Federal banking regulators and private-sector mortgage servicers have gradually stepped up their efforts to reach out to eligible borrowers facing foreclosure and have taken steps to improve their communication materials. However, they have not undertaken certain “best practices” such as conducting readability tests or using focus groups that might have maximized their potential outreach, the Government Accountability Office said in a new report. “Staff at the Board of Governors of the Federal Reserve System said that this was, in part, a trade off to expedite the remediation...

Rep. Scott Garrett, R-NJ, chairman of the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises, successfully attached an amendment to H.R. 5972, the Department of Housing and Urban Development Appropriations Act, 2013. Garrett’s amendment would gut the disparate impact rule proposed by HUD last September by prohibiting the agency from using any of the agency’s funding to “promulgate, issue, establish, implement, administer, finalize, or enforce” the rule. The congressman’s amendment has strong support from the mortgage...

The Supreme Court of the United States surprised many industry and legal observers late last month by deciding it would not take on a key dispute under the Real Estate Settlement Procedures Act. “The writ of certiorari is dismissed as improvidently granted,” the high court said in a terse announcement. At issue in First American Financial v. Edwards is whether someone who has not suffered any actual damages from alleged RESPA violations has the legal standing to sue in federal court. The SCOTUS decision to not rule on the case, after deciding a year ago to take it on, means the...

California is about to become the first state to enact into law a large portion of the national mortgage servicing settlement that state and federal government officials negotiated this year with the nation’s top five banks and apply it to all lenders. The state legislature passed the Homeowner Bill of Rights last week (AB 278/SB 900). The Democrat-controlled state Assembly approved the bill on a 53-25 vote, with the Senate endorsing the measure 25-13. The legislation will force large lenders to provide a single point of contact, eliminate dual tracking and impose significant civil...

California. Former IndyMac CEO Michael Perry and CFO Scott Keys agreed to a $6.5 million settlement to resolve a class-action lawsuit by shareholders who accused the executives of concealing how badly the mortgage lender’s financial position had deteriorated when they were buying company stock from March 1, 2007, to May 12, 2008. A shareholder’s motion for preliminary approval submitted last week said the pending settlement is “a reasonable resolution” of the dispute and ensures that shareholders will at least make some financial recovery. Florida. In Fuller v. MERS, U.S. District...

House of Representatives.Hearing on Impact of Dodd-Frank. The House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises plans a hearing Tuesday, July 10, on the impact of the Dodd-Frank Act on customers, credit and job creators. The witness list includes the American Securitization Forum and the Securities Industry and Financial Markets Association.House of Representatives.Hearing on Impact of Dodd-Frank on Financial Services Competition...

Twenty-five states are thinking about revising their foreclosure laws to make it harder for lenders to seize properties, out of concern that inefficient loan modifications are leading to unnecessary foreclosures, the Wall Street Journal reported last week. That would prove costly for borrowers in the future, according to Mortgage Bankers Association CEO David Stevens. Should all 50 states decide to go down their own path, lenders are going to have multiple processes, each with their own little nuances, and every single penny of that cost will be borne by tomorrow's borrowers...

A New York state appeals court last week upheld a lower court ruling which dismissed an investor group’s attempt to overturn Bank of America’s proposed $8.5 billion MBS settlement. The five-judge panel of New York’s First Department Appellate Division affirmed Judge Barbara Kapnick’s March 28 decision to dismiss the complaint brought by Walnut Place LLC and related entities. Walnut Place, which represents investors that bought about $1.4 billion of Countrywide non-agency MBS, filed suit in February 2011 claiming Countrywide made false representations on nearly 66 percent of the 2,166 mortgage...

The Federal Deposit Insurance Corp. is revising its definition of subprime mortgages in an effort to better compare bank portfolios, according to analysts that worked on the rule proposed by the FDIC in March. Brenda Bruno, a senior financial analyst at the FDIC, said the regulator is looking to classify “the worst” of subprime mortgages as higher-risk. “We are looking at those assets that are really sort of the ‘bottom of the barrel’ type assets,” she said last week during a webinar sponsored by VantageScore Solutions ...

Non-agency mortgage-backed security investors strongly oppose a proposal in California to reduce principal for borrowers with negative equity by acquiring mortgages via eminent domain. The proposal could set a troubling precedent according to non-agency MBS investors, who are still considering options to prevent such seizures. In June, San Bernardino County along with two cities in the county, Ontario and Fontana, approved a resolution that would allow the municipalities to acquire mortgages with negative equity using eminent domain ...