The Supreme Court of the United States surprised many industry and legal observers late last month by deciding it would not take on a key dispute under the Real Estate Settlement Procedures Act. “The writ of certiorari is dismissed as improvidently granted,” the high court said in a terse announcement. At issue in First American Financial v. Edwards is whether someone who has not suffered any actual damages from alleged RESPA violations has the legal standing to sue in federal court. The SCOTUS decision to not rule on the case, after deciding a year ago to take it on, means the...

The Federal Deposit Insurance Corp. is revising its definition of subprime mortgages in an effort to better compare bank portfolios, according to analysts that worked on the rule proposed by the FDIC in March. Brenda Bruno, a senior financial analyst at the FDIC, said the regulator is looking to classify “the worst” of subprime mortgages as higher-risk. “We are looking at those assets that are really sort of the ‘bottom of the barrel’ type assets,” she said last week during a webinar sponsored by VantageScore Solutions ...

The Consumer Financial Protection Bureau expects to undertake a project to refine and integrate disclosure requirements under the Truth in Lending Act and the Real Estate Settlement Procedures Act for reverse mortgages to improve consumers’ understanding of the product. The In a recent 231-page study submitted to Congress, the CFPB said consumers are still confused about how reverse mortgages work, despite the required disclosures and industry efforts to educate the public on this type of equity-based lending. The rising-balance and falling-equity nature of reverse mortgages is particularly ....

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...

Fannie Mae’s and Freddie Mac’s home retention activity declined for the most part during the first quarter of 2012, according to a new analysis of Federal Housing Finance Agency data by Inside The GSEs. Total loss mitigation activity – total home retention efforts and foreclosure alternatives combined – declined 5.0 percent during the first quarter of the year to 214,812 and was down 14.3 percent from year-ago levels. Our analysis was based on the FHFA’s First Quarter 2012 Foreclosure Prevention Report. Total home retention efforts came to 111,739 at the end of the first quarter, a decrease of 7.4 percent from the fourth quarter 2011 and down 22.4 percent from the same period a year before.

Federal banking regulators last week released their Financial Remediation Framework for independent foreclosure review consultants to use in determining the compensation due homeowners financially injured by servicers’ foreclosure practices in 2009 and 2010, generally capping damages at $125,000 but allowing borrowers to pursue litigation if they so choose. “The guidance helps ensure that similarly situated borrowers who suffered financial injury as a result of errors in foreclosure actions on their homes are treated similarly,” said the Office of the Comptroller of the Currency, which issued the guidance in conjunction with the Federal Reserve Board. Under the framework, remediation could include lump-sum payments; suspension or rescission of a foreclosure; the provision of...

Mortgage lenders and servicers face increased congressional and regulatory attention and pressure over how they should respond to the unique needs and problems active-duty U.S. military personnel face handling their mortgages, particularly when they are transferred. Sen. Richard Shelby, AL, ranking Republican on the Senate Banking, Housing and Urban Affairs Committee, emphasized during a hearing this week the disruptions that Permanent Change of Station orders can cause service members. “When PCS orders are issued, service members are required to move even if they owe more on their mortgage...

The Office of the Comptroller of the Currency and the Federal Reserve Board late last week put out guidance that will be used to calculate the compensation or other remedy that borrowers will receive for financial injury identified during the independent foreclosure review that was set up last spring in the wake of the industry’s foreclosure practice debacle. The Financial Remediation Framework provides examples of situations where compensation or other remediation is required for financial injury due to servicer errors, misrepresentations or other deficiencies...

In Rosenfield v HSBC Bank, the U.S. Court of Appeals for the Tenth Circuit recently ruled that borrowers cannot seek rescission after the Truth in Lending Act’s three-year statute of repose expires, even if the borrower had sent a notice of rescission within the three-year period. Beyond the ruling of the facts of the case, the court’s decision is another blow to the Consumer Financial Protection Bureau. Early this year, the CFPB had argued in a friend-of-the-court brief that TILA Section 125 (U.S.C. Section 1635) gives consumers a statutory right to rescind qualifying mortgage...

The Office of the Comptroller of the Currency has finalized a rule replacing certain credit rating references with alternative standards of credit worthiness to help banks determine whether a security is “investment grade.” Published in the June 13 Federal Register, the final rule is identical to the rule proposed by the OCC in November 2011 to implement directives in the Dodd-Frank Act to prevent over-reliance on credit ratings. Congress partly blamed inflated credit ratings for the financial crisis when triple A-rated mortgage securities lost their value as interest rates rose and home values...