Some top legal minds expect to see more investigations, and perhaps settlements, brought by the Residential MBS Working Group in the months ahead, and they’ll likely be flavored by interagency turf wars and the political ambitions of the elected officials that are helping to steer the group’s actions. “Just on the basis of prosecutorial rivalry, you can expect there will be further activity in this area,” said Jeremiah Buckley, partner in the BuckleySandler law firm, during a webinar discussion this week on the working group’s activities. Andrew Schilling, former chief of the Civil Division of the U.S. Attorney’s Office for the Southern District of New York...
The massive legal action initiated by the Federal Housing Finance Agency about a year and a half ago on behalf of Fannie Mae and Freddie Mac against many of the nation’s biggest non-agency MBS issuers and underwriters for allegedly misrepresenting toxic MBS netted its first settlement this week with the prospect of more where that came from. In papers filed with the U.S. District Court, Southern District of New York, the FHFA “voluntarily dismisses with prejudice” its lawsuit against General Electric Co., ending the legal action in which the FHFA had claimed the firm had misled Freddie into purchasing some $549 million of toxic MBS. “This settlement resolves...
Lawyers involved in securitization issues said they are feeling both anxiety and relief regarding regulatory issues in 2013. The feelings have been prompted by the Dodd-Frank Act with the greatest looming issue being risk-retention requirements. “To say that there is a lot of anxiety with this rule cannot be overstated and I really think it’s an impediment to some asset classes really getting traction in 2013, particularly mortgages,” Jon Van Gorp, a partner at the law firm of Mayer Brown, said on an outlook conference call late last week. “No one knows...
New rules from the Consumer Financial Protection Bureau require servicers to consult with loan owners regarding the loss mitigation process and increase reporting of loss mitigation activity. Senior officials at the CFPB said they have received complaints that servicers are not offering loan modification options allowed by loan owners, including non-agency mortgage-backed security investors. A senior CFPB official said servicers do not always have strong incentives to offer ...
Loan originator compensation requirements released this week by the Consumer Financial Protection Bureau aim to prohibit steering to subprime mortgages. The CFPB noted that during the subprime boom, some borrowers who would have qualified for prime loans were steered into subprime loans, with the steering largely tied to LO compensation. “Before the financial crisis, many mortgage borrowers were steered towards risky and high-cost loans because it meant more money for the loan originator,” said Richard Cordray ...
Federal regulators approved a final rule last week to set new appraisal requirements for higher-priced mortgage loans. The requirements include a complete exemption for “qualified mortgages” and certain other originations. Comptroller of the Currency Thomas Curry said the rule, along with the CFPB’s recent ability-to-repay rule, are key components in addressing the “worst economic practices since the Great Depression.” The final rule requires lenders originating HPMLs to obtain ...
Take extra time to read your FHA Annual Recertification Attestation before signing. It might make the difference between peace of mind and a world of pain. Phillip Schulman, compliance expert and partner with K&L Gates, said lenders have gotten themselves in hot water with the Department of Housing and Urban Development, and their executives threatened with debarment, because they failed to read the fine print. Each year, mortgage lenders are required to sign and submit to HUD a document attesting to the company’s compliance with all HUD-FHA regulations and policies and that ...
Can a lender rely on an approval from the FHA’s automated underwriting system in determining whether a mortgage loan is a “qualified mortgage?” Lawyers at BuckleySandler, a Washington, DC, law firm, indicated some uncertainty after poring over the Consumer Financial Protection Bureau’s final “ability-to-repay” rule governing residential mortgage lending under new Truth in Lending Act regulations. Effective on Jan. 10, 2014, the final rule requires lenders to verify a borrower’s financial information and determine the borrower’s capacity to repay the loan over the long term. It also creates a ...
Poor oversight and monitoring have allowed certain borrowers with Home Equity Conversion Mortgage loans to illegally rent their properties to participants in the federal government’s Section 8 housing choice voucher program, according to the Department of Housing and Urban Development’s Office of the Inspector General (OIG). The second of two OIG audit reports on HUD’s oversight of the HECM program has concluded that department policies did not always ensure that borrowers complied with the program’s residency requirements. The audit found that 37 out of 174 HECM borrowers reviewed were ...
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