Federal prosecutors this week sued an FHA lender to recover hundreds of millions of dollars in paid claims in connection with mortgage loans originated through branches that were not approved by the Department of Housing and Urban Development. A lawsuit filed by the U.S. Attorney in Manhattan district court this week alleged that Allied Home Mortgage Corp., President and CEO Jim Hodge and Executive Vice President Jeanne Stell engaged in reckless mortgage lending, flouted FHA mortgage insurance requirements and repeatedly lied about compliance. Such actions, the suit alleged, subsequently led to...

Now that the long-awaited revision of the Home Affordable Refinance Program is out of the way, look for the Federal Housing Finance Agency to redouble its efforts to discharge the government’s backlog of real estate owned properties with all deliberate speed. During an interview on C-SPAN’s “Newsmakers” program last weekend, FHFA Acting Director Edward DeMarco said the agencies are sifting through over 4,000 comment letters on the proposed REO bulk sales program. “Now that we have the HARP announcement out, we are turning to this as the next priority,” said DeMarco. “We do think we will have some good...

New regulatory requirements – including a controversial plan to assign ratings on a rotating basis – are encouraging firms to test the traditional approaches to rating MBS and ABS, but some observers say the reliance on an issuer-pay business model will be tough to change. New rating services are coming up with new ways to assess risk with more dynamic, ongoing reviews and more sources of information, and they’re less reliant on being fed information, said Stephen Kudenholdt, co-chair of the capital markets practice at SNR Denton. But the expectation that the market would shift to an investor-paid model clearly hasn’t...

In a major shakeup of its executive suite, Freddie Mac’s chief executive will step down next year while three members of the GSE’s board of directors are also headed for the exits, the Federal Housing Finance Agency announced this week.Freddie CEO Charles Haldeman Jr. informed the board of his desire “to step down sometime in the coming year,” according to the FHFA announcement. Freddie did not comment on Haldeman’s resignation, nor did it make the announcement itself, referring to the Finance Agency’s official press release in its Securities and Exchange Commission 8K filing this week.

Long awaited alterations to the Home Affordable Refinance Program announced by the Federal Housing Finance Agency this week are expected to be of some relief to underwater homeowners but it will do little to endear the Finance Agency to its critics, particularly among House Democrats, who think the FHFA should do more.Among the new HARP enhancements is the elimination of certain risk-based fees for borrowers who refinance into shorter-term mortgages and lower fees for other borrowers. Also removed is the current 125 percent loan-to-value ceiling for fixed rate mortgages backed by the government-sponsored enterprises.

Under fire by its official watchdog, as well as by a senior House Democrat, the Federal Housing Finance Agency last week announced it has directed Fannie Mae and Freddie Mac to transition away from the GSEs’ current foreclosure attorney network programs. FHFA’s directive – which it says is in synch with the Finance Agency’s Servicing Alignment Initiative to produce uniform foreclosure processing standards – will move toward a system where mortgage servicers select qualified law firms that meet certain minimum, uniform criteria. Under current practice in certain states, each GSE designates law firms eligible to undertake foreclosure work, and mortgage servicers then select and work with these firms, according to the FHFA.

A niche FHA mortgage insurance program could become a significant tool to help address the massive inventory of real estate owned, and soon-to-be REO, that continues to weigh on the housing market, some industry observers say. The FHA 203k program was designed to help borrowers who want to purchase a “fixer-upper” home. Started back in 1978, the program insures long-term loans that include both the purchase and rehabilitation of the property. But in 1996, the Department of Housing and Urban Development put a moratorium on issuing 203k loans to private investor-owners, citing instances of fraud and abuse and the inability to...

The Federal Housing Finance Agency this week announced a series of substantial and eagerly anticipated changes to the Home Affordable Refinance Program for borrowers with underwater Fannie Mae and Freddie Mac mortgages. Among the new HARP enhancements is the elimination of certain risk-based fees for borrowers who refinance into shorter-term mortgages and lower fees for other borrowers. Also removed is the current 125 percent loan-to-value ceiling for fixed rate mortgages backed by the government-sponsored enterprises. Furthermore, HARP 2.0 waives “certain” representation and warranties made by...

Although Obama administration officials said this week that principal reduction would play a large role in the multistate foreclosure settlement under negotiation, sources suggest that sorting out potential writedowns will be complex and that the settlement will focus on other issues. During a press conference on the revamped Home Affordable Refinance Program this week, Housing and Urban Development Secretary Shaun Donovan said principal reductions would be a big part of a settlement that was rumored to be close to completion. “The settlement negotiation is also going to be focused on significantly accelerating the...

U.S. Attorney General Eric Holder has been called upon to take the lead in investigating allegations that a number of the largest mortgage lenders in the country may have systematically charged illegal fees to military veterans who refinanced their homes. Sen. Jon Tester, D-MT, a member of the Senate Committee on Veterans’ Affairs, sent a letter to Holder recently requesting he get involved in a probe to determine the veracity of the accusations. Earlier this month, a complaint was unsealed in federal court in which two whistleblower types accused the lenders of charging refinance fees that are...