Widespread objection by stakeholders has forced the Department of Housing and Urban Development to rescind a new lending policy regarding borrowers with disputed debt and unresolved collection issues and to consider clarifying the issue in future guidance. The policy, announced along with other FHA underwriting changes in February, was initially to take effect on April 1. However, industry concern about fewer borrowers qualifying for an FHA-insured loan caused HUD to extend the policy’s effective date to July 1 to reexamine and gather more information from stakeholders. HUD announced its decision to ...

Advocates for FHA condominium rule changes may have to wait a bit longer for a proposed rule currently in development, according to Acting FHA Commissioner Carol Galante. Galante said the Department of Housing and Urban Development is reviewing the current FHA condo rules for future revisions that would remove the roadblock to buyers, sellers and lenders. A proposed rule is in the works but it could take considerably more time to finish and finalize it, she said without providing a timetable. In the meantime, new guidance is on the way to ...

The real estate industry called on the Department of Veterans Affairs to offer an existing pilot program on property rehabilitation similar to the FHA’s 203(k) program in all markets, especially those with a high veteran population. In a letter, the National Association of Realtors asked that the Veterans Renovation Pilot Program be administered through the VA Loan Guaranty Program, allowing veterans to purchase distressed property for repair, alteration, renovation and improvement. The VA pilot resembles the FHA’s “fixer-upper” program for buyers interested in purchasing ...

FHA lenders and servicers commencing foreclosure on FHA-insured mortgage loans in the Commonwealth of Virginia must first meet with the borrower personally before proceeding or risk voidance of the foreclosure sale, the state supreme court ruled recently. Because of the decision by the Supreme Court of Virginia, the state has joined a growing list of states that require a face-to-face meeting between a mortgage lender and a borrower before initiating foreclosure proceedings on an FHA-insured mortgage loan. In Mathews v. PHH Mortgage Corp., the court upheld ...

The Consumer Financial Protection Bureau has been able to identify a number of improvements it can make in a rulemaking that will merge the consumer mortgage disclosures required under the Truth in Lending Act and the Real Estate Settlement Procedures Act, thanks to input from a small business review panel it convened earlier this year. “During the small business review panel [process] and our other outreach, industry identified several areas in which the current rules create uncertainty about how to comply,” CFPB Deputy Director Raj Date said during a hearing of the House Financial Services Subcommittee on...

A number of mortgage lending and small business interest groups want the Consumer Financial Protection Bureau to use the extra time provided by re-opening the public comment process on the controversial ability-to-repay rulemaking to conduct a Small Business Advocacy Review panel and publish its recommendations when the agency issues the final rule. “We recognize that the CFPB was not legally required to conduct an SBAR panel since the rulemaking was transferred to the CFPB after the proposed rule stage,” the groups said in a letter to the bureau last week. However, given the potentially significant...

As New York announced a $60 million program to help struggling homeowners, winning accolades from the Department of Housing and Urban Development for its use of the foreclosure settlement money, other states continue to plug budget holes with their settlement gains. The Empire State’s Homeowner Protection Program will fund housing counseling and legal services using some of the $107.6 million allotted the state through the multistate servicing and foreclosure settlement. HUD Secretary Shaun Donovan called it a “national model” for how states should use their settlement money. NY Attorney...

Asset-backed commercial paper investors in the ongoing legal squabble that resulted from the collapse of Taylor Bean & Whitaker Mortgage Corp. and its Ocala Funding LLC subsidiary may bring suit over claims arising in documents, despite not being parties to those documents, when their agent refuses to sue or allow the investors to sue, a federal judge has ruled. Last week, U.S. District Court Judge Robert Sweet in Manhattan permitted Ocala’s two sole investors, plaintiffs Deutsche Bank AG and BNP Paribas Mortgage Corp., to sue defendant Bank of America in its roles as indenture trustee and collateral agent...

The attorneys general of New York and Delaware are now free to argue on behalf of absent investors against a proposed $8.5 billion settlement involving Bank of America, securities trustee Bank of New York Mellon and a group of investors to resolve the claims of other non-participating investors in non-agency MBS issued by Countrywide. A New York state judge last week granted a motion by NY Attorney General Eric Schneiderman and DE Attorney General Beau Biden to intervene in the litigation. At issue in this complicated case is whether the trustee acted legally and appropriately in entering into the...

Berkshire Hathaway and other new bidders are circling around the assets of Residential Capital, setting the stage for a showdown at the Southern District of New York Bankruptcy Court after the court approved the current way the mortgage unit is operating in bankruptcy. In a turn of events that has shaken the stability of ResCap’s initial bankruptcy plan that includes $8.7 billion to settle MBS investor lawsuits, Berkshire Hathaway objected to the current sale procedures in place, which have yet to be approved in court, in lieu of its own offer. The Nebraska-based conglomerate set the wheels in motion...