A new report detailing servicers’ compliance with foreclosure laws in San Francisco found that the mortgage industry has systematically violated state and municipal code. While California allows for both judicial and non-judicial foreclosures, the majority of servicers use the “power of sale” clause from the trust deed to choose a non-judicial foreclosure, wherein little oversight takes place. Prepared by Aequitas Compliance Solutions, the report was commissioned by San Francisco’s Office of the Assessor-Recorder. Aequitas compiled and reviewed 382 residential mortgage foreclosures, 16 percent of the...

All mortgage lending related institutions under the regulatory purview of the Consumer Financial Protection Bureau are one step closer to a little more certainty about the confidentiality of the data and information they provide the agency and its officials after action by the House Financial Services Committee last week. The full committee passed H.R. 4014 (introduced by Rep. Bill Huizenga, R-MI), a measure that would stipulate that providing information to the CFPB for any purpose as part of the supervisory process would not be construed as waiving, destroying or otherwise affecting any ...

California. In Kathryn McOmie-Gray v. Bank of America Home Loans FKA Countrywide Home Loans Inc., the Ninth Circuit has ruled that the Truth in Lending Act sets a three-year limitation for the borrower to file notice of claim for loan rescission. McOmie-Gray sought rescission of her loan for alleged violations of disclosure requirements under TILA. The district court dismissed the suit as untimely because it was filed after the three-year period set by TILA. McOmie-Gray subsequently argued to the appeals court ...

Industry trade groups this week stepped up their efforts to block the imposition of additional fees on Fannie Mae and Freddie Mac MBS as a way for the government to pay for an extension of the payroll tax holiday and unemployment benefits. Late this week, the House-Senate conference committee announced it reached an agreement on a $150 billion extension through the end of 2012, although final details of the deal were not yet finalized as Inside MBS & ABS went to press. Lawmakers had been considering raising $4 billion of new revenue from increased guarantee fees from the two government-sponsored...

The Department of Housing and Urban Development plans to use revenues from proposed FHA premium hikes and servicer settlements to stabilize the Mutual Mortgage Insurance Fund and bring capital reserves back to compliance. The proposals for annual premium increases on forward FHA-insured mortgage loans, multifamily and health care loans were laid out in the FY 2013 HUD budget, which the Obama administration sent to Congress this week. During a press briefing, HUD Secretary Shaun Donovan said raising FHA premiums further would improve the FHA insurance fund’s capital reserves, which fell ...

In an unusual legal development, the City of St. Paul, MN, late last week suddenly removed its challenge in a case before the Supreme Court of the United States that could have produced a definitive ruling on the disparate impact theory of lending discrimination under the Fair Housing Act. What’s unusual in Magner v. Gallagher is that the city believes it would have prevailed in the nation’s highest court – but opted to ask for dismissal because city leaders came to the conclusion that a victory could substantially undermine important civil rights enforcement in housing throughout the nation. The city expects to...

The Federal Housing Finance Agency’s own data prove that reducing the principal owed on underwater Fannie Mae and Freddie Mac loans would actually save taxpayers money, contrary to the agency’s position that writedowns are against taxpayer interests, according to House Democrats. In a letter last week to FHFA Acting Director Edward DeMarco, Reps. Elijah Cummings, D-MD, and John Tierney, D-MA, labeled the agency’s report justifying its policy against principal reduction as “seriously deficient and misleading.” “We understand that the FHFA is not part of the Obama administration, and that you do not take...

The already formidable task of replacing the outgoing CEOs at Fannie Mae and Freddie Mac got a little harder this week following swift congressional action to cut compensation levels at the GSEs down to size.Both the House this week and the Senate have approved by overwhelming margins the Stop Trading on Congressional Knowledge Act of 2012, which would bar members of Congress and congressional staff from using non-public, inside information for private gain.While the House version of the STOCK Act is weaker than the Senate’s, both versions retained an amendment sponsored by Sens. John McCain, R-AZ and Jay Rockefeller, D-WV, to prohibit Fannie and Freddie executives from receiving multi-million dollar bonuses while the GSEs remain in federal conservatorship.

Fannie Mae and Freddie Mac’s debt issuance would be accounted for in the calculation of the federal debt under legislation passed by House Republicans this week.Members approved H.R. 3581, the Budget and Accounting Transparency Act of 2012, sponsored by Rep. Scott Garrett, R-NJ, by a 239 to 181 vote. Garrett’s bill is part of a comprehensive package of 10 reform bills House GOP members are pushing to enforce spending controls and oversight of federal spending.“Off-budget liabilities such as government-sponsored enterprises Fannie Mae and Freddie Mac threaten any progress we make towards deficit and debt reduction,” said Garrett, who is vice chairman of the Budget Committee, as well as chairman of the House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises.

The second most senior Democrat on the House Financial Services Committee has filed a bill that would require Fannie Mae and Freddie Mac to reduce the principal on loans they own or guarantee.The Principal Reduction Act of 2012, H.R. 3841, sponsored by Rep. Maxine Waters, D-CA, would prevent foreclosure of, and provide for the reduction of principal on, mortgages held by the GSEs.Specifically the bill would require Fannie and Freddie to reduce principal to a 90 percent loan-to-value ratio. It would protect taxpayers by requiring shared appreciation of one-third of the profits if the home is sold and it would allow the GSEs to recapture any reduced funds if the loan subsequently defaults and enters foreclosure.