House Financial Services Financial Institutions Subcommittee Chairman Shelley Moore Capito, R]WV, and Rep. Brad Sherman, D]CA, have been circulating a gdear colleagueh letter in an effort to ratchet up political pressure on the Consumer Financial Protection Bureau to adopt a gsafe harborh for its pending qualified mortgage rule. gWe believe that the final rule must structure the QM as a strong legal safe harbor, not a rebuttable presumption. Both could still be challenged in court,h the lawmakers said. gHowever, as the Federal Reserve correctly stated in its preamble to the rule...
In the case of Brisbin v. Aurora Loan Services LLC, the U.S. Court of Appeals for the Eighth Circuit has ruled that a lender’s oral promise to postpone foreclosure is unenforceable; that is, that such a promise is a credit agreement that has to be in writing if it is to be enforceable. Borrower Alison Brisbin filed this lawsuit in Minnesota state court against Aurora Loan Services LLC, Mortgage Electronic Registration Systems Inc. and Freddie Mac, seeking legal and equitable relief from the foreclosure and sale of her home. She alleged three legal theories for invalidation of the...
Non-agency mortgage-backed security investors are hoping to influence the implementation of the recent $25 billion foreclosure settlement and ward off similar agreements in the future. They raised concerns this week at a hearing before the House Financial Services Committee’s Subcommittee on Capital Markets and Government Sponsored Enterprises. “As it stands, it will damage residential MBS markets further,” said Vincent Fiorillo, a trading/portfolio manager at Doubleline Capital, on behalf of the Association of Mortgage Investors. “By adding yet another risk premium to government intervention, it will further...
The settlement baked into the Residential Capital bankruptcy agreement is facing new challenges, including one from Warren Buffet’s Berkshire Hathaway and another from unsecured creditors. When ResCap announced its bankruptcy last month, it did so with a plan to sell its mortgage origination platform and servicing rights to Nationstar Mortgage, a division of Fortress Investment Group, for $4 billion and its portfolio loans to its parent company Ally Financial. Part of the deal is a release of legal liability for Ally, which will pass along some of its lingering obligations – like follow through on the...
Non-agency mortgage-backed security investors and politicians on both sides of the aisle were critical this week of the recent $25.0 billion servicing settlement. The settlement requires principal reduction loan modifications on mortgages held in five banks’ portfolios and allows the servicers to receive credit for reducing principal on mortgages in non-agency MBS. Vincent Fiorillo, a trading/portfolio manager at Doubleline Capital, noted that the Association of Mortgage Investors is not opposed to principal reduction mods ...
Walter Investment Management is scheduled next week to begin subservicing the first batch of up to 30,000 mortgages in non-agency mortgage-backed securities for Bank of America. The transfer will mark the latest shift from BofA to subservicers as part of a still-disputed $8.5 billion proposed settlement with non-agency MBS investors. Nine subservicers were approved as part of the settlement: Acqura Loan Services, Bayview Loan Servicing, FCI Lender Services, Nationstar Mortgage, Residential Credit Solutions ...
Three more FHA-approved lenders have found themselves under government scrutiny as the Department of Housing and Urban Development’s Office of the Inspector General broadened its investigation of potential abuses of the FHA single-family program. The OIG reportedly issued subpoenas to three large financial institutions last month to submit information on their FHA operations to determine whether the lenders followed HUD requirements when originating and underwriting FHA loans. The inspector general also would look to see whether quality control programs are ...
The Department of Housing and Urban Development is expanding an existing FHA note sales program as an alternative strategy for disposing of foreclosure property from the department’s bulging real estate-owned inventory. HUD Secretary Shaun Donovan announced enhancements to the accelerated claims disposition (ACD) program, which was designed primarily for delinquent FHA loans, at the 2012 Clinton Global Initiative America Meeting held this week in Chicago. The event brings together government and private sector leaders to discuss ways to ...
The Consumer Financial Protection Bureau is seeking comment and information on mortgages not financed by Fannie Mae or Freddie Mac, including those insured and guaranteed by the federal government, as it reopened the public discussion for the proposed “ability to repay” rule. New data the Federal Housing Finance Agency provided to the CFPB after the close of the rulemaking’s comment period spurred the bureau to reopen the comment period until July 9, 2012. The new FHFA data track the performance of loans purchased or guaranteed by Fannie Mae and Freddie Mac from 1997 to 2011. The CFPB also has obtained data on ...
SunTrust Mortgage has agreed to pay $21 million to the federal government to resolve a lawsuit alleging pricing discrimination against minority borrowers over a period of four years. The Department of Justice, which brought the pricing lawsuit, said the settlement also requires that SunTrust continue the anti-discrimination policies and practices it had adopted prior to the settlement. The mortgage lender agreed to the settlement voluntarily without admitting to any wrongdoing and without any factual findings, adjudications or litigation. Filed in U.S. District Court in Richmond, VA, the...
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