overseer of the MBS market, the Federal Mortgage Insurance Corp., the platform would shepherd...

New master policies announced recently by the Federal Housing Finance Agency for private mortgage insurers may not provide the touted improvements or additional clarity, warned attorneys with Reed Smith’s Insurance Recovery Group. The revised MI master policy requirements are designed to ensure consistent and reliable MI coverage for greater operational efficiency and transparency in the mortgage market. They are supposed to improve and clarify the various rights and ...

The private mortgage-insurance industry said it is pleased that the bipartisan agreement between Senate Banking Committee Chairman Tim Johnson, D-SD, and Ranking Minority Member Michael Crapo, R-ID, on housing finance reform recognizes the important role of private MI. The newly launched U.S. Mortgage Insurers said it supports Congress’ efforts to achieve housing finance reform, all of which recognize the importance of and the need for standard MI coverage on loans sold to Fannie Mae and Freddie Mac. Privately, MIs say...

The top Democrat and Republican of the Senate Banking, Housing and Urban Affairs Committee this week delivered their long-awaited mortgage reform bill which aims to put Fannie Mae and Freddie Mac out of business within a half-decade window, but with a couple potential leases on the lives of the two government-sponsored enterprises. In a rare Sunday filing, the legislation authored by Senate Banking Chairman Tim Johnson, D-SD, and Ranking Member Mike Crapo, R-ID, would set up a powerful new agency, the Federal Mortgage Insurance Corp., which could assume control of the GSEs within six months of enactment and begin writing new “catastrophic” mortgage-securities guaranties. Based on the bipartisan legislation introduced by Sens. Bob Corker, R-TN, and Mark Warner, D-VA last summer, the new bill adds...