Assured Guaranty won a lawsuit this week against Flagstar Bank regarding a breach of representations and warranties on more than $900 million in non-agency mortgage-backed securities issued by Flagstar. Industry analysts suggest the ruling is significant as it is one of the first in favor of bond insurance companies trying to enforce breaches of reps and warrants, and U.S. District Judge Jed Rakoff endorsed many of the tactics they have used to seek buybacks, including ... [Includes two briefs]

Although unhappy about the demise of the popular, fixed-rate, standard Home Equity Conversion Mortgage, loan officers are not worried about any long-term adverse effect on their FHA businesses. In fact, members of the National Reverse Mortgage Lenders Association, support the FHA’s decision, which is a part of a broad effort to strengthen and better manage the risk of the agency’s Mutual Mortgage Insurance Fund. They said they have other HECM products to offer in lieu of the standard HECM loan. Beginning April 1, borrowers who choose a fixed interest rate will be limited to ...

FHA-approved lenders that engage in aggressive marketing to borrowers with a history of foreclosure, particularly advertisements about the ease of obtaining an FHA-insured mortgage after foreclosure, could face potential sanctions and severe penalties, the FHA warned. In a letter to lenders, FHA Commissioner Carol Galante said there has been a proliferation of web-based and print ads conveying the message that almost any borrower can get a new FHA loan three years after ...

The FHA will begin monitoring state housing finance agencies (HFAs) to ensure that the cash assistance they provide borrowers for closing costs, downpayment or rehabilitation costs are not coming from illegal sources. FHA Commissioner Carol Galante said there have been concerns about whether some HFA homeownership program funding models are in compliance with the Department of Housing and Urban Development’s current interpretive rule clarifying its prohibition on seller-funded downpayment assistance. Published in the Federal Register, the interpretive rule clarified that ...

A recent revision to the Department of Housing and Urban Development’s Office of the Inspector General Audit Guide has lifted a reporting burden for FHA investing mortgagees who are involved in servicing, according to Phillip Schulman, a top compliance expert and a partner at K&L Gates. Under the revised guide, an investing mortgagee or lender that purchases, sells or holds FHA-insured mortgages but cannot originate or fund FHA loans no longer needs to submit reports on internal controls and compliance, Schulman reported in a client alert. The new rule states that investing mortgagees are now required to ...

Responding to industry concerns over the impact of the new loan officer compensation final rule on reverse mortgages, the Consumer Financial Protection Bureau has clarified the phrase “amount of credit extended” for closed-end Home Equity Conversion Mortgage loans. For closed-end reverse mortgages, a loan originator’s compensation may be based on either (a) the maximum proceeds available to the consumer under the loan; (b) the maximum claim amount (if the loan is subject to the Department of Housing and Urban Development’s HECM rules); or (c) the appraised value of the property, as determined by ...

A federal appeals court has rebuffed the bid by American International Group’s mortgage insurance unit to overturn a lower court’s order to pay more than $45 million to SunTrust Banks for insured losses related to mortgage defaults. The Fourth Circuit Court of Appeals last week upheld a Virginia federal judge’s ruling that AIG’s United Guaranty breached an insurance agreement by refusing to pay claims on 1,305 defaulted “combo” loans – which is a first-lien loan with a smaller, second-lien “piggyback” loan. At issue were mortgage defaults that SunTrust claimed should have been covered under a ...

Genworth Financial Inc.’s U.S. mortgage insurance segment continued to be a burden to its parent despite reporting a narrower operating loss of $34 million in the fourth quarter of 2012, compared to losses of $38 million in the prior quarter and $96 million in the prior year. Nonetheless, the reduced amount of losses during the period was good news to company executives who reported net income of $166 million, or 34 cents a share, during the period from $142 million, or 29 cents, a year earlier. Operating profit was $167 million, or 34 cents a share, up from ...

Republican critics of the Consumer Financial Protection Bureau are maneuvering to take advantage of a sudden opportunity to push for changes to the leadership structure and the finances of the bureau, after a surprise legal ruling breathed new life into their long-running struggle to clip the new agencyfs wings. Last month, the U.S. Court of Appeals for the D.C. Circuit ruled in Noel Canning v. National Labor Relations Board that three recess appointments President Obama made to the NLRB were unconstitutional because the Senate was technically not in recess at the time they were made. Industry lawyers believe...

With state and local lawsuits against Fannie Mae and Freddie Mac seeking payment for real estate transfer taxes from which the GSEs assert they are exempt, an industry attorney says the endgame for enterprise and municipality alike won’t come from the courts but from the other two branches of government at the highest level. Last month, Spokane, WA, and Montgomery County, MD, joined a growing list of local governments to file suit against the two GSEs for unpaid taxes, challenging Fannie’s and Freddie’s claim that the firms are exempt under their federal charter from transfer taxes in connection with the recording of deeds upon transfer of property by sale or foreclosure.