Solicitation of VA purchase loans for streamline refinancing within weeks of closing is apparently continuing despite Ginnie Mae’s efforts to stop the harmful practice. The Mortgage Bankers Association has expressed concern that guidance on pooling eligibility for streamlined refinance loans, which Ginnie issued in October last year, was far less effective than expected. Although the aggressive refinancing trend has slowed due to Ginnie’s action, there are still “pockets of that activity” being reported, said Pete Mills, MBA senior vice president. Refinancing a veteran’s purchase mortgage less than six months after its origination is not in the vet’s best interest because it strips equity from the house and results in higher financing costs, said Mills. While the rapid refi trend involves only a small number of loans in Ginnie mortgage-backed securities pools, investors do not get the full benefit of their investment because of early prepayment. Mills said there are a handful of lenders and brokers that ...

A favorable court ruling on the statute of limitations for filing claims under the False Claims Act gave Quicken Loans its first win in a closely watched government case involving allegedly fraudulent FHA loans. Judge Mark Goldsmith of the U.S. District Court for the Eastern District of Michigan dismissed portions of the Department of Justice’s lawsuit against Quicken in a March 9 decision, narrowing the lender’s potential liability for FHA losses. The losses were blamed on sloppy underwriting, fraudulent certification and loan performance. The DOJ said the FHA would not have knowingly insured the loans had it known they were defective. The DOJ and the Department of Housing and Urban Development’s inspector general began an investigation of Quicken’s FHA lending activities in April 2012. The investigation encompassed some 246,000 FHA loans, which Quicken originated from ...

A Georgia appellate court recently handed Wells Fargo Bank a provisional win in a lawsuit in which a VA borrower alleged breach of contract and wrongful foreclosure. In Wells Fargo Bank, N.A., d/b/a Wells Fargo Home Mortgage v. LaTouche, the court ruled that Wells did not breach its duty to the borrower to comply with VA foreclosure regulations. The court concluded that the trial court had erred in denying Wells Fargo’s motion for summary judgment as to the defendant’s claims for wrongful foreclosure that hinged upon the same VA regulations. The reversal stemmed from Wells Fargo’s request for an interlocutory review of the trial court’s denial of its motion for summary judgment on defendant Michael LaTouche’s claims for breach of contract, wrongful foreclosure and “surprise. An interlocutory review is undertaken when a question of law must be answered by an appellate court before ...

The Trump administration has proposed deep budget cuts in 2018 for the Department of Housing and Urban Development and the U.S. Department of Agriculture, but whether the agencies’ critical housing insurance programs would be affected is unclear. The cuts are part of the administration’s plan to reduce non-defense discretionary spending dramatically in order to fund increased defense spending and President Trump’s southern border wall, and to bring down a projected $9.4 trillion U.S. deficit over the next decade.Released this week, the preliminary 2018 budget seeks $40.7 billion in gross discretionary funding for HUD, $6.2 billion or 13.2 percent lower than the department’s approved spending in 2017. The $47.3 billion in discretionary budget authority enacted for fiscal 2017 does not include offsetting receipts from FHA and Ginnie Mae, which lowered the congressionally appropriated cost for ...

A recent decision by a federal judge in Detroit dismissing portions of the Department of Justice’s FHA-related claims against Quicken Loans will shrink the lender’s liability under the False Claims Act, according to a legal expert. In a decision rendered March 9 on the closely watched case, U.S. District Judge Mark Goldsmith narrowed the scope and timeframe for which the DOJ can pursue any recovery or settlement against Quicken Loans for FHA losses allegedly due to faulty underwriting and loan default performance. It is the first major decision since the DOJ’s suit was transferred from federal court in Washington, DC, to federal court in Detroit last year. The DOJ and the Department of Housing and Urban Development’s Office of the Inspector General began...

Nearly all of the discussion related to the ongoing legal battle between PHH Corp. and the Consumer Financial Protection Bureau has involved either questions about the bureau’s interpretation and enforcement of the Real Estate Settlement Procedures Act or issues having to do with the constitutionality of the CFPB. But the role played by the administrative law judge early in the bureau’s enforcement action has surfaced, with potential significance in the eyes of the U.S. Court of Appeals for the District of Columbia Circuit, which recently granted the agency’s request for a rehearing by the full court. To adjudicate the matter early on, the CFPB borrowed...

A borrower seeking cancellation of private mortgage insurance prevailed last week in a lawsuit against JPMorgan Chase. The appeals court noted that federal law regarding standards for MI cancellation overrides Fannie Mae’s servicing guidelines. The case of Ginnine Fried v. JPMorgan Chase centers on how to calculate a borrower’s loan-to-value ratio when allowing for MI cancellation after the LTV ratio falls below 80.0 percent. The borrower filed...

The Trump administration has subtly signaled its support for PHH Corp. in the mortgage lender’s long-running dispute with the CFPB over alleged violations of the Real Estate Settlement Procedures Act. In recent days, the Department of Justice asked the U.S. Court of Appeals for the District of Columbia Circuit for permission to file an amicus brief in the case by March 17, one week after the deadline the court had given PHH to file its response to the court’s decision to grant the CFPB’s request for an en banc rehearing.The court has since granted the administration’s request for the one-week extension. In its request, the Justice Department said, “As this court recognized in calling for the views of the ...

The attorneys general of 15 states came to the defense of PHH Corp. and related parties in their case with the CFPB over the agency’s interpretation and enforcement of the Real Estate Settlement Procedures Act.The AGs of Alabama, Arizona, Arkansas, Georgia, Idaho, Indiana, Kansas, Louisiana, Missouri, Nevada, Oklahoma, South Dakota, Texas, West Virginia and Wisconsin focused on the constitutional issues in the case, with not a single mention of the statutory questions related to the act. The AGs made three major arguments in support of PHH’s position. First, they asserted that the separation of powers plays a critical role in preserving the division of authority within the federal system, and the CFPB’s governance structure violates the separation of powers ...

PHH Corp. and related parties again made a full defense of their position in their legal struggle with the CFPB over alleged misconduct under the Real Estate Settlement Procedures Act. PHH made five primary arguments to the U.S. District Court of Appeals for the District of Columbia Circuit, the first of which was that the CFPB is unconstitutionally structured and must be invalidated. …