Fannie Mae and Freddie Mac could repay the U.S. Treasury faster than previously forecast, according to updated projections of potential draws for the two government-sponsored enterprises issued last week by the GSEs’ conservator. According to the Federal Housing Finance Agency, Fannie and Freddie are expected to draw between $191 billion and $209 billion from Treasury by the end of 2015. This year’s “reduced and more stable” projection by the FHFA is lower than the previous estimate made only a year ago, which offered a range of between $220 billion and $311 billion for total support through the end of 2014. “The key drivers of those results include...

The Department of Justice’s recent civil lawsuit against Bank of America/Countrywide over allegedly defective loans sold to Fannie Mae and Freddie Mac is a clear sign of the government’s more aggressive use of the False Claims Act and the 1989 thrift bailout law to target not only participants in government loan programs but any lender who sold loans to the government-sponsored enterprises, according to industry lawyers. Filed last week by the U.S. Attorney for the Southern District of New York, the suit is another example of the government’s increasingly aggressive effort to recoup taxpayer losses from the financial meltdown and to remind potential violators of the significant whistleblower provisions in the FCA and the Financial, Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), noted the Washington, DC, law firm BuckleySandler. The DOJ is following...

Smaller mortgage lending institutions remain apprehensive about their legal liability when it comes to originating qualified mortgages under the CFPB’s pending QM/ability-to-repay rule, and hope they’ll get a full safe harbor. Recent talk has mounted that the bureau is considering a two-tier approach to its QM rule: a safe harbor for mortgages that will be defined as “prime,” and the lesser rebuttable presumption for subprime or nonprime. Elizabeth Eurgubian, vice president and regulatory counsel for the...

Last week, the Department of Justice raised eyebrows in a $1 billion legal action against Bank of America as successor to Countrywide Financial by filing the first civil fraud suit alleging violations of the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act in the sale of mortgages to Fannie Mae and Freddie Mac. The federal government asserts that since the Treasury Department has had to bail out Fannie and Freddie, approximately $1 billion in losses suffered by the companies...

The CFPB has released its proposed credit card ability-to-pay rule, an effort by which the bureau intends to make it easier for spouses or partners who do not work outside of the home to qualify for credit cards. The Credit Card Accountability Responsibility and Disclosure Act (CARD Act), enacted in 2009, requires that card issuers evaluate a consumer’s ability to make the necessary payments before opening a new credit card account. Under current CARD Act regulations issued by the Federal Reserve, a card issuer...

Representatives of the mortgage lending and financial services industries jointly told federal regulators they strongly support efforts to prevent property “flipping,” but they are also concerned that the regulators’ proposed rule to implement requirements for property appraisals in connection with “higher-risk mortgage” loans might be far too complicated. “[T]he main complexity of the proposed rule relates to the fact that Congress defined higher-risk mortgages based on the spread of the annual percentage rate (APR) over...

The new cop on the financial services beat is strongly encouraging lenders and other financial services providers to make sure they have a robust compliance management system in place to closely monitor their fair lending activities in light of the letter and spirit of various consumer protection laws. Anna-Marie Tabor, the acting head of the CFPB’s Office of Fair Lending and Equal Opportunity, told participants in a recent fair lending webinar sponsored by the Federal Reserve that an adequate compliance...

Lender and financial services industry representatives, commenting on the CFPB’s recently released five-year strategic plan, called for clear, comprehensive guidance to the industry along with enough time to ensure full compliance, given the sheer volume of all the other rulemakings being promulgated in the wake of the financial crisis. The American Financial Services Association, the Consumer Mortgage Coalition and the Mortgage Bankers Association said they were pleased that the first goal in the strategic plan is to prevent...

A report recently issued by CFPB Student Loan Ombudsman Rohit Chopra likens complaints in the massive student loan sector to complaints related to problems in mortgage servicing. “The complaints and input received by the bureau resemble many of the same issues experienced by mortgage borrowers, such as improper application of payments, untimeliness in error resolution, and inability to contact appropriate personnel in times of hardship,” the report stated.

Last week, the CFPB released a report entitled, “The Next Front? Student Loan Servicing and the Cost to Our Men and Women in Uniform,” outlining the unique servicing obstacles reported by U.S. military service members seeking to pay off student loan debt. “Since I began this job almost two years ago, I’ve visited over 40 different military installations – talking to senior leaders, military service providers and thousands of service members and spouses,” said Holly Petraeus, head of the bureau’s Office...