Senate Republicans successfully thwarted an attempt by President Obama’s Democratic allies in the Senate to force an up-or-down vote on the nomination of Richard Cordray as the first director of the controversial Consumer Financial Protection Bureau. “Mr. President, after all the harm caused to consumers by financial regulators, it is time that the majority stop using consumer protection as a political football and start taking actions that actually help consumers,” said Sen. Richard Shelby, R-AL, the ranking member of the Senate Banking, Housing and Urban Affairs Committee. “We can take the first step by reforming the bureau to make it accountable to the very consumers it seeks to protect,” he added. “Until that time, however, we cannot, should not and will not move forward on the nomination of a director to lead this massive and unaccountable bureaucracy.”

Weeks after bringing the first criminal charges to be filed in a “robo-signing” related case, the Nevada State Attorney General’s office has filed suit against Lender Processing Services, the nation’s largest provider of default mortgage services, and some of its subsidiaries for engaging in allegedly deceptive practices against consumers in the state. The lawsuit, filed Dec. 15, 2011, in the 8th Judicial District of Nevada, follows the state AG’s investigation into LPS’ default servicing of residential mortgages in Nevada, especially loans in foreclosure. The lawsuit includes allegations of widespread document execution fraud, deceptive statements made by LPS about efforts to correct document fraud, improper control over foreclosure attorneys and the foreclosure process, misrepresentations about LPS’ fees and services, and evidence of an overall press for speed and volume that prevented the necessary and proper focus on accuracy and integrity in the foreclosure process.

California Attorney General Kamala Harris and her counterpart in Nevada, Catherine Cortez Masto, have launched a “joint investigation alliance” into misconduct and fraud in the mortgage industry. The joint probe will combine investigative resources, including litigation strategies, information, and evidence gathered through their respective ongoing investigations, assisting each state as it pursues independent prosecutions, the officials said. “This alliance will link the offices’ civil and criminal enforcement teams, speeding along the full, fair and adequate investigation of wrongdoing in the two states, which have experienced similar foreclosure and mortgage fraud crises,” the AGs said.

A week after filing suit against a handful of top lenders, including Ally Financial and its mortgage subsidiary, GMAC Mortgage, Massachusetts Attorney General Martha Coakley has asked the leadership of two key Congressional panels to investigate alleged mortgage-related misconduct by Ally via GMAC Mortgage. In this particular case, Coakley has some unusual leverage: Uncle Sam owns nearly three-quarters of Ally Financial as per a $17 billion investment made in 2008 under the Troubled Asset Relief Program. “In light of Ally’s alleged deceptive and illegal actions against homeowners in Massachusetts and across the country, I respectfully request that your committees investigate Ally’s serious misconduct and consider what actions the federal government can take to ensure that Ally adheres to the law,” Coakley said in a letter to Sen. Tim Johnson, D-SD, chairman of the Senate Banking, Housing and Urban Affairs Committee, and Rep. Spencer Bachus, R-AL, chairman of the House Financial Services Committee.

California. In XL Specialty Insurance Company v. Perry, No. 11-2078, U.S. District Court for the Central District of California ruled that the Federal Deposit Insurance Corp. cannot intervene in in a litigation dispute between former IndyMac Bancorp executives and their insurers. The court ruled the FDIC did not meet the standard for intervention as a matter of right, or the standard for permissive intervention. Connecticut. In RMS Residential Properties, LLC v. Anna M. Miller et al., the Connecticut Supreme Court recently ruled that RMS Residential Properties, LLC, with an assignment from Mortgage Electronic Registration Systems, Inc., had standing to foreclose after the borrower defaulted, and that MERS was a valid mortgagee at the origination of the loan, as the nominee for the original lender. The court rejected the claim of the defendant, who argued that that MERS, as third party, could not be named as a mortgagee because it was not the original lender or the party secured by the mortgage. The court also rejected the defendant’s request to declare the MERS mortgage to be void because MERS was not the owner of the debt.

Consumer Financial Protection Bureau. CFPB Now Accepting Mortgage Complaints. The Consumer Financial Protection Bureau began accepting mortgage complaints from consumers through its websitefs home page, as of Dec. 1, 2011. To file a complaint, a consumer has to describe what happened and what would be a fair resolution. The consumer is presented with a menu of options and has to specify the type of mortgage involved (conventional fixed-rate, FHA, etc.) as well as the part of the mortgage process involved that is the source of the complaint. Once the complaint is filed, the relevant company will be notified, and the consumer will be provided a tracking number.

There’s been a notable changing of the guard among attorneys in the mortgage banking practices at the law firms of Patton Boggs, Ballard Spahr and Dykema. Partners Richard Andreano, John Socknat and Michael Waldron and associate Reid Herlihy left Patton Boggs recently with upwards of 100 clients and signed on with the newly created Mortgage Banking Group at Ballard Spahr. The new unit is part of Ballard Spahr’s larger effort to build up its Washington, DC, office. Meanwhile, Dykema augmented its regulatory presence by bringing on board former Patton Boggs senior lawyers Heather Hutchings and Haydn Richards to its Financial Services Regulatory and Compliance practice.

The Fixed Income Clearing Corp., a subsidiary of the Depository Trust & Clearing Corp., has filed an application with the Securities and Exchange Commission to provide central counterparty (CCP) and pool netting services for MBS transactions. According to the filing, the CCP and new pool netting services would be available through the FICC’s MBS Division. Through its subsidiaries, the DTCC provides clearing, settlement and information services for equities, corporate and municipal bonds, government and private MBS, money market instruments and over-the-counter derivatives. The DTCC...

While Federal Housing Finance Agency Acting Director Edward DeMarco has been steadfast in his refusal to consider principal reductions for Fannie Mae and Freddie Mac loans, there are indications he may allow a new principal paydown proposal. Many consumer protection groups and regulators argue that principal reductions will protect, instead of degrade, taxpayers’ investment in the government-sponsored enterprises. Principal reduction can help revive a housing market that continues to be stressed by declining house prices and weak economic fundamentals, they say. Principal reductions have taken...

Bank of America and other large mortgage servicers are seeking a meeting with the Federal Housing Finance Agency to address concerns about the latest version of the Home Affordable Refinance Program for underwater Fannie Mae and Freddie Mac borrowers. Since HARP was first launched in 2009, it has failed to meet expectations. The government quickly expanded the program to include loans with current loan-to-value ratios of up to 125 percent, which accounted for a very small share of business. Under HARP 2.0, which went into effect this month but won’t be fully up to speed until the second quarter of...