Rep. Jeb Hensarling this week provided a detailed blueprint for his vision of the MBS market that would replace Fannie Mae and Freddie Mac with a voluntary securitization platform that would be prohibited from providing any guaranties, government-backed or otherwise. The Texas Republican’s proposed National Mortgage Market Utility would be built from the work already underway at the government-sponsored enterprises to design a common securitization platform. Like the existing CSP project, which was assigned to the GSEs by their regulator, the NMMU would develop standards for servicing, pooling and securitizing home mortgages, as well as a “publicly accessible securitization outlet.” Hensarling’s proposed utility, part of his Protecting American Taxpayers and Homeowners Act, goes...

The Securities Industry and Financial Market Association cautioned drafters of a proposed model law on mortgage foreclosures against adopting a provision that would eliminate or repeal the holder-in-due-course rule in the case of home loan foreclosures. Commenting on the Uniform Law Commission’s discussion draft on the “Residential Real Estate Mortgage Foreclosure Process and Protections,” SIFMA urged the commission not to repeal or limit the holder rule. The trade group warned that the rescission of the rule in the context of home loan foreclosures could convert a secured loan into an unsecured loan. “This is...

A recent decision by the Second Circuit Court of Appeals on a key aspect of the timing of securities lawsuits – squarely at odds with the ruling of another federal appeals court – has called into the question the legal viability of a 40-year-old Supreme Court precedent, prompting expectations that the high court will eventually clarify the conflict. The Second Circuit on June 27 ruled in Police & Fire System of City of Detroit v. IndyMac MBS Inc. to uphold a lower court ruling that blocked retirement systems from intervening in a putative class action that accused several major banks – including IndyMac, Morgan Stanley and Goldman Sachs – of misrepresenting certain MBS. The groups had attempted...

The issue of whether mortgage loan officers should be eligible for overtime pay has long been a bone of contention between companies and LOs.

The Senate Banking Committee is expected to advance Rep. Watt’s nomination to the Senate floor, strictly along party lines.

Hedge funds continue to salivate over mortgage servicing rights. Meanwhile, the Hensarling GSE bill goes down like a Led Zeppelin.

The Republican leadership of the House Financial Services Committee this week unveiled a comprehensive housing finance reform bill, including a series of proposals to “right size” the FHA, redefine its mission and reestablish it as a stand-alone agency. At the same time, Senate Banking Committee Chairman Tim Johnson, D-SD, and Ranking Member Mike Crapo, R-ID, announced they have reached a bipartisan agreement on legislation that would ensure the solvency of the FHA. Both lawmakers expect to introduce a bill next week. The House FHA reform measures were introduced in tandem with reform proposals for ...

The FHA has proposed measures to strengthen its oversight of FHA lenders and each measure could potentially increase lenders’ liability and compliance risk, compliance experts warned. Published for comment in the July 9 Federal Register, the proposals are part of a new enforcement regime that the FHA is considering to monitor and sanction lenders. They cover statistical sampling, origination quality standards, annual reviews, compare ratios, and indemnification and other remedies for loan defects. The proposed enforcement measures, however, raise a ...

The New York State Department of Financial Services has directed FHA lenders to refrain from applying the FHA’s higher mortgage insurance premiums in calculating a loan’s annual percentage rate and fully indexed rates for 60 days to prevent loans from becoming “high cost” or subprime. At the same time, the department issued guidance to conventional lenders on how to interpret existing provisions in state banking law regarding subprime loans. Statutory changes were made in 2009 to prevent some loans from becoming “subprime,” as defined by state law. Spikes in mortgage interest rates in the past few weeks plus ...

A post-endorsement review of FHA loans during the first quarter of 2013 has revealed a high percentage of materially defective loans.The defects apparently went undetected during the underwriting process and were uncovered only during a loan-level review that the FHA routinely conducts to ensure that newly originated, higher-risk loans comply with agency requirements. The Department of Housing and Urban Development’s Office of Lender Activities and Program Compliance reported that 44 percent of 6,251 single-family mortgage loans that were reviewed in the first ...