The massive legal action initiated by the Federal Housing Finance Agency about a year and a half ago on behalf of Fannie Mae and Freddie Mac against many of the nation’s biggest non-agency MBS issuers and underwriters for allegedly misrepresenting toxic MBS netted its first settlement this week with the prospect of more where that came from. In papers filed with the U.S. District Court, Southern District of New York, the FHFA “voluntarily dismisses with prejudice” its lawsuit against General Electric Co., ending the legal action in which the FHFA had claimed the firm had misled Freddie into purchasing some $549 million of toxic MBS. “This settlement resolves...

Take extra time to read your FHA Annual Recertification Attestation before signing. It might make the difference between peace of mind and a world of pain. Phillip Schulman, compliance expert and partner with K&L Gates, said lenders have gotten themselves in hot water with the Department of Housing and Urban Development, and their executives threatened with debarment, because they failed to read the fine print. Each year, mortgage lenders are required to sign and submit to HUD a document attesting to the company’s compliance with all HUD-FHA regulations and policies and that ...

Can a lender rely on an approval from the FHA’s automated underwriting system in determining whether a mortgage loan is a “qualified mortgage?” Lawyers at BuckleySandler, a Washington, DC, law firm, indicated some uncertainty after poring over the Consumer Financial Protection Bureau’s final “ability-to-repay” rule governing residential mortgage lending under new Truth in Lending Act regulations. Effective on Jan. 10, 2014, the final rule requires lenders to verify a borrower’s financial information and determine the borrower’s capacity to repay the loan over the long term. It also creates a ...

Poor oversight and monitoring have allowed certain borrowers with Home Equity Conversion Mortgage loans to illegally rent their properties to participants in the federal government’s Section 8 housing choice voucher program, according to the Department of Housing and Urban Development’s Office of the Inspector General (OIG). The second of two OIG audit reports on HUD’s oversight of the HECM program has concluded that department policies did not always ensure that borrowers complied with the program’s residency requirements. The audit found that 37 out of 174 HECM borrowers reviewed were ...

The Department of Housing and Urban Development is investigating reports that a loan officer of an approved FHA lender had participated in a reverse mortgage borrower’s counseling session, a practice HUD frowns upon but does not directly prohibit. A HUD representative declined to provide details but acknowledged that the report was part of informal discussions between department officials and stakeholders. “That information … has not been officially released in any form,” he said. “Once the details are finalized, we will be advising stakeholders.” The National Reverse Mortgage Lenders Association posted the ...

The Department of Veterans Affairs has announced new security measures to ensure that only authorized lenders and servicers have access to mortgage-related data. Guidance issued earlier this month establishes new security procedures for resetting users’ PIN numbers and validating their identities. Users must be validated as an employee of the lender/servicer that seeks access to the VA’s Veteran Information Portal (VIP). The VA will provide each approved lender/servicer with a list of previous users for validation. Upon completion of the validation, the list must be ...

Inside Mortgage Finance Publications, Inc. announced this week that it has just settled a major copyright infringement dispute with a large national financial institution for more than one quarter of a million dollars. Without admitting any infringement, liability or wrongdoing, the financial institution agreed to pay IMFP to settle charges that it had violated federal copyright laws by making unauthorized copies of Inside Mortgage Finance. IMFP alleged that the financial institution had engaged in ongoing in-fringement, distributing infringing copies of dozens of registered issues to a group of non-subscribing employees. “We never like...

The federal judge in charge of overseeing the multiple lawsuits filed by the Federal Housing Finance Agency against non-agency mortgage-backed securities issuers for allegedly misrepresenting deals that were sold to Fannie Mae and Freddie Mac rebuffed yet another motion by one of the banks to shut down the legal action. Last week, Judge Denise Cote of the U.S. District Court for the Southern District of Manhattan rejected a motion to reconsider her December decision allowing the FHFA to proceed on behalf of the GSEs with most of its fraud claims against Ally Financial. On Dec. 19, the judge denied most of Ally’s motion to dismiss, including the defendant’s request that the court strike the demand for punitive damages, finding there were sufficient factual allegations in the FHFA’s complaint to move forward with its fraud complaint.

Inside Mortgage Finance Publications, Inc. announced this week that it has just settled a major copyright infringement dispute with a large national financial institution for more than one quarter of a million dollars. Without admitting any infringement, liability or wrongdoing, the financial institution agreed to pay IMFP to settle charges that it had violated federal copyright laws by making unauthorized copies of Inside Mortgage Finance. IMFP alleged that the financial institution had engaged in ongoing infringement, distributing infringing copies of dozens of registered issues to a group of non-subscribing employees. “We never like to pursue...

The CFPB convinced a federal district court in Miami to require a nationwide debt-relief services company to refund up to $100,000 to consumers who were allegedly unlawfully charged advance fees for debt settlement services. State Attorneys General of New Mexico, North Carolina, North Dakota and Wisconsin and the Hawaii Office of Consumer Protection joined the bureau’s lawsuit, making this the CFPB’s first joint-enforcement action with the states. The bureau asserted that the defendant, Payday Loan Debt Solution...