The mortgage industry is facing mounting legal challenges to force-placed insurance practices as evidenced by two class-action lawsuits filed or advanced last week while state and federal policymakers look for ways to reduce homeowner costs on lender-placed insurance. A Florida homeowner filed a class-action lawsuit in federal court in Fort Lauderdale against Wells Fargo Bank, accusing the lender of engaging in a pattern of “unlawful and unconscionable profiteering and self-dealing” by charging inflated force-placed insurance premiums to homeowners who had allowed their coverage to lapse. Ira Fladell, a lawyer representing himself, claims the bank breached its contract with him and acted in bad faith and that the lender bought...

Former Freddie Mac executive David Stevens had a change of heart and will not step down as the head of the Mortgage Bankers Association in order to take the number two job at SunTrust Mortgage as initially planned, much to the relief of industry observers. Stevens’ resignation as MBA president and CEO was to have taken effect June 30. However, the association declared on July 2 that Stevens would not relocate to SunTrust’s Richmond, VA, headquarters but rather remain ensconced in the MBA’s downtown DC corner office. On May 30, Stevens, 55, announced his resignation as the MBA’s head barely a year after he was recruited as a marquee player to revive the downsized and demoralized trade group.

Fannie Mae will no longer purchase or securitize mortgages on properties encumbered by certain transfer fee covenants that were created on or after Feb. 8, 2011, under a new policy that goes live next week. The policy, which takes effect July 16, follows a rule finalized by the Federal Housing Finance Agency in March that prohibits Fannie, Freddie Mac and the Federal Home Loan Banks from taking on mortgages “encumbered by certain types of transfer fee covenants and related securities.” In light of the new policy, mortgages on affected properties must be purchased by Fannie as whole loans no later than July 13, 2012, or must be delivered by July 13 into MBS pools with issue dates before July 1, 2012.

The McGraw-Hill Companies announced it has tapped Freddie Mac’s former chief executive as the newest member of its board of directors. Charles Haldeman became the company’s 13th director last week after the company added a new seat to the board table. The rating agency Standard and Poor’s is part of the McGraw-Hill companies.

Fannie Mae executives and staffers were at the front of the line of Countrywide Home Loan’s sophisticated influence peddling operation that showered not just GSE employees but Washington insiders with deeply discounted mortgage loans in order to curry favor, according to a newly released House committee report. The 136-page report completes a three-year investigation by the House Oversight and Government Reform Committee of Countrywide’s so-called Friends of Angelo program, named after CEO Angelo Mozillo, which ran for a dozen years until the lender was acquired by Bank of America in 2008.

Mortgages modified by Fannie Mae performed slightly better than Freddie Mac loans in the short term although the performance gap between the two GSEs remained relatively narrow one year after modification, according to the Office of the Comptroller of the Currency.The OCC Mortgage Metrics Report for the First Quarter of 2012 noted that Fannie loans had an 11.4 percent re-default rate three months after modification, while Freddie mods saw a 12.3 percent rate. At the six-month mark, Fannie stood at 18.3 percent compared to Freddie’s 18.6 percent.

Despite the full implementation of the recently expanded Home Affordable Refinance Program in June and a refi boost that followed, Fannie Mae’s and Freddie Mac’s new volume declined during the second quarter of 2012, according to a new Inside The GSEs analysis. Fannie and Freddie issued $273.95 billion in single-family mortgage backed securities during the second quarter, a 10.2 percent drop from the first three months of the year. Thanks to the huge $305.21 billion of GSE business during the first quarter, the market was still 39.3 percent ahead of the pace set during the first half of 2011.

The Federal Housing Finance Agency said last week it is ready to take its initiative to dispose of GSE and government-held real estate-owned properties to the next level, but a California House Republican is demanding the pilot program skip over his state. The FHFA announced it has chosen winning bidders in its REO pilot venture with the transactions expected to close early in the third quarter. Although the winning bidders weren’t publicly identified by the FHFA, the agency has declared this first round to be a success and is planning the next round of sales, according to FHFA Acting Director Edward DeMarco.

Freddie Mac announced this week that it has tapped a former JPMorgan Chase executive to serve as the GSE’s new head lawyer. William McDavid will start work next week as Freddie’s executive vice president, general counsel and corporate secretary. He replaces Alicia Myara, who has served as the GSE’s interim general counsel since November 2011. McDavid was co-general counsel for Chase from 2004 until he retired in 2006 and previously served solo as general counsel for several Chase predecessors going back to Chemical Bank in 1988.

Mortgages sold to Fannie Mae and Freddie Mac are increasingly coming from lenders’ retail production channels, according to a new analysis by Inside Mortgage Trends. In the second quarter of 2012, 58.1 percent of single-family loans securitized by the government-sponsored enterprises were retail originations, up from 52.9 percent in the first quarter. Broker originations dropped from 10.8 percent of GSE business to 9.0 percent, and the correspondent share slipped from 36.3 percent to 32.9 percent. After accounting for a whopping 83.2 percent of Fannie/Freddie business in the first quarter ...