The Federal Housing Finance Agency violated federal law when it rolled back the Property Assessed Clean Energy program without going through the required notice and comment period, a California federal judge ruled earlier this month. U.S. District Judge Claudia Wilken’s Aug. 9 ruling held that the FHFA was not acting as conservator of Fannie Mae and Freddie Mac but as a regulator that had improperly exercised substantive regulatory oversight in violation of the Administrative Procedure Act when the agency put a stop to GSE involvement with PACE programs.“The FHFA’s directives on PACE obligations amount to substantive rule-making, not an interpretation of rules that would be exempt from the notice and comment requirement,” wrote Judge Wilken. “The notice and comment process must be followed.”

A New York federal judge has denied a motion by former Fannie Mae top executives to dismiss a civil action brought against them by the Securities and Exchange Commission concerning the company’s misrepresentations about its exposure to subprime and Alt A mortgages in the two years leading up to the GSE’s government takeover. On Aug. 10, U.S. District Court Judge Paul Crotty rejected the motion brought by former Fannie CEO Daniel Mudd, former Chief Risk Officer Enrico Dallavecchia and former EVP for Single Family Thomas Lund. The defendant trio argued that investors had sufficient information to form their own conclusions about the viability of Fannie’s subprime and Alt A portfolio.

Plans to hasten the resolution of Fannie Mae and Freddie Mac through an amended preferred stock purchase agreement (PSPA) announced last week by the Treasury Department and the Federal Housing Finance Agency has elicited mixed responses from stakeholders. Views vary as to whether the new deal will actually benefit taxpayers or simply protect holders of government-sponsored enterprise debt. The revised agreement will speed up the reduction of both GSEs’ investment portfolios, from an annual rate of 10 percent to ...

Lenders won a number of concessions from the Consumer Financial Protection Bureau last week when the regulator proposed rules for loan originator compensation. However, the proposal also includes significant provisions that would impact lender profitability and originator compensation. For firms currently offering compensation arrangements that would be prohibited by the proposal, the CFPB said its proposed prohibition on compensation based on transaction terms “may contribute to adverse selection ...

The Consumer Financial Protection Bureau late last week released a proposed mortgage loan origination regulation, and perhaps most notable is what’s not in it – a required flat fee – a decision likely to be embraced by mortgage lenders. In a conference call with reporters, bureau officials said that after consulting with industry representatives and community advocates, the CFPB concluded a flat fee proposal would not be in consumers’ best interests. The Dodd-Frank Wall Street Reform and Consumer Protection Act places...

The Consumer Financial Protection Bureau has come out with an extensive set of proposed rules addressing numerous mortgage servicing issues in the form of two related notices designed to protect homeowners from surprises and costly mistakes by their mortgage servicers. The first proposal aims to give borrowers clear and timely information about their mortgages so they can avoid costly surprises, and would bring greater transparency to the market, according to the bureau. The proposed rule would try to do this...

Six federal financial regulatory agencies have put out a proposal to establish new appraisal requirements for mortgage loans deemed to be higher risk. The Dodd-Frank Act generally defines a “higher-risk mortgage” as a closed-end consumer credit transaction secured by a principal dwelling with an annual percentage rate exceeding certain statutory thresholds (1.5 percent for first-lien loans, 2.5 percent for first-lien jumbo loans, and 3.5 percent for subordinate-lien loans). “Qualified mortgages” will be exempt from this...

It looks like the Consumer Financial Protection Bureau is going into stealth mode to try to find lender violations of various consumer protection laws. A job opening at the CFPB that was posted on a Treasury Department jobs listing suggests the bureau plans on using a mystery shopper or perhaps something a little more ominous, all in the name of consumer protection. According to the ad, the CFPB is looking for an investigator who “will work under the direction of enforcement attorneys to plan, organize, and conduct a wide...

The new amicus brief filing policy publicly articulated by the Consumer Financial Protection Bureau in recent weeks has some industry legal representatives concerned. The CFPB’s proactive approach in this regard is dramatically different to the approach taken by the Federal Reserve Board when it was charged with implementing federal consumer financial protection statutes such as the Truth in Lending Act, according to Barbara Mishkin, of counsel in the consumer financial services practice group at the Ballard...

The Consumer Financial Protection Bureau initiated a pair of potentially significant enforcement actions in recent weeks, but the agency has yet to really reveal any noteworthy part of its strategic playbook under its “unfair, deceptive and abusive acts and practices” authority as per the Dodd-Frank Act. One of the take-aways from these cases is that “the CFPB did not rely on its UDAAP authority to provide any look into what they may consider abusive,” said Donald Lampe, partner and head of the financial services regulatory...