A trio of industry trade groups is asking a federal appeals court to uphold a nearly century-old law that grants federal-court jurisdiction to civil lawsuits against any U.S. corporation in which claims arise from international banking or banking transactions in a U.S. territory. Last week, the Securities Industry and Financial Markets Association, New York Bankers Association and California Bankers Association filed an amicus brief with the U.S. Second Circuit Court of Appeals on behalf of Bank of America in its MBS lawsuit with American International Group. AIG filed...

The eminent domain proposal from Mortgage Resolution Partners will either painlessly help thousands of non-agency borrowers or severely harm the non-agency market, according to industry participants. The newly expanded plan could even hinder efforts to revive the non-agency market going forward, according to MRP’s opponents. “Eminent domain is an important method for mitigating losses to investors,” Graham Williams, CEO of MRP, said in a comment letter last week to the Federal Housing Finance Agency ...

Lender-related underwriting and disclosure issues have prompted a significant increase in liability for non-agency mortgage-backed security issuers, based on a court ruling last week. The U.S. Court of Appeals for the Second Circuit found that liability extends beyond trusts specifically purchased by investors to potentially all trusts in an issuer’s shelf with mortgages originated by the same lenders. “Investors may now seek to intervene to broaden classes in MBS class actions that don’t explicitly ...

A California-based lender that had a $400,000 minimum loan amount policy agreed to a settlement with the Department of Justice this week regarding alleged discrimination. Luther Burbank Savings will spend $2.0 million as part of the settlement and is prohibited from implementing a $400,000 minimum loan amount policy. The lender denied the discrimination allegations, did not admit any wrongdoing as part of the settlement and claimed the loan amount policy was tied to its focus on nontraditional mortgages ...

The Federal Housing Finance Agency and the National Credit Union Administration recently filed separate lawsuits seeking repurchases of mortgages in non-agency mortgage-backed securities. The FHFA lawsuit filed in August against DB Structured Products relates to ACE Securities Corp. Home Equity Loan Trust, Series 2006-FM1, which Freddie Mac purchased in August 2006. The FHFA did not disclose the size of Freddie’s investment. And last week the NCUA filed a lawsuit against UBS Securities ... [Includes three briefs]

The Department of Housing and Urban Development’s disciplinary arm hit 14 FHA-approved lenders with civil money penalties totaling $2.31 million for various violations of FHA regulations. HUD’s Mortgagee Review Board imposed the fines as a result of separate administrative actions against the lenders from Aug. 1, 2011, to Dec. 31, 2011. The MRB report, which was published in the Sept. 10 Federal Register, cited various offenses, including improper lending practices, failure to follow FHA origination guidelines, fraudulent reporting, failure to remit mortgage insurance premiums, failure to report ...

SunTrust Banks, Inc. is planning to shift $3 billion of loans, including an undetermined number of delinquent Ginnie Mae loans and other nonperforming loans, to its held-for-sale portfolio and record a $375 million provision for mortgage repurchases in the third quarter of 2012. The moves are expected to strengthen SunTrust’s mortgage portfolio and put the company in a better position by improving its risk profile and balance sheet and stabilizing its capital ratios. The $3 billion transfer of loans to the held-for-sale (HFS) category will include ... (1 chart)

Legislation was introduced this week in the House of Representatives that would effectively neutralize a proposal for local governments to use “eminent domain” powers to seize underwater mortgage loans and perform controversial modifications. Rep. John Campbell, R-CA, has introduced The Defending American Taxpayers from Abusive Government Takings Act, which would prohibit the FHA and VA from originating, insuring or guaranteeing a mortgage loan in jurisdictions that have invoked the power of eminent domain to seize a loan within the last 10 years. Fannie Mae and Freddie would be subjected to ...

Fannie Mae and Freddie Mac are obligated to comply with recently enacted Massachusetts law requiring creditors to take “commercially reasonable steps to avoid foreclosure,” according to a letter to the GSEs’ conservator from state Attorney General Martha Coakley. The AG’s Aug. 23 letter to Federal Housing Finance Agency Acting Director Edward DeMarco puts the agency on notice about a law signed Aug. 3 by Gov. Deval Patrick, D, “An Act to Prevent Unnecessary and Unreasonable Foreclosures,” which mandates loan modifications “when they make economic sense.”

The Federal Housing Finance Agency is suing a unit of Deutsche Bank demanding the bank repurchase loans backing now toxic mortgage securities. Acting as conservator to Freddie Mac, the FHFA filed suit on Aug. 24 in New York State Supreme Court in Manhattan against DB Structured Products Inc. The Finance Agency alleges that DBSP breached promises about loans that were pooled and securitized and failed to repurchase the loans as required, according to the agency’s court filing.