Mortgage industry executives should be aware and expect continued – and perhaps even more muscular – use of a 1989 federal law by government prosecutors to pursue mortgage-related claims. At the direction of Attorney General Eric Holder, the Department of Justice embraced the use of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) in MBS lawsuits. Despite Holder’s announcement late last month that he is stepping down after six years as AG, there is...

The substantial increase in federal support of the single-family housing finance system, as well as weaknesses uncovered in the wake of the mortgage market meltdown, have led to a U.S. finance system that warrants reform, according to the Government Accountability Office. The GAO focused considerable attention on the much-reported fact that government programs have accounted for a huge share of the mortgage and MBS market since the financial crisis. The congressional watchdog views the federal role in housing finance as a “high-risk area.” “Developments in mortgage markets since 2000 have challenged...

Ending the conservatorships of the government-sponsored enterprises and recapitalizing Fannie Mae and Freddie Mac is the “most pragmatic and feasible” solution to facilitate housing finance reform and protect taxpayers, according to a recently issued white paper. In his blueprint for ending GSE conservatorship, Clifford Rossi – adjunct professor at the Robert H. Smith School of Business, University of Maryland, College Park – calls for an administrative solution by recapitalizing Fannie and Freddie and bringing the GSEs out of conservatorship under strict conditions as the next best way of implementing housing finance reform short of legislation. “Conservatorship was...

Affordable housing advocates are continuing their full-court press against the head of the Federal Housing Finance Agency, demanding that the FHFA greenlight financing for the dormant National Housing Trust Fund after a setback in federal court. U.S. District Court Judge Marcia Cooke of the Southern District of Florida last week dismissed a lawsuit brought by the National Low Income Housing Coalition on the grounds that the NLIHC lacks standing to sue the FHFA. Cooke also found that the court does not have jurisdiction over the decisions of the agency. The coalition filed...

After six years of government control of the GSEs, Congressional inaction has ensured no legislative solution to housing finance reform anytime soon so the administration must take action, according to a white paper unveiled this week. Clifford Rossi, adjunct professor at the Robert H. Smith School of Business, University of Maryland, College Park, told Inside The GSEs that a legislative fix to GSE reform is the ideal solution.

Efforts to reduce the government-sponsored enterprises’ footprint using guaranty fees and loan limits should be left to Congress, according to Bob Ryan, a special advisor to the director of the Federal Housing Finance Agency. Meanwhile, officials at the Treasury Department suggest that the FHFA does have a role in setting policy that will inform any housing finance reform action by Congress.

FHFA Principal Reduction Pilot Program. A bill filed by Sen. Robert Menendez, D-NJ, before Congress left town last month would create a shared-appreciation mortgage program in which banks would reduce the mortgage principal for eligible underwater homeowners. Under the Preserving American Homeownership Act, S. 2854, the pilot programs – to be established by the Federal Housing Finance Agency and the FHA – would entitle banks to a portion of the increased value of the home when the market improves.

Before members of Congress left the nation’s capital for their final push before the November elections, diverse efforts were underway for making changes to aspects of the qualified mortgage definition under the CFPB’s ability-to-repay rule, either through legislation or persuasion. Earlier this month, the U.S. House of Representatives passed H.R. 5461, a package of legislation which includes the text of H.R. 3211, the Mortgage Choice Act, which passed the House unanimously in June. The legislation would make it easier for mortgages to fit under the ATR rule’s cap on points and fees by providing equal treatment to title charges, regardless of whether or not a consumer chooses a title company affiliated with the lender. “This provision is narrowly focused to ...

Did Apple Place Itself Within CFPB’s Purview? Some legal experts think the recent rollout of mobile payment technology by Apple Inc. might have put the consumer technology heavyweight in the CFPB’s regulatory crosshairs. Georgetown Law Professor Adam Levitin said in a recent blog that Apple may have unwittingly become a regulated financial institution through the release of its Apple Pay service. “Basically, I think Apple is now a ‘service provider’ for purposes of the Consumer Financial Protection Act, which means Apple is subject to CFPB examination and UDAAP [unfair, deceptive or abusive acts or practices],” he said. Levitin then proceeded to walk readers through a number of legal definitions to bolster his argument. Vivian Kim, an associate at the Dykema ...

Efforts to reduce the government-sponsored enterprises’ footprint using guaranty fees and loan limits should be left to Congress, according to Bob Ryan, a special advisor to the director of the Federal Housing Finance Agency. Meanwhile, officials at the Treasury Department suggest that the FHFA does have a role in setting policy that will inform any housing finance reform action by Congress. In comments this week at the ABS East conference produced by Information Management Network in Miami Beach, Ryan said the FHFA looks to Congress for direction when considering how to run the conservatorship of Fannie Mae and Freddie Mac. “There is nothing in the legislation that suggests the FHFA should shrink the footprint [of the GSEs],” he said. Ryan said...