Proponents of creating a covered bond market in the U.S. say the prospects of such a move have never looked better in the wake of legislative momentum in Congress, the off-year election year and the adoption of a covered bond framework in Canada. Last month, Canada’s national housing agency announced details of the legal framework for the issuance of Canadian covered bonds. Under the framework, registered covered bonds will be issued through a program that will be run by the Canada Mortgage and Housing Corp. The Canadian framework will operate...

It is 2013 and courtrooms across the country continue to hum with investor disputes over issuer liability for MBS investments that went bad. In its third lawsuit against JPMorgan Chase since mid-2011, the National Credit Union Administration is seeking millions of dollars in damages in connection with the packaging and sale of $2.2 billion in MBS issued by the now-defunct Washington Mutual to three corporate credit unions long before it was acquired by JPMorgan in 2008. Filed in Kansas federal court, the NCUA lawsuit alleged...

The Consumer Financial Protection Bureau has issued its long-awaited “qualified mortgage” ability-to-repay final rule that, as expected, includes an exception for Fannie Mae and Freddie Mac mortgages and does little to facilitate a rebound in the non-agency sector. Mortgage lenders will be presumed to have complied with the ability-to-repay rule if they originate “qualified mortgages” that prohibit or limit the risky features believed to have harmed consumers in the recent mortgage crisis. That means...

Acknowledging problems with independent foreclosure reviews established in 2011, federal regulators this week agreed to a settlement with 10 bank servicers for $8.5 billion in borrower relief. The settlement applies to a portion of the 14 servicers under related consent orders from the Federal Reserve and the Office of the Comptroller of the Currency. “The OCC and the Federal Reserve accepted this agreement because it provides the greatest benefit to consumers subject to unsafe and unsound mortgage servicing and foreclosure practices during the relevant period in a more timely manner than would have occurred under the review process,” the regulators said. The agreement in principle includes...

Expect the Consumer Financial Protection Bureau and the Federal Housing Finance Agency to roll out a national mortgage database this year, but experts say it remains to be seen how comprehensive or how secure the first-of-its-kind mega electronic information storehouse will be. This week, during a webinar sponsored by the Ballard Spahr law firm, experts from Ballard and Navigant Consulting agreed that the government’s commitment to develop an origination-to-foreclosure repository of mortgage data is a “daunting” task that will take much longer than a single calendar year to implement and refine. “I absolutely believe...

The Consumer Financial Protection Bureau this week spread a huge safety net under the agency mortgage market, ruling that loans deemed suitable for Fannie Mae, Freddie Mac, the FHA and the Veterans Administration will be “qualified mortgages” that provide strong protection against litigation for mortgage lenders. The CFPB’s long-awaited ability-to-repay final rule provides a safe harbor for loans that meet its QM definition and also are not considered “higher-priced mortgages” under an older Truth in Lending Act regulation promulgated by the Federal Reserve back in 2008. That rule classifies first mortgages as higher-priced if the annual percentage rate exceeds the average offered rate for comparable loans by 1.5 percentage points or more. Generally, the CFPB final rule defines...

The official watchdog of the Federal Housing Finance Agency has pointedly suggested that the GSE regulator direct Fannie Mae and Freddie Mac to determine whether or by how much the two companies were swindled out of billions of dollars as a result of banks’ alleged manipulation of a key interest rate and then determine how to recoup those losses, in court if necessary. A recent unpublished memo by the FHFA’s Office of Inspector General urged the Finance Agency to prepare to file suit against the banks involved in setting the London Interbank Offered Rate after an analysis of the GSEs’ published financial statements and publicly available historical interest data concluded that Fannie and Freddie may have suffered more than $3 billion in losses due to LIBOR manipulation.

Mortgage market observers say they are seeing a gradually building struggle by the Federal Housing Finance Agency to maintain its precarious balance between the FHFA’s congressionally-mandated roles as conservator to the GSEs and – indirectly – regulator of 65 percent of the mortgage market. Industry interests, meanwhile, continue to call for greater “transparency” surrounding Fannie Mae- and Freddie Mac-related decision making. Under the Housing and Economic Recovery Act of 2008, the FHFA was created to succeed the Office of Federal Housing Enterprise Oversight as regulator to Fannie and Freddie as well as the 12 Federal Home Loan Banks.

The FHA has made changes to its internal systems to make sure lenders are paying the correct recertification fees based on the number of FHA-approved branch offices. Currently, an approved lender is required to pay annual recertification fees within 90 days of the end of the fiscal year to maintain approval for the next annual reporting period. Recertification fees cover the home office and each FHA-approved branch office. Previously, lenders were allowed to terminate branch offices at the start of the annual reporting period but before paying the recertification fees. However, system flaws caused ...

An FHA lender need not cancel a scheduled foreclosure sale to reassess a borrower if the property is non-owner occupied, vacant or an investment property, according to newly issued agency guidance. Under such circumstances, the lender does not have to cancel a foreclosure sale date because loss mitigation retention options are only available to owner-occupants, the FHA explained in a frequently-asked-questions guidance on the revised requirements for loss mitigation retention options. The FHA announced the changes last month in an effort to ...