Three jurisdictions in California are raising a lot of industry hackles over a plan that could lead to the use of eminent domain to seize currently performing underwater mortgages and force a restructuring of their terms. Its a plan more like Grand Theft Mortgage than a silver bullet for the regions housing woes, according to former Fannie Mae executive Edward Pinto. At issue is a resolution adopted last week by Californias San Bernardino county and the cities of Ontario and Fontana in which the jurisdictions entered into a joint powers agreement. Under the resolution...
The Supreme Court of the United States surprised many industry and legal observers late last month by deciding it would not take on a key dispute under the Real Estate Settlement Procedures Act. The writ of certiorari is dismissed as improvidently granted, the high court said in a terse announcement. At issue in First American Financial v. Edwards is whether someone who has not suffered any actual damages from alleged RESPA violations has the legal standing to sue in federal court. The SCOTUS decision to not rule on the case, after deciding a year ago to take it on, means the...
A New York state appeals court last week upheld a lower court ruling which dismissed an investor groups attempt to overturn Bank of Americas proposed $8.5 billion MBS settlement. The five-judge panel of New Yorks First Department Appellate Division affirmed Judge Barbara Kapnicks March 28 decision to dismiss the complaint brought by Walnut Place LLC and related entities. Walnut Place, which represents investors that bought about $1.4 billion of Countrywide non-agency MBS, filed suit in February 2011 claiming Countrywide made false representations on nearly 66 percent of the 2,166 mortgage...
Non-agency mortgage-backed security investors strongly oppose a proposal in California to reduce principal for borrowers with negative equity by acquiring mortgages via eminent domain. The proposal could set a troubling precedent according to non-agency MBS investors, who are still considering options to prevent such seizures. In June, San Bernardino County along with two cities in the county, Ontario and Fontana, approved a resolution that would allow the municipalities to acquire mortgages with negative equity using eminent domain ...
Default risk on non-agency jumbo mortgage-backed securities continues to improve gradually, according to economic risk factors applied to Fitch Ratings non-agency jumbo MBS loan loss model. The rating service released the economic risk factors for the second quarter of 2012 last week. Fitch said the improvement is tied to home price trends and it expects home prices to touch bottom in 2013. New Jersey and New York have the highest default risk in the country, with expected defaults well above ... [Includes three briefs]
The Department of Housing and Urban Development said it has received $1.2 billion in recent settlements with large mortgage lenders and servicers but HUDs internal watchdog, which did much of the legwork in the investigations, reveals a much smaller amount. According to recent audit reports published by HUDs Office of the Inspector General, only Bank of America and Flagstar Bank have made payments under settlement agreements with HUD and the Department of Justice to resolve government claims. In separate memos to HUDs Office of General Counsel last month, Kim Randall, director of the HUD OIG Civil Fraud Division, sought clearance to ...
Two lenders lost their approval to underwrite and originate FHA loans under Credit Watch while two others may be ordered to indemnify the Department of Housing and Urban Development for potential losses on several ineligible FHA-insured loans. HUD recently stripped Community Central Mortgage Co. of Mount Clemens, MI, and Strategic Mortgage Co. of Columbus, OH, of their direct endorsement approval because of the exceedingly high default and claim rates of FHA-insured loans they originated in their business areas. The Credit Watch Termination Initiative allows HUD to terminate a direct endorsement agreement with any FHA lender if ...
In an unusual move, the federal judge overseeing the Federal Housing Finance Agencys massive legal action against many of the nations biggest MBS issuers has granted a defendant the right to appeal her denial of its motion to dismiss. Last week, Judge Denise Cote of the U.S. District Court for the Southern District of New York granted permission to UBS Americas to go over her head to the U.S. Court of Appeals for the Second Circuit. UBS hopes the appellate court will reverse...
A federal judge earlier this month had ruled that the Federal Housing Finance Agencys case against UBS Americas will serve as the test case in a series of lawsuits that FHFA has filed concerning failed residential mortgage-backed securities. However, in another ruling a week later, Judge Denise Cote of the U.S. District Court for the Southern District of New York granted a motion by UBS to appeal her May 4 denial of the banks motion to dismiss on statute of limitation grounds. Judge Cotes June 13 decision denied UBS request that it should not be the first of 17 cases to proceed because it was not a loan originator and it was not accused of fraud.
The reallocation of hundreds of millions of dollars of funds paid by the nations five largest loan servicers to states as part of this years whopping $25 billion national foreclosure settlement has ignited intra-state feuding as to how best utilize the cash windfall, according to a mortgage industry attorney. During a webinar sponsored last week by the State Attorneys General Enforcement Network, Jeremiah Buckley, founding partner of BuckleySandler, noted emerging controversies among state elected officials as they do battle, in some cases via the courts, to ensure the funds are used for consumer/mortgage-related purposes. The landmark agreement finalized in April between Ally Financial, Bank of America, Citigroup, JP Morgan Chase and Wells Fargo with a coalition of state attorneys general...