The Department of Justice this week announced a $4.9 billion settlement with the Royal Bank of Scotland to resolve legacy-related claims that the bank misled investors on the quality of residential MBS they purchased from RBS between 2005 and 2008.

The Mortgage Bankers Association called upon Congress to pass legislation to restore Ginnie Mae eligibility for so-called orphaned VA loans, which have caused a temporary disruption in the government-backed secondary market. In written testimony to the Senate Committee on Veterans’ Affairs last week, the MBA urged lawmakers to make technical corrections to restore the eligibility of certain Interest Rate Reduction Refinance Loans for pooling. The MBA estimated the VA orphan loan mess at roughly $500 million. Due to new loan seasoning requirements in the recently enacted Economic Growth, Regulatory Relief, and Consumer Protection Act, sime IRRRLs were rendered ineligible for Ginnie MBS pools. The loans were in transit when legislation addressing the problem of VA loan churning and serial refinancing became law in May. The new law’s seasoning provisions turned out to be ...

A Treasury Department report called on the Department of Housing and Urban Development to establish clear standards for determining which mortgage-related violations and loan defects the Department of Justice should pursue under the False Claims Act. The report also recommended that DOJ ensure that materiality, for purposes of the FCA, is linked to the standards of the agency administering the program to which the claim has been filed. Furthermore, it urged both HUD and the DOJ to work together to clarify the process by which they can jointly resolve claims. The report was issued pursuant to President Trump’s February 2017 executive order establishing his administration’s policy to regulate the U.S. financial system according to a set of core principles. Both HUD and the DOJ have been successful in using the statute to prosecute FHA lenders who knowingly commit fraud or make ...

Fannie Mae Updates HECM Servicing Manual. Fannie Mae has updated its Reverse Mortgage Loan Servicing Manual to include changes related to real estate-owned hazard-insurance requirements. The policy change applies only to Home Equity Conversion Mortgage REO. The revised manual now requires that, for HECM loans, the servicer must place a property insurance policy on the acquired property in accordance with Department of Housing and Urban Development guidelines. Coverage must be up to the HUD foreclosure appraisal amount or the deed-in-lieu property valuation amount. Should the servicer be unable to obtain a HUD foreclosure appraisal or deed-in-lieu property valuation, it must place coverage in accordance with HUD guidelines and up to the unpaid principal balance amount. Fannie encouraged immediate servicer implementation of the policy. However, the ...

A legislative proposal to charge veterans, servicemembers and military spouses more for a VA home loan is getting heat from lenders and the Department of Veterans Affairs itself. Testifying before the Senate Committee on Veterans Affairs last week, Paul Lawrence, VA undersecretary for benefits, warned that increasing VA loan fees would impose additional financial burdens on veterans who are trying to buy a home, making them more vulnerable to predatory lending. Fee-related proposals are included in H.R. 299, the Blue Water Navy Vietnam Veterans Act of 2017. The House of Representatives passed the bill by a vote of 382-0 in June and it is currently under consideration in the Senate. H.R. 229 would expand disability benefits to Vietnam veterans who were exposed to Agent Orange while serving on U.S. ships offshore or on the ground in Thailand and the Korean demilitarized ...

The appraisal industry is opposed to a legislative proposal that would make changes to how appraisals are procured for the VA home loan program. The appraisal measure is one of the key provisions in H.R. 299, the Blue Water Navy Vietnam Veterans Act, which the House of Representatives passed by a vote of 382-0 in June. The bill is now pending in the Senate Committee on Veterans’ Affairs. The Blue Water Act would clarify presumptions relating to veterans’ exposure to herbicide, such as Agent Orange, during the Vietnam era and disability claims. The bill also proposes changes to the VA loan fee structure, including a proposed hike to the fees veterans, servicemembers and their spouses pay to obtain a VA-guaranteed home loan. The appraisal provision in H.R. 299 would allow VA appraisers to engage a third party to perform property inspections on their behalf. The provision addresses a problem with ...

Mortgage lenders want the CFPB to exempt single-family residential construction loans from the Real Estate Settlement Procedures Act / Truth in Lending Act Integrated Disclosure Rule. The TRID rule implemented by former Director Richard Cordray expressly applies to most construction loans that are secured, closed-end consumer credit transactions. Such loans are subject to the same extensive cost and term TRID disclosures as permanent purchase ...

The CFPB recently announced plans to create a “regulatory sandbox” to encourage consumer-friendly innovation in financial services. The mortgage industry sees it as an opportunity to enhance the emerging niche of loans that fall outside the qualified mortgage standard. “I’m optimistic,” said Justin Wiseman, an associate vice president at the Mortgage Bankers Association. “I think [the plan is] broadly beneficial across the mortgage market … one area that might ...

House Bill Would Strengthen Online Credit Card Disclosures. Rep. David Price, D-NC, recently introduced the Online Credit Card Disclosure Act, legislation which would require credit card companies to inform consumers about the risks associated with minimum debt payments by regularly publishing clear, personalized pay-down disclosures online, including websites and mobile apps. “As more and more Americans handle their financial affairs [Includes three briefs] ...

The U.S. District Court for the Southern District of Iowa earlier this month granted preliminary approval of an $11.2 million settlement in a proposed class-action against national bank JPMorgan Chase. According to the complaint filed in 2016, Chase charged and collected interest on FHA-insured loans that paid off early. Chase was either the lender or the servicer of the loans. The lawsuit, Audino et al. v. JPMorgan Chase Bank, alleges that the bank breached the promissory notes underlying the class’s FHA-insured home loans when it collected post-payment interest without providing disclosures to borrowers who made a prepayment inquiry, request for payoff figures, or tender of prepayment. Plaintiffs allege that the bank did not use the proper FHA form to provide the disclosures to consumers. Chase denies any wrongdoing and neither admits nor concedes any actual or potential fault or liability. The bank also denies it was ...