A U.S. Court of Appeals for the Federal Circuit recently upheld rulings that went against Mortgage Grader, a loan shopping website that has filed a number of patent-related lawsuits. The court upheld a ruling by a lower court that found that Mortgage Grader’s claims related to the “abstract idea” of anonymous loan shopping and that the patents obtained by the firm didn’t include an “inventive concept.” Mortgage Grader filed a lawsuit in January 2013 against Costco Wholesale and ...

The ongoing decline in interest rates is wreaking havoc on the sale of “bulk” mortgage servicing portfolios, causing investors to pull back on pricing, and sending some bidders to the exits, at least for a little while. Servicing advisors who play in the space confirmed to Inside Mortgage Finance that pricing isn’t what it used to be, and is off peaks seen a year ago when bids – in retrospect – were too aggressive and later resulted in write-downs. Mark Garland, president of MountainView Servicing Group, Denver, admitted...

Wells Fargo has agreed in principle to a $1.2 billion settlement to resolve FHA-related civil claims brought by the federal government while First Tennessee Bank has agreed to subsidize interest-rate reductions on home mortgages as part of a $1.9 million settlement agreement with the Department of Housing and Urban Development. The Wells Fargo settlement was disclosed in a recent filing with the Securities and Exchange Commission. If finalized, the settlement would be the largest for FHA. So far, the FHA has collected...

A recent ruling by the Rhode Island Supreme Court has increased concerns that state courts will allow liens for homeowner associations and related entities to supersede first-lien mortgages. In late December, the R.I. Supreme Court ruled that a condo foreclosure sale conducted pursuant to the R.I. Condominium Act can extinguish a prior-recorded first mortgage if the lender fails to redeem the mortgage within 30 days of the foreclosure. The decision reversed a ruling by a lower court, which found that the borrower’s mortgage survived the condo association’s lien foreclosure sale. The Mortgage Bankers Association said...

Federal courts and a state attorney general have been busy this past week churning out decisions and announcing settlements on a number of cases involving legacy non-agency MBS, Wall Street financial institutions and pension funds. A hearing on a proposed $272 million cash settlement of two class-action lawsuits against Goldman Sachs involving legacy MBS will be held on April 13, 2016, at 10 a.m. in U.S. District Court for the Southern District of New York. Attorneys for the plaintiffs, NECA-IBEW Health & Welfare Fund and the Police and Fire Retirement System of the City of Detroit, sent out...

The Department of Veterans Affairs has issued guidance to help VA lenders understand better the agency’s interim final rule on a borrower’s ability to repay and qualified mortgages. The guidance was published in a frequently asked questions (FAQs) format to clarify and explain both the VA’s ATR and QM standards. The VA interim final rule became effective on May 9, 2014, the date it was published in the Federal Register. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires residential mortgage lenders to make a reasonable and good faith determination that the consumer has a reasonable ability to repay the loan according to its terms. The statute directed the Consumer Financial Protection Bureau to develop and implement an ATR/QM rule. Under the CFPB’s final rule, a qualified mortgage is a category of loans that have certain, more stable features that ...

The Department of Veterans Affairs and the U.S. Department of Agriculture Rural Housing Service have issued 2016 guidelines for lending to borrowers who have gone through a bankruptcy, foreclosure or a short sale. Under VA guidelines, borrowers emerging from a previous Chapter 7 bankruptcy may apply for a VA loan two years after the bankruptcy discharge. Borrowers with a Chapter 13 bankruptcy may qualify for a new VA loan if they have made at least 12 months of payments and the lender concludes that they have reestablished satisfactory credit. Before the bankruptcy-tainted borrower applies for a VA loan, however, the trustee or the bankruptcy judge must approve the new loan. The lender may put in a good word on behalf of the borrower provided the latter has met all requirements for a new loan. Borrowers may apply for a VA loan two years after a foreclosure or a short sale. In the case of ...

The FHA flood insurance requirements could make it difficult or more risky for lenders to originate FHA loans in states with significant flood risk or where flood maps may not accurately reflect the current flood risks, the Mortgage Bankers Association warned. Testifying during a recent hearing on private flood insurance, Steven Bradshaw, executive vice president of Standard Mortgage and MBA representative, warned that FHA’s current requirement for lenders to secure flood insurance on properties only if it is located within a high flood-risk zone has had some unexpected adverse impact, particularly in the wake of hurricane-related catastrophes. Bradshaw noted that many homes that were destroyed by Hurricane Katrina were not located in special flood-hazard areas (SFHA) and therefore were not required to have flood insurance. “Sadly, these borrowers were often uninsured and the ...

The FHA has given lenders and servicers an additional extension through April 17, 2016, to submit due-and-payable notices when Home Equity Conversion Mortgage borrowers fall behind on their property tax or insurance payments. The extended deadline also provides FHA lenders and servicers an opportunity to pursue loss mitigation before initiating foreclosureThe latest deadline extension was the second such extension. In April 2015, the FHA announced a policy change providing HECM lenders and servicers an additional 60 days in which to initiate foreclosure proceedings against any troubled HECM borrower with a case number issued prior to Aug. 4, 2014, with a non-borrowing spouse. Lenders and servicers are required to comply with reasonable-diligence timeframes for such HECMs. Debenture interest will not be curtailed during this period. The April policy allows mortgagees full discretion as to when to use the extension.

On Jan. 21, 2016, the FHA issued a reminder to lenders to register for one of the three remaining phases of Electronic Appraisal Delivery (EAD) Onboarding, before the electronic appraisal submission requirements become mandatory on June 27, 2016. The remaining onboarding phases are the following: Feb. 15-April 15 (registration closes on Feb. 14); March 15-May 15 (registration closes March 14); and April 15-June 15 (registration closes on April 14). All appraisals for FHA case numbers assigned on or after June 27, 2016, must be submitted to FHA through the ...