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...

Members of the Residential Mortgage-Backed Securities Working Group filed a lawsuit this week against Credit Suisse Securities and reached separate settlements last week with JPMorgan Securities and Credit Suisse. New York Attorney General Eric Schneiderman, a co-chair of the working group, said federal and state regulators are working on a number of other actions. “We’re a long way away from wrapping this up,” he said. The lawsuit against Credit Suisse was filed this week by Schneiderman, alleging that ...

JPMorgan Securities and Credit Suisse Securities have agreed to pay more than $400 million combined to settle government charges that they misled investors in offerings of non-agency MBS from 2005 to 2010, according to the Securities and Exchange Commission. The SEC, working with the federal-state Residential MBS Working Group, reached separate settlement agreements with the two financial institutions after filing a complaint and issuing a cease-and-desist order. Neither JPMorgan nor Credit Suisse admitted to or denied the findings against them or any of their affiliates. The SEC alleged...

Some real estate agents are refusing to accept offers from buyers using FHA financing prompting minority rights advocates to question whether racial discrimination is causing the problem or some other factors. While illegal flipping and steering that targeted minority communities appear to have abated, bias against borrowers using FHA financing continues in the real estate market, according to Janis Bowdler, director of the Wealth-Building Policy project of the National Council of La Raza. Bowdler expressed her concern during a recent panel discussion of an FHA Working Paper on the FHA’s role in the housing finance market hosted by the Urban Institute. She said there have been reports of ...

Private mortgage insurers have been making a slow comeback and reclaiming market share, thanks in part to policy changes adopted by the FHA, according to MI industry executives. Executives say MI penetration of the market has grown from 2.8 percent in the first quarter of 2012 to anywhere between 8-10 percent in the third quarter, an increase they attributed in part to gaining market share from FHA. Currently, private MI companies account for approximately one-third of loans with loan-to-value ratios of 80 percent or more, which are also ...

Recent procedural rulings in Federal Housing Finance Agency lawsuits against non-agency MBS issuers and underwriters again favored the conservator of the government-sponsored enterprises, prompting some to speculate that issuers will move to settle the lawsuits. Meanwhile, a number of other MBS-related litigation developments continue to pile up. U.S. District Judge Denise Cote is overseeing 16 cases filed by the FHFA against non-agency MBS issuers and underwriters regarding non-agency MBS purchased by the GSEs between 2005 and 2007. The FHFA alleges misrepresentations by the issuers and underwriters on the MBS. Last week, Cote dismissed...