The Consumer Financial Protection Bureau, in a conciliatory gesture to a wary industry, recently announced the existence of a formal Early Warning Notice process that will provide advance notice of potential enforcement actions to individuals and firms under investigation. The process is modeled on similar procedures that have been successful at other federal agencies, according to the CFPB. It starts with the bureau’s Office of Enforcement explaining to individuals or firms that evidence gathered in a CFPB investigation indicates they have violated consumer financial protection laws. Recipients of an Early Warning Notice are then invited to submit a response in writing, within 14 days, including any relevant legal or policy arguments and facts. The Early Warning Notice process “strikes a balance between the goal of fairness to those being investigated and our mission to protect consumers,” said Raj Date, special advisor to the secretary of the Treasury for the CFPB. “This process will help us fulfill our commitment to transparency in enforcing the law.”

Federal Housing Finance Agency.Office of the Comptroller of the Currency. Single Uniform Audit Program discussed. Representatives of mortgage servicing and foreclosure law firms met with officials from the Federal Housing Finance Agency and the Office of the Comptroller of the Currency recently to discuss development of a Single Uniform Audit Program to replace the individual servicer reviews of foreclosure law firms as required by the bank regulators’ consent orders and regulatory directives. Industry reps are said to be developing a straw-man proposal.

The Government Accountability Office recently confirmed the view widely held in the mortgage finance industry that federal regulators are not doing enough to analyze the cost and other effects of implementing the Dodd-Frank Act. “Little is known about the actual impact of the final Dodd-Frank Act rules, given the short amount of time the rules have been in effect,” the GAO said. The government watchdog noted that federal financial regulators are required to perform a variety of analyses, but the requirements vary and none of the regulators are...

A proposed Senate bill to steadily wind down Fannie Mae and Freddie Mac over the course of a decade appears to have some support at the Federal Housing Finance Agency, where the acting director is eager for Congress to move toward resolving the three-year-old conservatorships of the two government-sponsored enterprises. S. 1834, the Residential Mortgage Market Privatization and Standardization Act of 2011 would gradually reduce the two GSEs over 10 years through an unusual mechanism. Instead of guaranteeing the entire MBS trust as they...

Although primary market lenders will face fewer hurdles in originating refinance loans for underwater Fannie Mae and Freddie Mac borrowers, detailed guidelines released by the government-sponsored enterprises this week confirm that it will take several months before the expanded programs are fully implemented. And when they are, the revamped Home Affordable Refinance Program will generate up to one million new loans that otherwise wouldn’t have happened, according to estimates by Keefe, Bruyette & Woods. That’s just about what the market expected, and it will mean... (Includes one data chart)

The outstanding supply of subprime mortgages in the market continued to decline in the third quarter, but three special servicers significantly increased their portfolios, according to a new ranking and analysis by Inside Nonconforming Markets. The growing servicers – Ocwen Financial, Nationstar Mortgage and Walter Investment Management – all focus on high-touch servicing. Special servicing is in particularly high demand as banks have started to sell their subprime holdings, a trend expected to...

The high-cost loan limits for FHA mortgages will be re-elevated to $729,750 through at least the end of 2013 while the government-sponsored enterprises’ loan limits will remain unchanged under appropriations legislation approved by Congress this week. Industry participants suggest that the FHA’s newly higher loan limits will have little impact on non-agency jumbo activity. The revised FHA loan limits were included in “mini-bus” appropriations legislation for the Department of Housing and Urban Development and other federal agencies. The bill – which also contained a Continuing Resolution to avoid a government shutdown – was...

The Federal Housing Finance Agency’s recent proposal to revamp servicer compensation has received mixed reactions from non-agency participants. High-touch servicers approve of the landscape-shifting fee-for-service proposal but analysts suggest that the system would be much more difficult to establish for non-agency mortgages than for agency loans. Ocwen Financial and other servicers that predominantly handle delinquent mortgages favor the FHFA’s proposal that would significantly increase the fees paid to service delinquent loans and lower the base servicing fee for performing loans, perhaps to...

Mortgage real estate investment trusts, along with investors, urged the Securities and Exchange Commission to maintain certain exemptions for mortgage REITs or risk further housing finance issues. REITs are seen as key in efforts to reduce the federal government’s current support of mortgage finance. “Mortgage-focused real estate investment trusts, such as Redwood, are well-suited to carry out this key mortgage banking business function,” said Andrew Stone, general counsel for Redwood Trust. “However, these companies need to continue to be able to rely on the [SEC] exclusion in order to efficiently and effectively carry out...

Recent modifications on non-agency mortgages performed relatively well but mod activity is slowing down, according to new data. The relative lack of activity applies to both the Home Affordable Modification Program and proprietary non-agency mod efforts. About 33.5 percent of non-agency mortgages were delinquent as of the third quarter of 2011, according to LoanPerformance, and 46.0 percent of all non-agency borrowers have negative equity. However, Fitch Ratings found that only 24.0 percent of outstanding non-agency mortgages (measured by loan balance) have been modified at least once, up from 20.0 percent at the...