Expressing concern about a potential FHA bailout, Sen. Tim Johnson, D-SD, chairman of the Senate Committee on Banking, Housing and Urban Affairs, said that he is prepared to work with Republicans on a bipartisan solution to keep the FHA solvent should government measures fail. This week, Johnson called a hearing to know more about the administrative and legislative action plan the Department of Housing and Urban Development has put together to restore the financial health of the FHA’s Mutual Mortgage Insurance Fund. A recent independent actuarial audit revealed that ...

The mortgage banking industry is urging Congress to reject the FHA’s call to eliminate the existing “knew or should have known” standard in the National Housing Act in connection with an agency proposal to extend indemnification authority to all direct-endorsement lenders. Both proposals are part of legislative and administrative measures sought by the FHA to strengthen its capability to manage risk and protect its Mutual Mortgage Insurance Fund. A recent independent actuarial review of the fund found that in FY 2012 the economic value of the FHA’s single-family portfolio had dropped to negative $13.5 billion (excluding Home Equity Conversion Mortgage loans) and that ...

The Eleventh Circuit Court of Appeals ruled earlier this month that a 2010 Federal Housing Finance Agency directive advising Fannie Mae and Freddie Mac against purchasing mortgages laden with certain first-priority lien obligations under the Property Assessed Clean Energy program is not tantamount to a rulemaking that can be challenged in court. The ruling rejected a challenge by Leon County, FL, to uphold its PACE program. The county claimed the FHFA had engaged in rulemaking without the required notice and comment period in violation of the Administrative Procedure Act.The circuit court’s opinion by Judge Rosemary Barkett found the Finance Agency’s action was consistent with its congressionally defined role as conservator under the Housing and Economic Recovery Act of 2008.

For the third time in as many months, a federal judge has summarily dismissed a securities class action lawsuit against a former Fannie Mae executive. U.S. District Judge Richard Leon threw out the case against Leanne Spencer, Fannie’s former controller, brought nearly a decade ago by investors hoping to recover damages. Two Ohio pension funds – the Ohio Public Employees Retirement System and the State Teachers Retirement System of Ohio – filed suit in 2004 related to a $6.3 billion overstatement of earnings against Fannie and three former GSE executives, including CEO Franklin Raines.

A law professor says there is no quick solution to the mortgage industry’s foreclosure mess and the resulting legal chaos, but moving to a single electronic note/mortgage transfer system would solve much of what caused the crisis to begin with. “Massive originations of mortgage loans relying on the sell-to-distribute model, followed by massive foreclosures, have led to chaos in the legal processes to track who may foreclose and sell homes,” said Alan White, professor of law at Valparaiso Law School ...

The former chief executive of DocX admitted to her role in a fraud scheme that duped servicers and relied on forged signatures and employees that could sign thousands of mortgage-related instruments a day. Lorraine Brown pled guilty to charges from the Department of Justice of conspiracy to commit mail and wire fraud. “She was responsible for more than a million fraudulent documents entering the system, directing company employees to forge and falsify documents relied on by property recorders ...

The CFPB has won a preliminary injunction in its first enforcement action, which was taken against a California attorney and some of his affiliated companies and partners that offered loan modification and foreclosure relief services to homeowners struggling to keep up with their mortgage payments. In Consumer Financial Protection Bureau v. Chance Gordon, et al., filed in July in U.S. District Court for the Central District of California, the judge enjoined the defendants from making various representations alleged by the...

The five banks that are parties to the $25 billion national mortgage settlement have extended more than $26.11 billion in gross relief to more than 300,000 borrowers, or roughly $84,385 per homeowner, according to a new report from the Office of Mortgage Settlement Oversight. At that pace, the five participating servicers will satisfy their obligations under the settlement two years ahead of the 2015 deadline. “The report discloses that the banks have completed $21.92 billion in consumer relief to borrowers...

Adverse impact violations are the hardest to defend against and the ones causing the biggest settlements, according to Tammy Butler, the director of fair lending and compliance for Optimal Blue, a leading pricing engine. “In a nutshell, this means that your institution has a policy or criterion that has a disproportionate impact on the protected class population of the areas you serve,” she said in a recent blog. This can occur in the way that a lender prices loans or underwriting overlays. “So far, every lender that has been...