U.S. Bank, as trustee for a mortgage loan trust, has sued Citigroup in New York state court to force the financial giant to cure or repurchase defective loans from a securitized pool. In a separate case, a federal court in New York dismissed a shareholder action against Citigroup in connection with certain residential MBS. At issue in the first case is a pool of 4,792 mortgage loans that Citigroup Global Markets Realty Corp. purchased and securitized in May 2007. Citigroup sold the loans to Citigroup Mortgage Loan Trust, which, in turn, deposited the loans into the trust and assigned its rights to U.S. Bank. The trust then issued the MBS. According to the court summons and notice, Citigroup conducted...

The Federal Housing Finance Agency spent the last two weeks racking up several legal settlements in its massive litigation action against some of the nation’s financial institutions. Look for more to come predict industry analysts. On Oct. 25, JPMorgan Chase agreed to pay $4.0 billon to settle claims on $33.8 billion of non-agency mortgage-backed securities purchased by Fannie Mae and Freddie Mac.

A little-known case about disparate impact in housing and lending discrimination now before the U.S. District Court for the District of Columbia will likely be the stage for the next legal debate on the question whether disparate-impact claims are permissible under the Fair Housing Act. It could also decide whether the Consumer Financial Protection Bureau can apply disparate impact in its examinations and investigations. With the Mount Holly, NJ, town council reportedly poised to vote on a proposed settlement, the U.S. Supreme Court, for the second time in two years, would be deprived of the opportunity to decide the fate of disparate impact. Reports indicate the town council may have a decision by Nov. 7 and a settlement could end the case, Mount Holly v. Mount Holly Garden Citizens in Action, Inc., before scheduled oral arguments on Dec. 4. The Supreme Court was poised...

The parties in Township of Mount Holly v. Mt. Holly Gardens Citizens in Action, Inc., currently pending before the Supreme Court of the United States, have reached a tentative settlement, the Wall Street Journal reported late last week, citing people involved in the dispute. The prime question before the SCOTUS in Mount Holly is whether disparate-impact claims are cognizable under the Fair Housing Act. Mount Holly challenges the legal position of the Department of Housing and Urban Development that disparate impact can be used to...

The CFPB’s recent decision to no longer bring enforcement attorneys along for the ride in routine examinations may bring a sigh of relief to many in the industry, but it’s important to avoid reading too much into the move, according to a consultants’ analysis. For one thing, examiners will no longer be distracted by the need for additional legal review. “Assigning an enforcement attorney to support every exam was the CFPB’s most meaningful break from the practices of its prudential peers as it forged its own interdisciplinary approach to...

Ocwen Financial posted record revenues in the third quarter of 2013 that could have been even higher if not for unexpected delays in boarding $42.0 billion in unpaid principal balance on non-agency mortgages from OneWest Bank. Officials at Ocwen wouldn’t reveal the exact cause of the delay. The loans were in non-agency mortgage-backed securities issued by IndyMac, which was taken over by the Federal Deposit Insurance Corp. in 2008 and sold by the FDIC to OneWest in 2009. Ocwen officials said delays ...

JPMorgan Chase’s settlement with the Federal Housing Finance Agency regarding representation and warranty claims on non-agency mortgage-backed securities could prompt large settlements by other banks, according to industry analysts. Chase agreed last week to pay $4.0 billion to settle claims on $33.8 billion of non-agency MBS purchased by Fannie Mae and Freddie Mac. The securities were issued between 2004 and 2007 by Chase, Bear Stearns and Washington Mutual. The settlement sets a “relatively high bar” for ...

Financial industry trade groups want all Title II forward mortgage loans that meet FHA requirements to be treated as “safe harbor” qualified mortgage loans instead of being lumped in either of two QM buckets as proposed by the Department of Housing and Urban Development. Commenting on HUD’s proposed definition of a “qualified mortgage,” the industry groups – Mortgage Bankers Association, Consumer Bankers Association, Consumer Mortgage Coalition, American Bankers Association, and the Independent Community Bankers of America – urged HUD to ...

Proposed options for adjusting FHA products, market presence and powers could have a direct effect on the availability of credit for borrowers and on the FHA’s ability to respond to changing market conditions, according to a new study by the Government Accountability Office. In certain instances, the recommended changes would entail tradeoffs – a downside for every upside. Industry participants, researchers and the FHA have suggested these options to improve FHA’s long-term viability or for shrinking the agency’s footprint in the mortgage market. The GAO undertook the study to determine ...

It’s a done deal that the Federal Housing Finance Agency will make “across the board” reductions in Fannie Mae and Freddie Mac loan limits that will take effect in May 2014, but factions in the housing and mortgage industries are already drafting contingency plans if the cuts are too deep. “I would say if they are significantly – 5 to 10 percent – reduced, then you will see new legislation,” said one industry lobbyist who’s been tracking the issue for well over a year. In other words, if the national loan limit falls...