The National Credit Union Administration this week reached settlements with two underwriters of non-agency mortgage-backed securities. The settlements also have implications for non-agency MBS issuers and underwriters facing lawsuits from the Federal Housing Finance Agency. Deutsche Bank Securities agreed to pay the NCUA $145.0 million to reduce losses associated with five failed credit unions. Citigroup also agreed to pay the NCUA $20.5 million to settle similar charges. The settlements included terms stating that the issuers did not admit fault. NCUA Board Chairman Debbie Matz warned that the settlements are...

Legislation that would keep VA funding fees at their current levels through FY 2016 was sent this week to President Obama for signature. The House of Representatives passed the bill, H.R. 674, the 3 Percent Withholding Repeal and Job Creation Act of 2011, on Nov. 16, with amendments from the Senate. The Senate approved the bill on Nov. 10. The president is expected to sign the bill. However, if the bill is not signed by Nov. 18, funding fees will decrease as scheduled for a short period, according to the Department of Veterans Affairs in a published guidance to VA lenders. If funding fees do reset to the lower amounts ...

A federal judge in Houston ruled that Allied Home Mortgage Corp. can continue to originate and underwrite FHA-insured loans, putting into question the validity of the Department of Housing and Urban Development’s suspension of the lender’s FHA privileges. U.S. District Court Judge Melinda Harmon, in a 22-page decision issued filed on Nov. 15, said the “potential destruction” of Allied’s business outweighs any harm the government would suffer before the issues can be litigated.

The Obama administration this week proposed a new rule that would establish uniform procedures for the resolution of disparate impact allegations under the Fair Housing Act at a time when the whole legal underpinnings of disparate impact are slated for review by the U. S. Supreme Court. In a proposed rule that has been in preparation for months, the Department of Housing and Urban Development argued that it has the authority to apply the disparate impact theory of discrimination in the context of fair housing, including fair lending charges. The purpose of the proposed rule, HUD says, is to clear up uncertainty about...

The new system built by the Consumer Financial Protection Bureau to process consumer complaints about their mortgages needs to be fixed before it becomes operational, industry groups say. In a joint letter to the CFPB, the American Bankers Association, Consumer Bankers Association, Financial Services Roundtable and its Housing Policy Council and Mortgage Bankers Association said the bureau should consult with financial services companies, which have in place a range of systems to address consumer complaints. “We believe that CFPB should provide a more transparent process that allows all stakeholders...

After years of on-again, off-again activity behind the scenes while the House of Representatives has repeatedly taken tentative steps toward creating a covered bond marketplace, the Senate finally got into the game with the introduction this week of legislation nearly identical to the bill introduced in the House earlier this year. On Wednesday, a small bipartisan group from the Senate Banking, Housing and Urban Affairs Committee introduced the “United States Covered Bond Act of 2011,” which is designed to create a legislative framework to expand funding options for U.S. financial institutions. Co-sponsors include...

In today’s dramatically changed mortgage lending and regulatory environment, lenders must aggressively manage their originator compensation structures if they want to guarantee their compliance with all applicable laws and regulations, according to a top industry consultant. The first step is “to eliminate all incentive arrangements that pay commissions or bonuses based on any of the terms or conditions of the loans such as interest rates, demand features, prepayment penalties or proxies for these loan terms,” said Henry Oehmann, national executive compensation services executive director for Grant Thornton. Lenders...

The Consumer Financial Protection Bureau will follow the practice of other federal regulators by providing advance notice of potential enforcement actions to individuals and firms under investigation. The bureau said its Early Warning Notice process allows the subject of an investigation a chance to respond to any potential legal violations that CFPB enforcement personnel believe have been committed before the agency ultimately decides whether to initiate legal action. But there are no guarantees. “The decision whether to give such notice is discretionary, and a notice may not be appropriate in some situations, such as in...

Delays, staff shortages and changes in leadership have put a damper on FHA efforts to identify risks in its single-family mortgage insurance programs, which could affect its ability to minimize financial risks, according to the Government Accountability Office. In a report to the chairman and the ranking minority member of the Senate Banking, Housing and Urban Affairs Committee, the GAO concluded that while the FHA has taken steps to assess credit and operational risks, the assessment strategy is not comprehensive. The risk assessment efforts are not integrated, and the FHA lacks annual assessments and mechanisms to...