Law firm K&L Gates and the National and Washington Lawyers’ Committees for Civil Rights launched a pro bono legal challenge to an allegedly discriminatory and otherwise unlawful foreclosure rescue scam targeting Hispanic homeowners in northern Virginia. Plaintiffs Jose and Margarita Viera allege they have been the victims of defendants Bella Homes LLC and a number of its management officials and agents in a scheme that zeroes in on Hispanic homeowners who were having difficulty making their mortgage payments. “The crux of the complaint is that ...

Regulatory streamlining is absolutely essential if smaller mortgage lenders are going to survive the threat they face from their enormous regulatory burdens, two industry trade groups told the Consumer Financial Protection Bureau recently. “Currently, the industry is dealing with several new rules, including those under the Secure and Fair Enforcement Act for Mortgage Licensing and the Truth in Lending Act, and faces an unprecedented wave of additional rules required under Dodd-Frank Wall Street Reform and Consumer Protection Act,” said the Consumer Mortgage Coalition ...

Earlier this month, private-equity firm Fortress took its mortgage servicer unit, Nationstar Mortgage Holdings Inc., public, the second such offering for a mortgage servicer in a month, even as some large bank servicers increasingly look for the exits. The move might look like healthy creative vs. destructive capitalism to some, but it’s a disturbing trend on at least one public policy level, according to housing policy expert Karen Shaw Petrou, managing partner at Federal Financial Analytics, a Washington, DC, think tank. “From a purely market perspective, there’s no problem if banks lose and PEs win ...

The fact that real estate law remains fundamentally local in nature fuels a dynamic that prevents a timely and cost-effective resolution to the nation’s foreclosure crisis: a nearly overwhelming deluge of state and local laws, rules and regulations. That’s one of the take-aways in the testimony that Alfred Pollard, general counsel of the Federal Housing Finance Agency, provided early this week before the House Committee on Oversight and Government Reform. “State and local officials have been very active in adding to or amending laws related to foreclosures or servicing of mortgages,” Pollard said...

Arizona. A former Countrywide loan officer, Paige Kinney, aka Jamie Lee Lawler, 43, of Phoenix, AZ, has been sentenced to 15 years in prison and ordered to pay $22 million in restitution by U.S. District Judge Neil Wake. According to court documents related to the first indictment she faced, Kinney played a leadership role in a $40 million mortgage fraud scheme that targeted Countrywide Home Loans and other lenders through the use of straw buyers and “cash back” accounts. According to her plea agreement on the second ...

Federal Housing Finance Agency.FHFA Office of Inspector General. FHFA’s Supervision of Freddie Mac’s Controls over Mortgage Servicing Contractors Faulted. The Federal Housing Finance Agency’s Office of Inspector General found some areas in which the Finance Agency could improve its supervision of Fannie Mae’s and Freddie Mac’s controls over its mortgage servicing contractors. “FHFA has not clearly defined its role regarding oversight of servicers, sufficiently coordinated with other federal banking agencies about risks ...

Senate Banking, Housing and Urban Affairs Committee member Jerry Moran, R-KS, and Sen. Joe Manchin, D-WV, recently introduced the industry-supported S. 2160, the Financial Institutions Examination Fairness and Reform Act, which would provide critical balance and additional transparency to decisions the regulatory agencies make in the examination process. S. 2160, like its counterpart in the House, H.R. 3461, would, among other things, require more timely examination reports; more information about the facts the agency relied upon to make its exam decisions; and more precise ...

Even though approximately $10.0 billion in non-agency representation and warranty payouts have already been included in proposed or completed settlements, another $34.0 billion in payouts are probably waiting in the wings, with Bank of America and JPMorgan facing the largest exposure by far, according to analysts at Barclays Capital. “Total payouts to non-agency investors from rep and warranty related recoveries will be $26.0 billion to $52.0 billion, using the $8.5 billion Countrywide settlement deal as a template. This corresponds to an average of 3-6 points of recoveries on non-agency securities...

Many non-agency MBS investors are upset with the $25 billion servicing settlement involving 49 state attorneys general, eight federal agencies and the nation’s five largest servicers, the full terms of which were filed in U.S. District Court this week. Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial will receive some credit for modifying loans they service but do not own, although several of these firms have indicated that they plan to focus their efforts on portfolio loans. The Association of Mortgage Investors said the settlement establishes a precedent under which the bad debts of...

The documents governing a proposed $25.0 billion settlement involving five major banks include greater incentives for principal reduction loan modifications on portfolio loans rather than loans in non-agency mortgage-backed securities. However, non-agency MBS investors remain concerned that they could take losses due to the settlement. The consent judgments against Ally Financial, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo were filed in federal court this week, a month after the settlement was announced by 49 state attorneys general and the federal government ...