New York Attorney General Eric Schneiderman this week sued JPMorgan alleging fraudulent and deceptive acts in the pooling and sale of residential MBS by now-defunct Bear Stearns. Filed in the New York Supreme Court in Manhattan, the lawsuit is the first of several legal actions contemplated by the Residential MBS Working Group, a state-federal task force created by President Obama earlier this year to investigate those suspected of contributing to the financial crisis through the sale of defective mortgage certificates. Bear Stearns, which was taken over by JPMorgan, and co-defendant EMC Mortgage perpetuated...

If a mortgage lending industry that remains anxious about regulatory overkill wants to capture the attention of regulators and policymakers and convince them to lighten up, it will make more of an inroad talking about how those regulations will hurt consumers as opposed to lamenting the impact on companies themselves, a top industry official said this week. Among the regulatory rulemakings keeping mortgage industry representatives up at night are the Basel III proposal, the pending qualified mortgage rule, the qualified residential mortgage rule, the repurchase rule and the loan originator compensation rule, according to Mortgage Bankers Association President and CEO David Stevens. However, “The real thing that I think all of us have to be vocal and adamant about as we talk about these rulemakings, is...

The Consumer Financial Protection Bureau has been discreetly broadening its influence on statutory and regulatory interpretations through its largely unannounced filing of amicus curiae briefs in a handful of important cases brought by private litigants, according to an analysis of the CFPB’s legal activity by two leading industry attorneys.Since December 2011, the bureau has filed six such “friend-of-the-court” briefs in federal appellate cases, always assuming the role of steadfast consumer advocate, according to a review of the briefs by Arthur Axelson and Jeffrey Jamison, senior counsel and associate, respectively, with the Dykema law firm. In fact, “in several of its amicus curiae briefs, the CFPB has even sought to reverse a general consensus among the federal appellate courts,” the pair noted. In Birster v. American Home Mortgage Services, Inc., filed Dec. 21, 2011, in the 11th Circuit Court of Appeals, the question of interest to the bureau was whether activity surrounding foreclosure is immune from the Fair Debt Collection Practices Act. The CFPB argued that it is not. In Marx v. General Revenue Corp., filed Jan. 26, 2012, in the 10th Circuit Court of Appeals, there were...

Low house prices remained the biggest obstacle to borrowers being approved for mortgage credit in 2011, according to a new Inside the CFPB analysis of Home Mortgage Disclosure Act data. Some 23.4 percent of application rejections in 2011 were because of insufficient collateral, roughly even with the 23.8 percent rate back in 2010. Although there was some firming up of house prices in a number of markets last year, the overall market continued to be under significant stress. Low house values were a bigger...

Mortgage lending oversight by the CFPB and the states will likely be far more interrelated and integrated in the future than might be expected – this in response to the rulemaking and enforcement jurisdictional shake out that occurred as a result of the Dodd-Frank Act, a top regulator told industry participants at a recent mortgage lending conference. “The CFPB can’t cover everything, because of resources – it isn’t that big of an agency. But more importantly, it lacks the legislative authority to cover everything that...

The U.S. District Court for the District of Massachusetts recently decertified a class of borrowers who claimed that their mortgage lender violated the Equal Credit Opportunity Act and the Fair Housing Act by allowing its brokers to impose charges not related to a borrower's creditworthiness. In Barrett v. Option One Mortgage Corp., No. 08-10157, 2012 WL 4076465, the borrowers, who are African-American, claimed that the lender’s loan pricing policy had a disparate impact on African-American borrowers who...

The CFPB appears to be helping borrowers feel better about taking out a mortgage over the Internet, according to a top industry technology firm. Mortgage Marvel, the online mortgage shopping service of mortgage technology firm Mortgagebot, recent conducted an examination of its application history and data to help answer the question: Is the CFPB friend or foe? “According to the data, applications are up significantly when compared to last year’s data,” said Rick Allen, senior vice president of client services...

The CFPB is playing hardball with PHH Corp. – and by extension, the rest of the mortgage lending industry – by recently refusing to amend, let alone withdraw, the civil investigative demand it issued earlier this year to the firm. “PHH’s petition to modify or set aside the Civil Investigative Demand in this matter is denied,” CFPB Director Richard Cordray said in a ruling recently. That means PHH will soon have to produce “all responsive documents, items and information within its possession, custody or control that...

A new study by the CFPB of different credit scoring models found that for “a substantial minority” of consumers, different scoring models gave meaningfully different results. The study found that for 73 to 80 percent of consumers, different scoring models place consumers in the same category of credit quality. Different scoring models place consumers in credit-quality categories that are off by one category 19 to 24 percent of the time. And from 1 to 3 percent of consumers are placed in categories that are two or more...