Mary Jo White, chair of the Securities and Exchange Commission, stressed this week that the regulator plans to increase its enforcement activity, including more emphasis on trials. However, she said the SEC needs more appropriations from Congress to accomplish its goals. “We can’t judge at this point how many additional trials we’re going to have, but we already don’t have enough,” White said at a hearing this week by the Senate Committee on Banking, Housing, and Urban Affairs. President Obama’s proposed...
After the dust-up in the capital markets from the last meeting of the Federal Reserve’s Open Market Committee over when the central bank will begin to “taper” its huge asset purchase program, this week’s meeting of the FOMC provided no new clues about the timing of the Fed’s exit strategy. “To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the committee decided to continue purchasing additional agency MBS at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month,” the FOMC said, reiterating previous announcements. Also, the FOMC is...[Includes one data chart]
A federal district court in New York last week ruled that a landmark discrimination lawsuit, the first to connect racial discrimination to the securitization of mortgage-backed securities, can move forward against Morgan Stanley. A July 25 ruling by the U.S. District Court for the Southern District of New York in Adkins v. Morgan Stanley denied in part the investment bank’s motion to dismiss the case, which alleges violations of the Fair Housing Act and the Equal Credit Opportunity Act. The putative class-action suit was filed...
The Special Inspector General for the Troubled Asset Relief Program is pressing the Treasury Department to focus on servicer actions as part of efforts to reduce re-default rates in the Home Affordable Modification Program. The Treasury has pushed back against the suggestions, stating that it is “always looking to improve the program.” In a report published last week, the SIGTARP said HAMP mods have re-defaulted at an “alarming” rate. As of the end of April, the re-default rate on HAMP mods completed in 2009 was 46 percent and the re-default rate for HAMP mods completed in 2010 was 38 percent. “While HAMP has helped...
Fannie Mae, Freddie Mac and their government conservator are all calling on the Consumer Financial Protection Bureau to amend proposed changes to its mortgage servicing rule because certain provisions would inhibit similar servicing goals put forth by the Federal Housing Finance Agency. In a comment letter, the FHFA said its servicing alignment initiative has pushed for improved practices that are similar to the goals of the CFPB rule, but “several provisions in the recently proposed amendments would actually make those goals more difficult to achieve.” The four areas of the CFPB proposal that are especially important cover...
When Wells Fargo recently pulled the plug on its remaining loan-production joint ventures, it downplayed the significance of the move, explaining that in the scheme of things these unique partnerships – mostly with real estate companies – account for just 3 percent of its total production. But for some of the eight JVs that were shoved aside, it could be a big deal because it means they may now have to find either a new partner or raise additional capital. Still, not all of the JVs are fretting...
The Consumer Financial Protection Bureau took its first legal action over alleged violation of the new loan originator compensation rule last week, bringing suit against Castle & Cooke Mortgage, a Utah-based nonbank, and two top executives. The CFPB claims that the defendants had an unwritten policy of paying quarterly bonuses to loan officers based on a formula that rewarded the origination of mortgages with high interest rates, “thus incentivizing loan officers to steer consumers into mortgages with less favorable terms, the very practice the compensation rule sought to prohibit,” said the CFPB’s complaint. Overall, the firm paid...
The Senate Committee on Banking, Housing and Urban Affairs this week approved bipartisan legislation to strengthen FHA solvency and oversight authority over lenders, paving the way toward dealing with the larger issue of housing finance reform. Introduced by Committee Chairman Tim Johnson, D-SD, and Ranking Minority Member Mike Crapo, R-ID, the FHA Solvency Act (S. 1376) passed by a vote of 21-1. The approved bill included...
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