A federal appeals court has agreed to hear a rare appeal by one of the non-agency mortgage-backed securities issuers and underwriters being sued by the Federal Housing Finance Agency for allegedly misrepresenting the deals that were sold to Fannie Mae and Freddie Mac. A three-judge panel of the Second Circuit Court of Appeals accepted UBS Americas’ appeal to re-argue and reverse a lower court’s denial of the bank’s motion to dismiss the FHFA’s suit as time-barred under the Housing and Economic Recovery Act.The FHFA sued UBS in July 2011 on behalf of Fannie and Freddie, seeking damages and civil penalties on behalf of the government-sponsored enterprises under the Securities Act of 1933.

Fannie Mae and Freddie Mac’s newly amended preferred stock purchase agreement with the U.S. Treasury requiring the companies to accelerate the rate at which they reduce their investment portfolios will have little immediate impact but will become more challenging to the GSEs as time goes on, analysts predict. The Treasury’s amended agreement calls for the GSE portfolios to be wound down at an annual rate of 15 percent, instead of the 10 percent annual reduction originally required of the two companies. The more aggressive 15 percent reductions will go into effect in 2013. Consequently, Fannie’s and Freddie’s portfolios must be reduced to the $250 billion target by 2018, four years earlier than initially scheduled.

The Treasury Department’s surprise announcement late last week that it will now “sweep” up any and all future profits from Fannie Mae and Freddie Mac in lieu of the dividends the GSEs had been paying in return for taxpayer support solves some problems but creates new ones, industry observers say. Rather than continue to borrow from the Treasury to make dividend payments to the Treasury – as the GSEs have since they were placed in conservatorship in September 2008 – the revised preferred stock purchase agreements will replace the 10 percent quarterly dividend with a “full income sweep” of “every dollar of profit that each firm earns going forward,” according to Michael Stegman, counselor to the Treasury for Housing Finance Policy.

Lenders won a number of concessions from the Consumer Financial Protection Bureau last week when the regulator proposed rules for loan originator compensation. However, the proposal also includes significant provisions that would impact lender profitability and originator compensation. For firms currently offering compensation arrangements that would be prohibited by the proposal, the CFPB said its proposed prohibition on compensation based on transaction terms “may contribute to adverse selection ...

Plans to hasten the resolution of Fannie Mae and Freddie Mac through an amended preferred stock purchase agreement (PSPA) announced last week by the Treasury Department and the Federal Housing Finance Agency has elicited mixed responses from stakeholders. Views vary as to whether the new deal will actually benefit taxpayers or simply protect holders of government-sponsored enterprise debt. The revised agreement will speed up the reduction of both GSEs’ investment portfolios, from an annual rate of 10 percent to ...

Lenders Compliance Group Inc., a mortgage risk management firm for mortgage lenders, has formally launched the Brokers Compliance Group, a full-service, mortgage risk management firm in the U.S., specializing in outsourced mortgage compliance and offering a full suite of services to residential mortgage brokers. “Together, Lenders Compliance Group and Brokers Compliance Group will build on existing tools, processes, experts, risk assessments, and resources to provide a ‘best practices’ approach to residential mortgage compliance,”...

The Conference of State Bank Supervisors has begun making available public state regulatory actions on the Nationwide Mortgage Licensing System Consumer Access online portal. In addition, NMLS Consumer Access now directly connects the public to state agencies for the purpose of submitting a consumer complaint on a state-licensed company or individual loan officer. This latest upgrade consolidates enforcement actions taken by state regulatory agencies against state-licensed companies and individuals in a single repository...

Consumer Financial Protection Bureau. Agency Creating Interactive Regulatory Forum. The Consumer Financial Protection Bureau is working with the Cornell University e-Rulemaking Initiative (CeRI) to make it easier for the public to comment on mortgage servicing proposed rules through a pilot project called Regulation Room (www.regulationroom.org). “Regulation Room provides an online environment for people and groups to learn about, discuss and react to selected rules proposed by federal agencies,”...

All nonbank residential mortgage lenders and originators now must be in compliance with the Financial Crime Enforcement Network’s final rule requiring the establishment of anti-money laundering programs and the filing of suspicious activity reports. On Feb. 14, 2012, FinCEN published in the Federal Register its final rule on anti- money laundering program and suspicious activity report filing requirements for residential mortgage lenders and originators. The effective date of this rule was April 16, 2012, and the...

Last week, the Consumer Financial Protection Bureau issued a proposed rule in the Federal Register that would amend Regulation Z and Regulation X to implement the Dodd-Frank Act’s amendments to the Truth in Lending Act and the Real Estate Settlement Procedures Act, respectively. Specifically, the bureau is proposing to amend Reg Z to implement the Dodd-Frank amendments that would expand the Home Ownership and Equity Protection Act to apply to more types of mortgage transactions. Under the proposed rule...