Menendez Introduces HAWK Amendment in T-HUD Appropriations Bill. The National Association of Realtors recently sent a thank-you note to Sen. Robert Menendez, D-NJ, for introducing an amendment to H.R. 2577, the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act of 2016, to restore HUD’s authority to offer the Homeowners Armed with Knowledge (HAWK) program. Lawmakers who were concerned about the financial condition of the FHA Mutual Mortgage Insurance Fund denied funding for the HAWK program last year in a continuing spending bill, effectively stalling the program for a year. The HAWK program is a key component of the FHA’s Blueprint for Access, which was designed to open up the credit box for underserved borrowers. Specifically, program participants will benefit from reductions in FHA premiums once they complete ...

The Federal Housing Finance Agency filed a motion last week to dismiss a lawsuit that was filed by Fannie Mae and Freddie Mac shareholders in Delaware this summer who argued that the Treasury sweep of the government-sponsored enterprises’ profits is illegal under state law. The complaint stated that with Fannie chartered under Delaware law and Freddie under Virginia’s jurisdiction, the preferred stock of a corporation cannot be given a cumulative dividend right equal to all the ...

Servicers’ use of property-management contractors has helped save costs and increase efficiencies but also opened servicers to liability, according to an analysis of litigation involving contractors. Christopher Odinet, an assistant professor of law at the Southern University Law Center, noted that servicers’ reliance on property-management firms increased in recent years due to long timelines for delinquencies and foreclosures. Servicers hire the firms to inspect ...

With the CFPB’s legal action against PHH Corp. pending before the U.S. Court of Appeals for the District of Columbia, a number of experts are revisiting the bureau’s enforcement actions related to marketing services agreements for clues as to how best to proceed going forward. What some of them are finding should give the industry pause. During a webinar this week, Jonathan Foxx, president and managing director at Lenders Compliance Group, a consulting firm ...

With the mortgage lending industry’s use of marketing services agreements under the Real Estate Settlement Procedures Act likely hanging in the balance, the CFPB detailed its anti-kickback legal arguments against PHH Corp. and its mortgage units in its “reply” brief with the U.S. Court of Appeals for the District of Columbia, filed earlier this month. In PHH Corp., et al., v. CFPB, the first main argument the bureau made is that PHH violated RESPA Section 8(a) because it entered into agreements with mortgage insurers so that whenever an insurer received a referral from PHH, the insurer paid PHH a kickback in the form of premiums for mortgage reinsurance. “PHH thus committed a separate violation every time it accepted a kickback ...

The recent anti-arbitration announcement from the CFPB would create risks for consumer lenders and related asset-backed securities, according to a report from Moody’s Investors Service. Specifically, the bureau indicated it is contemplating instituting a ban on provisions in financial contracts that prohibit consumers from participating in class-action litigation. The agency is also considering whether to mandate that companies that include such arbitration clauses regularly submit to the CFPB information related to arbitration proceedings, possibly for release to the public. Such changes could end up driving more class-action litigation against lenders and servicers, a number of which play essential roles in the securitization process, analysts at Moody’s said. “The proposals, if adopted, would affect financial products including credit cards, automobile loans, ...

Industry recipients of a civil investigative demand (CID) from the CFPB may have been given a new way to cope, thanks to a recent decision from the District Court for the District of Columbia. In John Doe Company No. 1 v. CFPB, the target of a CFPB investigation brought an injunctive action against the agency seeking a temporary restraining order and a motion to seal the case. John Doe Company No. 1 asserted that sealing the case was justified on two grounds, the first of which is that bureau investigations are usually conducted confidentially. Further, sealing would protect the company from the harm that would result from the negative publicity if the CFPB’s ongoing investigation was made public. In coming ...

Are Home Builders Next on the CFPB’s MSA Hit List? Lender anxiety tied to the CFPB’s crackdown on marketing services agreements is reaching a new fever pitch these days, while spreading to other sectors of the housing finance industry, namely home builders and Realtors. Industry officials interviewed by Inside Mortgage Finance, an affiliated newsletter, recently said title insurance affiliates owned by Realtors and home builders are a particular area of concern – namely pushing customers into using service providers in which they have an ownership stake. “I’ll tell you where the RESPA [Real Estate Settlement Procedures Act] violation is – it’s pressing customers into using their title company,” said one trade group executive. “The idea is that the consumer gets to pick ...

Mortgage lenders are more willing to expand the credit box for FHA borrowers, but they appear to be getting more cautious about FHA lending, according to a new Inside FHA/VA Lending analysis of Ginnie Mae mortgage-backed securities data. Over two thirds of FHA loans securitized in the first nine months of 2015 had credit scores below 700, and 6.2 percent of them had scores of 620 or lower. By comparison, 47.0 percent of VA loans were below 700 and just 4.4 percent were in the lowest category. But FHA lenders became more cautious as the year wore on. In the first quarter, 6.8 percent of FHA loans had scores of 620 or lower. That fell to just 6.0 percent in the third quarter. The FHA purchase-mortgage sector skews even further away from the riskiest borrowers and toward safer ground. The share of FHA purchase loans with scores of 620 or lower fell from 5.8 percent in the first ... [ 2 charts ]

Facing the possibility of a potential False Claims Act lawsuit, PHH Corp. is reconsidering its participation in the FHA mortgage insurance program. Though PHH’s FHA segment represents only 3 percent of its mortgage volume over the past 12 months, the company will proceed cautiously as it evaluates the risk-adjusted return of FHA products and programs, said Glenn Messina, PHH president and chief executive.Ranked 50th among FHA lenders as of June 30, 2015, PHH expects more regulatory challenges in 2016 as well as rising compliance costs, said Messina during a third-quarter earnings call. In its latest quarterly filing, PHH disclosed receiving a subpoena from the inspector general of the Department of Housing and Urban Development for documents related to, among other things, FHA loan origination and underwriting practices. Like several other FHA lenders, PHH is ...