A key judicial review panel last week said the Federal Housing Finance Agency’s March bid to consolidate all the GSE shareholder lawsuits and transfer them to one court was “inappropriate” and rejected the government’s request. The Judicial Panel on Multidistrict Litigation said that the government’s case for centralization was not strong enough. “On the basis of the papers filed and hearing session held, we conclude that centralization is not necessary for the ...

A judge overseeing a key GSE shareholder lawsuit says she will look at another batch of government documents to determine whether they should be made available to the plaintiffs. The Federal Housing Finance Agency and Treasury Department are opposing the decision. Judge Margaret Sweeney’s May 20 order, in the Fairholme Funds, Inc. v. The United States case, requests that the defendants provide the court with hard copies of some of the documents listed in the ...

A bill making its way through the New York state legislature has prompted concerns among servicers and the Mortgage Bankers Association, who warn that the bill’s requirements regarding abandoned properties would increase costs and legal risks for servicers. A.6932-A, the Abandoned Property Neighborhood Relief Act, was recently approved by New York’s Assembly on a 116-22 vote. The bill would require servicers to periodically inspect properties tied to delinquent mortgages, report vacant properties to a state registry and provide authorities with tools to prompt servicers to maintain abandoned properties, among other provisions. “There is...

First Mortgage Corp., a privately-held mortgage company based in Ontario, CA, and six executives have agreed to pay the Securities and Exchange Commission $12.7 million to resolve charges they concocted a scheme to defraud investors in Ginnie Mae MBS, the SEC announced this week. According to the SEC’s complaint, from March 2011 through March 2015, FMC repurchased current loans from Ginnie pools that it claimed were delinquent. FMC bought...

HSBC Bank has filed a summons with notice in the New York State Supreme Court on Bank of America and Merrill Lynch to appear and face charges alleging complicity in the origination and sale of toxic mortgage loans that led to millions of dollars in losses to investors. Filed last week, the summons alleges that BofA, Merrill Lynch and Countrywide Home Loans were aware of the defects in approximately 1,359 residential mortgage loans that were securitized and sold to investors in 2007. The loans had an aggregate principal balance of $564.8 million. According to filing documents, Merrill Lynch purchased...

A California-based mortgage lender and six senior executives have agreed to pay $12.7 million to the Securities and Exchange Commission to resolve allegations they schemed to defraud investors in the sale of residential mortgage-backed securities with a Ginnie Mae guarantee. The SEC complaint alleged that, from March 2011 to March 2015, Ginnie Mae issuer First Mortgage Corp. and its top executives pulled current performing loans out of Ginnie Mae MBS. The issuer falsely claimed that the loans were delinquent so that it could recycle them as newly issued MBS and sell them at a profit. FMC allegedly issued Ginnie Mae MBS prospectuses with false and misleading information by using a Ginnie Mae rule that allowed issuers to repurchase seriously delinquent loans. In addition, the SEC complaint alleged that FMC deliberately delayed depositing checks from borrowers who had been behind on ...

A dispute over rule interpretation between the Department of Housing and Urban Development and its inspector general regarding the use of gift funds and premium pricing in downpayment assistance has FHA lenders concerned about potential liability and unnecessary legal costs. Last week, HUD Deputy Secretary/FHA Commissioner Edward Golding sought to allay lender concerns by refuting the IG’s position on lender use of downpayment assistance programs sponsored by state housing finance agencies. In a memo to the industry, Golding upheld...

Wells Fargo and JPMorgan Chase recently launched programs to deliver low-downpayment mortgages to Fannie Mae that differ from the government-sponsored enterprises’ recent expansion into high loan-to-value financing. Both banks introduced new 97 percent LTV programs they believe are easier to use than the GSE initiatives and, for certain borrowers, a better choice than FHA financing. Wells Fargo’s “yourFirstMortgage” requires a minimum of 3 percent downpayment for fixed-rate mortgages. The company will consider FICO scores significantly lower than other similar high-LTV programs, to as low as 620, along with debt-to-income ratios up to 45 percent. Factoring in nontraditional uses of credit such as rent, utility bill payments and tuition is...

One of the biggest red flags that will bring CFPB examiners charging in a lender’s direction is the level of consumer criticisms lodged against a company, especially if the number of such gripes is disproportionately large, a top industry attorney reminded the industry recently. Addressing attendees earlier this month during a webinar sponsored by Inside Mortgage Finance, a sibling publication, Michelle Rogers, a partner in the BuckleySandler law firm office in Washington, DC, said, “If your complaints are anomalous in that they’re much higher than others in your industry – peers, folks of your size – you are more likely to get an exam than others. And so you want to make sure that you’re mitigating or addressing those issues.” And those ...

There was a significant increase last year in the number of coordinated examinations of non-bank financial services companies between the CFPB and state banking regulators. The number of such exams rose from nine in 2014 to 16 in 2015, the State Coordinating Committee of the Conference of State Bank Supervisors reported recently in its annual report. Examinations that are scheduled between the SCC and the CFPB are performed simultaneously between state regulators and the CFPB. The examinations involve coordinated planning, shared resources, concurrent onsite visits, and sharing of confidential and non-confidential supervisory information, including findings and reports of exam. The SCC also indicated there was “an expansion into new industry types as the CFPB established additional supervision authority by rule.” ...