Transparency, investor access to information and a willingness to engage in loss mitigation can help reduce the wave of litigation and investor losses resulting from repurchase demands, according to mortgage litigation experts. There’s a better alternative to fighting out buyback claims in court: all counterparties should sit down and find ways to resolve issues that trigger repurchase claims in an open and forthright manner, said panelists on a webinar hosted by Inside Mortgage Finance Publications. “We have to work together because the country is hurting and the longer this drags on, the bigger the problem is going...

Lenders and consumer advocates are bitterly divided over rules for alternative mortgages released by the Consumer Financial Protection Bureau in July. While lenders generally support the preemption in the interim final rule, the Center for Responsible Lending raised major concerns about the rule and the “spread of the subprime virus.” The CFPB’s interim final rule on the Alternative Mortgage Transaction Parity Act was required by the Dodd-Frank Act. ...

Alt A mortgages and interest-only loans held by Freddie Mac will be subject to new buyback reviews due to issues with the government-sponsored enterprise’s settlement with Bank of America. An audit released last week suggests that the GSE lost billions of dollars by failing to include thousands of alternative mortgages in the buyback analysis. The Federal Housing Finance Agency’s Office of Inspector General conducted the audit and – at the request of the FHFA and Freddie – redacted the exact amount of money potentially “left on the table.” ...

A proposed FHA rule on “seller concessions” recently listed as withdrawn from the Office of Information and Regulatory Affairs’ review process is now being cleared for issuance by the Department of Housing and Urban Development. FHA spokesman Lemar Wooley clarified that the long-awaited proposal was not withdrawn as reported but “delayed” as a routine requirement for an Economic Impact analysis. “But now it is moving again,” he explained in an email. “It is in the clearance process and we hope to publish a proposed rule before the end of the year. According to Wooley, the proposed rule would ...

The FHA is seeking legal opinion on whether Congress can grant it authority to bar any former executive of a defunct lender from participating in FHA programs for material violation of agency requirements. The Department of Housing and Urban Development’s Office of General Counsel is pondering the question in the wake of an internal report on the FHA’s inability to prevent former executives of defunct mortgage companies that failed to indemnify HUD on FHA losses from reentering the FHA program. The report from HUD’s Inspector General said 12 corporate officers have signed on to new mortgage firms with ...

Expanding approved lenders’ reach in originating FHA-insured single-family mortgage loans is a “positive step” in improving their ability to compete with non-approved and sponsored FHA originators, according to industry participants. The recently revised FHA policy eliminates the geographical restrictions imposed upon direct endorsement lenders, which limited their FHA originations to designated lending areas. Under the new policy, loan origination and servicing may be conducted from an approved lender’s home office, branch office or direct lending branch office. HUD no longer has to approve a lender’s branch office facilities. However, all office facilities, regardless of type, must ...

VA-approved lenders should not submit payments for loans closed on or after Oct. 1 until the impact of recent legislation passed by Congress and awaiting President Obama’s signature becomes clear, the Department of Veterans Affairs said in a recent notice. The legislation apparently provides higher funding fees for VA home loans, contrary to changes in funding fees announced by the VA in Circular 26-11-12 on Sept. 8. Lenders were advised not to act until further notice. If the President signs the legislation, it will, in effect, keep funding fees at their FY2011 rates through Nov. 17, 2011, the VA said. This means ...

State attorneys general trying to negotiate a big-ticket settlement with top mortgage servicers saw their coalition fracture further over the past week, including a decision by Massachusetts to move independently toward litigation. A major stumbling block continues to be divergent views among the states on whether lenders should get immunity from non-servicing issues such as potential litigation over securitization as part of the deal. The widely held view is that top banks were willing to put up a combined $20 billion to be used to help struggling borrowers to settle legal challenges that were spawned by...

A regional inspector general report found “material underwriting deficiencies” in a clump of FHA loans originated by Countrywide Financial, and though Bank of America may end up paying about $1 million to settle the charges, the case could be a harbinger of bigger losses to come. The Department of Housing and Urban Development inspector general for five upper midwest states singled out Countrywide for an audit because the company’s average default-to-claim rate was high for the region. The IG audited just 14 FHA loans, but half of them contained material underwriting deficiencies, mostly failing to...

Two strongly pro-consumer mortgage lending initiatives underway at the Consumer Financial Protection Bureau are nearing completion, top agency officials told industry representatives recently. One project nearing the finish line is the ability-to-repay rulemaking the bureau inherited earlier this year from the Federal Reserve Board. The final rule will be unveiled “early next year in order to provide clarity to the market as quickly as we can, without sacrificing the quality of our analysis,” said Raj Date, special advisor to the Secretary of the Treasury for the CFPB, in comments before attendees at a conference sponsored by SourceMedia. “I’m a real believer in...