Shaun Donovan, secretary of the Department of Housing and Urban Development, this week said the multistate foreclosure settlement is “very close” to reaching its conclusion, during a speech at the U.S. Conference of Mayors. However, a meeting last week among more than a dozen state attorneys general to discuss alternatives and to air grievances suggests there is still a lot of work to do. Some of the state AGs attending the meeting have been outspoken regarding their frustrations with the process. They included Kamala Harris of California and Eric Schneiderman of New York, who are not currently...

Fannie Mae and Freddie Mac have drummed up little support for their controversial proposal to pay mortgage servicers a flat fee for performing loans, but one top-tier lender has stepped forward to publicly endorse the idea. Ally Financial in a comment letter to the Federal Housing Finance Agency said it supports the so-called fee-for-service proposal, combined with a policy that would provide for the separation of excess interest-only cash flows from the underlying mortgage servicing rights. The company, which ranked as the fifth-largest servicer in the market as of the end of September, did...

The Consumer Financial Protection Bureau wasted no time in moving forward aggressively with its new director, last week releasing its mortgage origination examination procedures that will be used to scrutinize mortgage lenders and brokers in both the bank and nonbank sector of the industry. The procedures are the clearest indication yet that nonbanks are generally going to be held to the same standards, expectations and requirements as their more traditional banking counterparts. The new procedures outline the CFPB’s supervisory approach to making sure mortgage originators comply with federal...

PHH Corp. has become the first publicly identified lender targeted to be investigated by the new Consumer Financial Protection Bureau, which is trying to determine if PHH steered mortgage borrowers into using its captive mortgage reinsurance program, the firm revealed last week. “In January 2012, the Consumer Financial Protection Bureau notified the company that the CFPB had opened an investigation to determine whether mortgage insurance premium ceding practices to the company’s captive reinsurers comply with the Real Estate Settlement Procedures Act and other laws enforced by the CFPB and requested certain...

Demands to repurchase poorly performing mortgages have resulted in a spike in the number of mortgage fraud-related Suspicious Activity Reports (SARs) filed by banks in 2011, according to the Department of the Treasury’s Financial Crimes Enforcement Network. In its 2011 annual report, FinCEN said increased buyback demands by investors have forced large mortgage lenders to conduct additional reviews of loans they originated, resulting in higher SARs filings last year. A review of SAR filings in the first quarter of 2011 found that the number of mortgage fraud reports rose to 25,485, up 31 percent from...

The Federal Reserve is urging government policy makers to consider more aggressive responses to the housing debacle, including a government-backed program to transform much of the real estate owned overhang into rental housing. In a white paper sent to Congress, the Fed suggested that a government-facilitated REO-to-rental program can boost the housing market and improve loss recoveries on REO. Such a program could take many forms, the Fed noted. “The REO holder could rent the properties directly, sell the properties to a third-party investor who would rent the properties, or enter into a joint...

PHH Corp. over the last month has felt the pinch of being the largest mortgage banking business not associated with a depository institution as it faced some setbacks in lining up financing for its operations. The company this week priced a $220 million offering of 6.00 percent convertible senior notes that is being co-managed by JPMorgan Securities and BofA Merrill Lynch. That was up from the $150 million offering originally announced, and PHH gave the underwriters the option to purchase an additional $30 million. PHH will use the money to pay off $250 million of 4.00 percent convertible senior...

Congress’ 11th hour decision at the end of last year to fund a temporary tax cut with a decade-long hike in the guarantee fees that Fannie Mae and Freddie Mac charge to offset potential losses from bad loans will likely prolong the intended wind down of the GSEs, making it much harder to untangle the government from the mortgage market, say experts.Late last month, the Federal Housing Finance Agency directed Fannie and Freddie to increase g-fees on new mortgage products by 10 basis points starting April 1.The FHFA’s directive to the GSEs implements the Temporary Payroll Tax Cut Continuation Act of 2011, passed by the House and Senate and signed by President Obama on Dec. 23. The legislation mandates that Fannie and Freddie raise their single-family guarantee fees by “not less than” 10 bps. The provision is scheduled to sunset in 2021.

The Federal Reserve is calling for the design of a large-scale rental program of government-owned foreclosed properties as the best bet to moderate the inflow of unsold homes even as the Federal Housing Finance Agency shapes the eagerly awaited government REO reduction initiative.The Fed white paper, disseminated among the leaders of the Senate Banking and House Financial Services committees last week, recommends that the GSEs work to convert foreclosed properties into rental housing.The paper states that a government-facilitated REO-to-rental program could take many forms.

The Federal Housing Finance Agency is pondering a proposed principal-paydown plan to assist underwater homeowners holding Fannie Mae or Freddie Mac mortgages who have filed for Chapter 13 bankruptcy protection.The plan – based on a proposal pitched to the FHFA in November by Rep. Zoe Lofgren, D-CA, and the National Association of Consumer Bankruptcy Attorneys – would lower a borrower’s mortgage payments under a five-year bankruptcy repayment schedule.An FHFA spokesman confirmed to Inside The GSEs this week that “the NACBA proposal is under discussion” by the Finance Agency but offered no additional details.