Whistleblowers that bring a False Claim Act claim against an FHA lender based on previous publicly disclosed information have no standing, according to a recent federal district court ruling. Judge Jack Zouhary of the U.S. District Court for the Northern District of Ohio dismissed an FCA lawsuit against U.S. Bank because the whistleblower had neither direct nor independent knowledge of the bank’s alleged false claims – two basic requirements for standing in a whistleblower suit. The Advocates for Basic Legal Equality (ABLE), an Ohio-based legal aid group, filed an FCA lawsuit against U.S. Bank for allegedly disregarding and violating FHA regulations. The group accused the bank of filing false claims and collecting payments without evaluating loss mitigation alternatives before foreclosing on properties. According to ABLE, it had consulted with “many people,” whose mortgage loans were ...

The Department of Veterans Affairs has issued a policy clarifying that VA lenders must treat veterans in same-sex or opposite-sex marriages equally and fairly when processing and underwriting their home-loan applications. The policy is effective immediately. Under the new policy announced on May 19, the VA will process all claims and applications involving same-sex marriages in the same manner as claims and applications based on opposite-sex marriages, “without any additional scrutiny or development.” Language on VA forms, web pages and other VA communication materials will be revised to ensure that all veterans, VA program administrators and personnel are aware of the equal-treatment policy. The new instructions require VA lenders to accept a claimant’s or an applicant’s assertion of ...

Congress is considering streamlining the U.S. Department of Agriculture’s single- and multifamily housing programs as lawmakers expressed concern about reports of inefficiency, inflexible underwriting and weak risk management. In an oversight hearing conducted recently by the House Financial Services Subcommittee on Housing and Insurance, lawmakers also considered a suggestion to merge the USDA’s Rural Housing Service and FHA single-family mortgage insurance programs because of overlapping functions and certain similarities in their borrower profiles. “The process of dealing with RHS is a nightmare,” said Blaine Luetkemeyer (R-MO), vice chairman of the committee. “It is 2015 but we have a housing program that operates like it is 1975.” Complaints against the RHS include little or no accountability across government programs, significant lack of ...

Mortgage-related issues will likely play a central role in the end product of financial regulatory relief legislation working its way through the U.S. Senate. For now, though, the measure passed by the Senate Banking, Housing and Urban Affairs Committee last week is really an opening gambit, as congressional staffers confer over technical details and lawmakers horse trade and arm twist. “It’s a starter,” said Bob Davis, head of mortgage markets and the senior lobbyist at the American Bankers Association, speaking of the bill sponsored by committee chairman Sen. Richard Shelby, R-AL, the Financial Regulatory Improvement Act of 2015. “The Shelby bill will be...

Officials involved in the development of the common securitization platform and the single, interchangeable MBS for Fannie Mae and Freddie Mac have vowed not to publicize any timetable for the project. And despite several attempts to get an answer during a panel session at this week’s secondary market conference sponsored by the Mortgage Bankers Association, they stuck to their plan. They went out of their way to stress that they haven’t forgotten about potential non-agency users sometime down the road. But that’s...

The Senate Banking, Housing and Urban Affairs Committee approved a Republican regulatory relief bill on a strictly partisan vote late this week, with all of the mortgage-finance provisions previously reported intact. Sen. Pat Toomey, R-PA, momentarily offered Fannie Mae and Freddie Mac a “get out of jail free” card, in the form of an amendment addressing capital requirements for the two government-sponsored enterprises, then withdrew it, presumably for use at a future point in time. “This is...

U.S. Mortgage Insurers Supports GSE Risk-Sharing. The USMI wrote a letter this week to Sen. Richard Shelby, R-AL, in support of Shelby’s regulatory relief bill, which calls on the GSEs to engage in front-end risk sharing transactions. “This directive would make greater use of private capital to “de-risk” the GSEs, lower the exposure and costs for the enterprises and taxpayers and should lower costs to borrowers,” the trade group said. Fannie Names Winning Bidders of First NPL Sale. Fannie Mae unveiled the winning bidders on its first-ever sale of non-performing mortgages last week: SW Sponsor LLC and PRMF Acquisition, the latter of which is an affiliate of Neuberger Berman Fixed Income Funds. The GSE...

Housing is showing some traction, but heavy regulation and enforcement continue to weigh on the mortgage market, according to analysts at this week’s secondary-market conference sponsored by the Mortgage Bankers Association in New York. Charles Gabriel, president of Capital Alpha Advisors, said there are some green shoots in the mortgage market, including signs of more home sales. But he characterized it as “a mature market that is suboptimized.” Lenders have paid massive penalties in lawsuits, he added, and there is no sign that they will expand the credit box. “U.S. Bank was asked...

The noise over regulatory relief legislation is getting louder. Over the past week, Republicans in the Senate issued a clarification of sorts about their draft legislation, Democrats came up with a narrower alternative and the industry weighed in as the Senate Banking, Housing and Urban Affairs Committee prepared for a markup scheduled for late this week. A noteworthy provision in the Democrats’ proposal would extend qualified-mortgage status for loans originated and held in portfolio – but only if the depository institution has less than $10 billion in assets. The GOP bill would extend this safe harbor to all banks, thrifts and credit unions. The Democratic proposal would bar...

If one of the sponsors of the Dodd-Frank Act supports giving mortgage lenders an enforcement break when the CFPB’s integrated disclosure rule kicks in later this year, you know something serious is afoot. Such is indeed the case. Rep. Brad Sherman, D-CA, one of the original backers of Dodd-Frank, has crossed the partisan aisle in the House Financial Services Committee to join Rep. Steve Pearce, R-NM, in introducing H.R. 2213. Their bill would grant lenders a temporary safe harbor from enforcement of the rule integrating the required mortgage disclosures under the Truth in Lending Act and the Real Estate Settlement Procedures Act. More specifically, H.R. 2213 would protect lenders from private lawsuits and regulatory enforcement actions through Dec. 31, 2015, ...