The Department of Housing and Urban Development said it has received $1.2 billion in recent settlements with large mortgage lenders and servicers but HUD’s internal watchdog, which did much of the legwork in the investigations, reveals a much smaller amount. According to recent audit reports published by HUD’s Office of the Inspector General, only Bank of America and Flagstar Bank have made payments under settlement agreements with HUD and the Department of Justice to resolve government claims. In separate memos to HUD’s Office of General Counsel last month, Kim Randall, director of the HUD OIG Civil Fraud Division, sought clearance to ...

Two lenders lost their approval to underwrite and originate FHA loans under Credit Watch while two others may be ordered to indemnify the Department of Housing and Urban Development for potential losses on several ineligible FHA-insured loans. HUD recently stripped Community Central Mortgage Co. of Mount Clemens, MI, and Strategic Mortgage Co. of Columbus, OH, of their direct endorsement approval because of the exceedingly high default and claim rates of FHA-insured loans they originated in their business areas. The Credit Watch Termination Initiative allows HUD to terminate a direct endorsement agreement with any FHA lender if ...

The Consumer Financial Protection Bureau is proceeding with its effort to develop a rule to limit the upfront points and fees mortgage originators could collect from borrowers – an initiative it began by assembling a small business regulatory review panel to consider the bureau’s initial direction. But one panel participant isn’t confident that their views are going to make much headway with an agency that may already have its mind made up. The CFPB is considering a handful of related proposals, one of which would require an interest-rate reduction when consumers elect to pay discount points. Specifically...

The Supreme Court of the United States had a chance to resolve the issue of whether an individ-ual who has not suffered any actual damages from violations of the Real Estate Settlement Procedures Act has legal standing to sue in federal court. But instead, SCOTUS decided not to explore it. “The writ of certiorari is dismissed as improvidently granted,” the high court said in a terse an-nouncement late last week regarding First American Financial v. Edwards, a case it agreed to hear al-most to the day one year ago. The ruling means the plaintiff will in fact be able to move ahead and sue, as the...

The appraisal industry is calling upon Congress to enact legislation to reform the current regula-tory structure for appraisers, at the same time warning that any unauthorized action by appraiser regula-tory agencies to toughen oversight would hurt and jeopardize the profession. Testifying before the House Financial Services Subcommittee on Insurance, Housing and Economic Opportunity last week, the Appraisal Institute said the Appraisal Subcommittee of the Federal Financial Institutions Examination Council and the Appraisal Foundation, an authorized private regula-tory body, have agreed to...

The Securities and Exchange Commission is coming down the home stretch in a project that has raised jitters in the MBS and ABS market: a review of the credit rating process for structured finance transactions that will conclude with reform recommendations for Congress. Embedded in the Dodd-Frank Act was a provision authored by Sen. Al Franken, D-MN, that requires the SEC to study potential conflicts of interest in issuer-pay and subscriber-pay compensation models used in the credit rating process. Franken originally proposed that the SEC be required to create a process through which a new government entity would assign...

In an unusual move, the federal judge overseeing the Federal Housing Finance Agency’s massive legal action against many of the nation’s biggest MBS issuers has granted a defendant the right to appeal her denial of its motion to dismiss. Last week, Judge Denise Cote of the U.S. District Court for the Southern District of New York granted permission to UBS Americas to go over her head to the U.S. Court of Appeals for the Second Circuit. UBS hopes the appellate court will reverse...

Despite indications of heightened risk that the Federal Housing Finance Agency initially missed, the Federal Home Loan Banks substantially increased their unsecured lending to foreign financial institutions in 2010 and 2011, particularly in Europe, according to a report issued this week by the FHFA’s official watchdog. The FHFA’s Office of Inspector General noted that unsecured lending by the FHLBanks swelled from $66 billion at the end of 2008 to more than $120 billion by early 2011, but declined sharply by year-end 2011, as the European sovereign debt crisis continued to worsen.

The Federal Housing Finance Agency should “expeditiously finalize” its long-awaited analysis as to whether Fannie Mae and Freddie Mac will be allowed to offer principal forgiveness modifications under the Treasury Department’s Home Affordable Modification Program, according to the Government Accountability Office. In a report issued late this week, the GAO reminded the FHFA that the Obama administration’s loan modification program, which would be used to implement any principal reductions, expires at the end of December 2013.

A federal judge earlier this month had ruled that the Federal Housing Finance Agency’s case against UBS Americas will serve as the “test case” in a series of lawsuits that FHFA has filed concerning failed residential mortgage-backed securities. However, in another ruling a week later, Judge Denise Cote of the U.S. District Court for the Southern District of New York granted a motion by UBS to appeal her May 4 denial of the bank’s motion to dismiss on statute of limitation grounds. Judge Cote’s June 13 decision denied UBS’ request that it should not be the first of 17 cases to proceed because it was not a loan originator and it was not accused of fraud.