A New York State Supreme Court judge recently signed off on JPMorgan’s proposed $4.5 billion settlement with a revised list of MBS trusts, while three other Wall Street banks lost in separate bids to have MBS claims against them dismissed. On Aug. 12, Justice Marcy Friedman of the New York State Supreme Court approved JPMorgan’s representation-and-warranties settlement offer for 319 MBS trusts. She concluded that the trustees exercised their discretionary power reasonably and in good faith in accepting the settlement. JPMorgan and a group of 20 large institutional investors that hold approximately 32.5 percent of the securities issued by the MBS trusts negotiated the settlement. Among these prominent investors were Fannie Mae, Freddie Mac and the Federal Home Loan Bank ...

Recent rulings in Nevada favor the mortgage industry when it comes to super-liens imposed by homeowners associations on loans in foreclosure. Twenty-two states have super-lien laws that allow HOAs to take priority over first mortgages and foreclose the property to collect up to six months of unpaid fees. In 2014, the Nevada Supreme Court ruled that an HOA could extinguish a senior mortgage. But the Ninth Circuit Court recently ruled that an HOA foreclosure sale extinguishing the first deed of trust is unconstitutional. In the case of Bourne Valley Trust v. Wells Fargo Bank, the court ruled that Bourne Valley seeking to purchase the property at an HOA foreclosure sale violated the first-lien holder’s due process rights. Attorneys at Bradley ...

With federal civil monetary penalties set to rise significantly over the next couple of months, mortgage industry stakeholders are getting increasingly concerned about retroactivity in some of the interim final rules adopted by federal agencies to implement the revised penalty amounts, according to industry attorneys. Although application of the adjusted civil penalty amounts to violations that occurred prior to the passage of the Federal Civil Penalties Inflation Adjustment ...

A dispute over which office within the Department of Housing and Urban Development is responsible for tracking and recording certain collections from civil fraud settlements is wreaking havoc on HUD’s accounting of collections and recoveries. In its semiannual report to Congress, HUD’s Office of the Inspector General said it might have to elevate the matter to the HUD deputy secretary for a decision as to which office is responsible for each action. The dispute ...

A ruling late last year by a state appeals court in New York threatens to upend the practice of providing “gap” or “bridge down” representations and warranties on residential MBS, according to a brief submitted on behalf of the Securities Industry and Financial Markets Association. SIFMA asked the New York State Court of Appeals to reverse the lower court’s ruling in Bank of New York Mellon v. WMC Mortgage. Lawyers at the law firm of Stroock & Stroock & Lavan submitted an amicus brief to the N.Y. State Court of Appeals on behalf of SIFMA regarding the case. “The court’s resolution of this issue could have...

JPMorgan Chase is a step closer to settling a dispute with Deutsche Bank and the Federal Deposit Insurance Corp. over certain mortgage securitization agreements in connection with the government’s takeover of failed mortgage lender Washington Mutual. According to Chase’s most recent 10-Q filing with the Securities and Exchange Commission, the firm, Deutsche Bank and the FDIC have signed a term sheet to resolve pending litigation brought by the German bank against Chase and the FDIC in relation to WaMu as well as Chase’s outstanding indemnification claims pursuant to the terms of the purchase-and-assumption agreement with the FDIC. The term sheet is subject...

A federal judge rejected efforts by the government to keep a new batch of official memos and other documents from being disclosed in the ongoing legal war over the terms of the conservatorships of Fannie Mae and Freddie Mac. U.S. Court of Federal Claims Judge Margaret Sweeney released a new set of documents that included a brief excerpt of former White House housing policy expert Jim Parrott’s deposition from January, a presentation from the Federal Housing Finance Agency in 2008 and several memos dating back to 2008 and 2012. Sweeney rejected...

As policymakers in Washington, DC, face the expiration of the Treasury Department’s Home Affordable Modification Program at year-end, the CFPB last week released a collection of what it characterized as “guiding principles” on the future of foreclosure prevention. “We aim to help consumers avoid foreclosures, which upset their personal and financial lives,” said CFPB Director Richard Cordray. “The modification program was put in place to provide alternatives to foreclosure. Our principles will serve as helpful guardrails for servicers, investors and regulators to consider as we continue to protect consumers who are struggling to pay their mortgages.” In summary, the principles emphasize, among other things, accessibility: “Consumers should easily be able to obtain and use information about loss mitigation options, and ...

Mortgage Industry Waits for PHH Shoe to Drop. The mortgage industry is awaiting a final ruling from the U.S. Court of Appeals for the District of Columbia Circuit in the case of PHH Corp. v. Consumer Financial Protection Bureau, No. 15-cv-01177.

More unsealed documents were released this week during the discovery process in a GSE shareholder case in the U.S. Court of Federal Claims. The eight documents ranged from an excerpt of former White House housing policy expert Jim Parrott’s deposition from January,to presentations from the Federal Housing Finance Agency in 2008 to several memos dating back to 2008 and 2012. In the two-page Parrott deposition excerpt, he said that the net worth sweep was a “Treasury-driven process,” when asked why he didn’t reach out to anyone on Capitol Hill about the plan. He added that to the degree there was outreach to Congress, it would have come from Treasury, not him.