Mortgage industry participants have mixed views about the FHA’s revised policy on disputed debt despite a general concern over its impact on borrower eligibility and lenders’ bottom lines. This week, the FHA delayed implementation of the policy until July 1 to get more feedback from lenders and industry participants and to work on clarifying guidance. The policy’s initial effective date was April 1. Lenders felt the FHA had bypassed them when the agency decided to announce the policy revision in a Feb. 28 mortgagee letter, along with other FHA underwriting changes. Affected parties should have been able to ...

A Department of Housing and Urban Development proposal to reduce the amount of seller contributions on FHA loans on behalf of homebuyers would lock out lower-income purchasers, limit home sales and stall economic recovery, warned FHA lenders. As the proposal’s comment period ended on March 24, emailed comments opposing the proposed rule continued to pour in at HUD. “We are finally seeing an increase in buyers in our market in the entry-level purchase price,” said one loan officer. “I shudder to think of what will happen if this proposal goes through.” The verdict appears to be ...

The Department of Housing and Urban Development has announced discrimination settlements with two mortgage lenders accused of denying FHA mortgage loans to expectant mothers. Two women filed separate complaints against Magna Bank in Nashville, TN, and Home Loan Center in Irvine, CA, alleging a violation of the Fair Housing Act. According to the complaints, the women’s loan applications were rejected because they were pregnant and temporarily on leave. The settlement agreement with Magna Bank requires the bank to pay the complainant $14,085 for allegedly ...

A legal action brought by a group of four pension funds against Bank of New York Mellon alleging that the bank failed in its role as trustee to Countrywide MBS investors will proceed in federal court, albeit on much narrower grounds, a U.S. District Court judge has ruled. Last week, Judge William Pauley of the U.S. District Court for the Southern District of New York reduced “with prejudice” the number of Countrywide MBS trusts on which the plaintiffs could sue from 530 to 26. The case is Retirement Board of the Policemen’s Annuity and Benefit Fund of the City of Chicago, et al v. the Bank of New York...

Some liberal interest groups are questioning whether the RMBS working group formed by federal and state enforcement agencies to coordinate securitization investigations is moving fast enough. In an email circulated earlier this week, CREDO, a progressive network, wrote that the Department of Justice has yet to deliver on its promise of 55 investigators to the RMBS working group. As federal and state enforcement agencies were wrapping up the contentious $25 billion settlement with five mortgage servicers in late January, U.S. Attorney General Eric Holder announced a new task force designed to “stream...

The mortgage banking industry got some advance notice this week on the direction the Consumer Financial Protection Bureau plans on taking when it issues a mortgage servicing proposed rule later this summer. The CFPB said it wants to design mortgage servicing rules to keep mortgage borrowers from getting stuck with costly surprises because of a lack of transparency or getting the runaround from their mortgage servicer because of a lack of accountability. “In recent years, many borrowers have complained that they did not receive the information they needed to help avoid foreclosure,” CFPB Director Richard...

A conflict-of-interest provision in the $25 billion robo-signing settlement approved by the court last week could make it harder for independent settlement monitor Joseph Smith to organize an oversight monitoring team within the agreement’s timeline. Smith, North Carolina’s former commissioner of banks, may have to issue or seek clarifying guidelines that would allow him to recruit attorneys and other professionals for his monitoring team and begin a phased implementation of the settlement’s servicing standards and mandatory relief requirements, according to an industry attorney. Last week...

Fannie Mae and Freddie Mac have generally made exceptions to their own rule regarding title impediments for properties with oil, gas, water or mineral rights, though new environmental disputes over hydraulic fracturing may change that, with “confounding implications for a particular region’s lenders,” said rating service DBRS. While contracts that allow for parties other than the property owner to utilize the land often complicate matters, the profitability of leases for resources like natural gas make those properties more attractive, because “the lease would generate income the borrower could apply...

Last week, key Republicans on the House Financial Services Committee asked banking regulators to provide a detailed analysis of a key provision in the controversial proposed rule on risk retention in securitization that could make non-agency MBS issuance unprofitable for issuers. In a letter to the agencies charged with implementing the risk-retention requirements of the Dodd-Frank Act, Republicans Spencer Bachus (AL) and Scott Garrett (NJ) expressed their concerns about the premium capture cash reserve account requirements drafted by the regulators. The PCCRAs would require issuers to hold any premiums...

Fannie Mae and Freddie Mac could end up on the hook for millions of dollars in unpaid property taxes as well as the targets of numerous legal complaints following a Michigan federal judge’s ruling that could force the GSEs to open their coffers to a plethora of revenue-starved local governments. Two weeks ago, U.S. District Court Judge Victoria Roberts granted Oakland County, MI, summary judgment in its lawsuit against Fannie and Freddie because the two GSEs failed to pay the transfer tax on deeds recorded by the state Register of Deeds Office, as required by Michigan law.