Negotiations among major banks and state attorneys general to settle problems in foreclosure servicing practices reached a one-year anniversary this week with little apparent progress over the key issue of how much litigation relief the lenders will gain from the deal. “We worked out a tremendous amount of the settlement and gotten a lot done,” said a spokesman for Iowa Attorney General Tom Miller, who has been spearheading the negotiation on behalf of the states. However, he disputed applying the word “imminent,” which some bankers had used, to describe when the settlement might be finalized. “Let’s not jump...

The Securities and Exchange Commission has made a good bit of progress in updating its proposal for shelf eligibility conditions for ABS in light of industry comments and the passage of the Dodd-Frank Act. However, there are still numerous areas that concern major players in the mortgage finance industry. A number of commenters took issue with the SEC’s proposal to impose an additional executive officer certification requirement. The agency originally proposed requiring the issuer to file an exhibit to the registration statement consisting of a certification of the chief executive officer of the depositor that, to his or her knowledge, “the securitized assets backing the issue have...

California. The state amended a number of its mortgage loan originator licensing provisions under the California Finance Lenders Law last week, including one amendment that permits applicants who have an expunged or pardoned felony conviction to obtain a license. The underlying crime, facts or circumstances can be considered when determining whether to issue a license. Another amendment permits a person exempt from the California Finance Lenders Law to register with the Commissioner of Corporations so as to sponsor one or more individuals required to be licensed under the SAFE Act if specific requirements are met.

The credit rating industry is generally making progress in implementing a landslide of new regulatory requirements – both in the U.S. and from overseas regulators – but several firms continue to wrestle with conflict-of-interest standards and other issues, according to an annual report released this week by the Securities and Exchange Commission. Problems were found at all 10 ratings firms. The three larger nationally recognized statistical rating organizations – Standard and Poor’s, Moody’s Investors Service and Fitch Ratings – all have more than 1,000 credit analysts and credit analyst supervisors, while...

Securitization market participants continue to face significant uncertainty from regulatory forces on both sides of the Atlantic that is dampening securitization activity, raising costs and probably leaving some deals undone. Much of the problem stems from capital requirements and the use of credit ratings, which have fallen into disrepute among many lawmakers and regulators in the wake of the collapse of the subprime mortgage market and the resulting credit market freeze in 2008. After last year’s enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Federal Reserve, the Federal Deposit Insurance Corp., the...

Alt A mortgages and interest-only loans held by Freddie Mac will be subject to new buyback reviews due to issues with the government-sponsored enterprise’s settlement with Bank of America. An audit released last week suggests that the GSE lost billions of dollars by failing to include thousands of alternative mortgages in the buyback analysis. The Federal Housing Finance Agency’s Office of Inspector General conducted the audit and – at the request of the FHFA and Freddie – redacted the exact amount of money potentially “left on the table.” ...

A proposed FHA rule on “seller concessions” recently listed as withdrawn from the Office of Information and Regulatory Affairs’ review process is now being cleared for issuance by the Department of Housing and Urban Development. FHA spokesman Lemar Wooley clarified that the long-awaited proposal was not withdrawn as reported but “delayed” as a routine requirement for an Economic Impact analysis. “But now it is moving again,” he explained in an email. “It is in the clearance process and we hope to publish a proposed rule before the end of the year. According to Wooley, the proposed rule would ...

The FHA is seeking legal opinion on whether Congress can grant it authority to bar any former executive of a defunct lender from participating in FHA programs for material violation of agency requirements. The Department of Housing and Urban Development’s Office of General Counsel is pondering the question in the wake of an internal report on the FHA’s inability to prevent former executives of defunct mortgage companies that failed to indemnify HUD on FHA losses from reentering the FHA program. The report from HUD’s Inspector General said 12 corporate officers have signed on to new mortgage firms with ...

Expanding approved lenders’ reach in originating FHA-insured single-family mortgage loans is a “positive step” in improving their ability to compete with non-approved and sponsored FHA originators, according to industry participants. The recently revised FHA policy eliminates the geographical restrictions imposed upon direct endorsement lenders, which limited their FHA originations to designated lending areas. Under the new policy, loan origination and servicing may be conducted from an approved lender’s home office, branch office or direct lending branch office. HUD no longer has to approve a lender’s branch office facilities. However, all office facilities, regardless of type, must ...

VA-approved lenders should not submit payments for loans closed on or after Oct. 1 until the impact of recent legislation passed by Congress and awaiting President Obama’s signature becomes clear, the Department of Veterans Affairs said in a recent notice. The legislation apparently provides higher funding fees for VA home loans, contrary to changes in funding fees announced by the VA in Circular 26-11-12 on Sept. 8. Lenders were advised not to act until further notice. If the President signs the legislation, it will, in effect, keep funding fees at their FY2011 rates through Nov. 17, 2011, the VA said. This means ...