Late last month, Fairholme Capital chief Bruce Berkowitz sent out a press release reassuring his shareholders that the hedge fund’s bet on owning the junior preferred stock of Fannie Mae and Freddie Mac will prevail, eventually. Among other things, the veteran equity-fund manager extolled the government-sponsored enterprises’ massive fourth quarter profits of almost $10 billion, called them “indispensable” to the mortgage insurance industry and reminded readers they continue to fulfill “their historic role of insuring adequate levels of liquidity to lenders of all sizes.” He also mentioned...

The FHA is nearing full implementation of a new loan review system (LRS) for managing FHA’s Title II single-family quality-control processes. No specific implementation date has been set but it could be sometime in the second quarter, the agency said. The LRS builds on FHA’s efforts to align the documentation of loan-review results. In addition, it incorporates the Single-Family Housing Loan Quality Assessment Methodology or defect taxonomy.The FHA said the new system would not be used to manage any aspect of the agency’s standard loan origination or endorsement processes. Rather, it would be used to review of test cases submitted by lenders seeking unconditional direct-endorsement authority. It would be used as well for various post-endorsement reviews of forward single-family loans. After the ...

With servicing costs climbing the past five years, the issue of how much to pay residential loan processers is once again rearing its ugly head. And depending on who you talk to, the Treasury Department may take up the issue as well, especially since it controls the senior preferred stock of Fannie Mae and Freddie Mac. One industry advisor involved in the topic, speaking under the condition his name not be used, told...

As policymakers work toward housing finance reform, industry participants are forming plans to ensure that servicing issues are addressed. The Urban Institute’s Housing Finance Policy Center recently launched the Mortgage Servicing Collaborative, which will provide data on servicing issues and analyze possible solutions. “We are...

Each of the parties that were rebuffed recently in their attempts to intervene in the controversial legal dispute between PHH Corp. and the CFPB decided they wouldn’t take “no” for an answer. Each of them again filed a motion with the U.S. District Court of Appeals for the District of Columbia Circuit seeking permission to intervene in the case, contrary to prevailing appeals court rules. Earlier this month, Democrat attorneys general from 16 states and the District of Columbia submitted a petition for rehearing en banc. Also, Sen. Sherrod Brown, D-OH, and Rep. Maxine Waters, D-CA, submitted a motion for rehearing en banc, as did a handful of public interest, consumer advocacy groups. All seek to inject themselves into the ...

It’s not just the defenders of the CFPB that are itching to enter the legal fray between the bureau and PHH Corp. The plaintiffs in State National Bank of Big Spring, Texas, et al. v. Lew have also filed a motion to intervene in the en banc proceeding. The plaintiffs – State National Bank of Big Spring, TX, the 60 Plus Association and the Competitive Enterprise Institute – had previously asked the federal district court for the District of Columbia to consolidate their 2012 lawsuit against the CFPB with that of PHH. However, they were recently denied. In their subsequent petition to the U.S. District Court of Appeals for the DC Circuit, the plaintiffs noted, “More than 18 months ago, this court ...

If federal policymakers do away with the CFPB’s mortgage rules without proper replacements, the credit quality of residential mortgage-backed securities could be compromised, analysts at Moody’s Investors Service said in a recent report. The analysts were providing a review of President Trump’s recent executive order related to the Dodd-Frank Act. “Any significant repeal of the Dodd-Frank Act’s mortgage-related provisions without effective alternatives would weaken residential RMBS credit quality because these provisions have strengthened the credit quality of mortgage originations, improved servicing practices and bolstered the credit integrity of RMBS structures,” the analysts said. The report is significant because it flies in the face of the traditional industry narrative that the bureau’s mortgage rules have been nothing but an onerous burden ...

In a competitive mortgage market with increasingly knowledgeable and demanding borrowers, it is essential that originators implement proper processes and controls to produce accurate property tax data collection, analysis and estimation, according to an online blog posting by Dominique Lalisse, an analyst with CoreLogic. One of the critical components of the new loan origination process that has emerged under the CFPB’s Truth in Lending Act/Real Estate Settlement Procedures Act integrated disclosure rule is property- tax amount estimation for residential properties, she pointed out. “The estimating process is conducted during the initial stages of origination in order to complete the required loan estimate (LE) provided to the borrower,” Lalisse said. “With increased scrutiny around the preparation of the LE, lenders must ...

The Department of Housing and Urban Development is apparently poised to begin an investigation of allegations of redlining on the part of CIT Group, Pasadena, CA, through its CIT Bank subsidiary, the successor to OneWest Bank, after agreeing to accept a complaint against the lender filed by the California Reinvestment Coalition. The CRC alleges the bank violated and continues to violate the Fair Housing Act by providing residential real estate-related transactions in a manner that discriminates on the basis of race, color and national origin. Specifically, the complaint alleges that since at least 2011, CIT Bank discriminated in marketing and originating housing-related products, as evidenced by the low number of mortgages it made to African-American, Asian-American and Latino borrowers in ...

The CFPB recently issued a request for information into ways to expand access to credit for consumers who are “credit invisible,” that is, those who don’t have enough credit history to generate a credit score. The bureau issued the RFI to drum up public feedback on “the benefits and risks of tapping alternative data sources such as bills for mobile phones and rent payments to make lending decisions about consumers whose lack of credit history might otherwise block opportunities.” According to the CFPB, there are 26 million Americans who are credit invisibles. “Another 19 million consumers have a credit history that has gone stale, or is insufficient to produce a credit score under most scoring models,” said the agency. The ...