Ally Financial recently received subpoenas and document requests from the Securities and Exchange Commission and the Department of Justice over a broad array of lending and securitization activities, the company revealed in a recent Form 10-Q disclosure filed with the SEC. “The subpoenas and document requests from the SEC include information covering a wide range of mortgage-related matters, and the subpoenas received from the DOJ include a broad request for documentation and other information in connection with its investigations of potential fraud and other potential legal violations related to MBS, as well as the origination and/or underwriting of mortgage loans,” the company said. In addition, Ally recently received...

The Department of Housing and Urban Development will not take on the new points-and-fees cure provision for qualified mortgages adopted by the Consumer Financial Protection Bureau. The agency is concerned that lenders might inadvertently violate the FHA’s statutory 3.5 percent downpayment requirement. HUD adopted other changes in the CFPB’s revised final rule on ability to repay and qualified mortgages (ATR/QM) to maintain consistency but saw no need for any further ability to cure points-and-fees errors. Reimbursement of any excess points and fees to the borrower could take away from the mandatory 3.5 percent downpayment and render the loan ineligible for FHA insurance, the agency explained in a notice published in the Nov. 3 Federal Register. HUD said it would provide lender guidance under its own QM rule on ...

Reinstating the government-sponsored enterprises’ conventional 97 percent loan-to-value mortgage programs would benefit first-time homebuyers and borrowers with little or no cash reserves for a downpayment but adversely affect the FHA Mutual Mortgage Insurance Fund, according to analysts. If limited to first-time homebuyers, a conventional 97 LTV loan would offer some new homeowners better home loan financing than FHA and provide greater access to mortgage credit, said analysts with Bank of America Merrill Lynch. For years, Fannie Mae offered conventional 97 LTV loans through its MyCommmunityMortgage to help first-time homebuyers purchase a home with only a 3 percent downpayment. It was a better alternative to FHA’s main product, which required a 3.5 percent downpayment. The Fannie product also had less ...

PHH Mortgage may avoid taking a big hit in a legal dispute with a homeowner after the company mishandled his mortgage modification. Last week, in Linza v. PHH Mortgage Corp. et al., Yuba County (CA) Superior Court Judge Stephen Berrier threw out most of the jury’s original $16.2 million verdict against the company, including all punitive damages. Instead, the judge said that homeowner Phillip Linza is entitled to only $159,000 in damages. The case stems...

As mortgage lenders continue to feel their way around the world of unfair, deceptive or abusive acts or practices (UDAAP) as defined by the Dodd-Frank Act and the Consumer Financial Protection Bureau, there is much they can learn from a close examination of recent enforcement actions. During a webinar this week sponsored by Inside Mortgage Finance, Mercedes Tunstall, a partner with Pillsbury Winthrop Shaw Pittman, said CFPB consent orders show that the bureau is watching telemarketing practices very closely. The CFPB is...

An internal conflict within the Securities and Exchange Commission is reportedly holding up final resolution of Bank of America’s record $16.65 billion settlement with government agencies. The settlement, announced last August, is stalled due to a partisan dispute among the five SEC commissioners over granting a waiver on additional sanctions that would take hold when the settlement is entered into court. The sanctions, if enacted, could adversely affect...

An Iowa-based GSE last week asked a federal court in the state to give “no weight” to a ruling earlier this month by a federal judge who dismissed litigation by other GSE shareholders, including Perry Capital and Fairholme Funds. Continental Western Insurance Co. filed papers in U.S. District Court for the Southern District of Iowa Central Division arguing that Judge Royce Lamberth was “simply wrong” in his interpretation of the Housing and Economic Recovery Act of 2008 and his HERA-based rationale to shut down shareholders’ suits in DC.

Fannie Mae will pay $170 million to certain investors to settle a consolidated class-action lawsuit that alleges the GSE misrepresented its exposure to subprime loans in the run up to the 2008 mortgage crisis.The lead plaintiffs in the case include the Massachusetts Pension Reserves Investment Management Board and State Boston Retirement Board, which represent a class of common stockholders. The Tennessee Consolidated Retirement System represents a class of preferred stockholders.

A federal judge last week dismissed claims brought by the state of Massachusetts that Fannie Mae and Freddie Mac violated state law by putting limits on the sale of pre- and post-foreclosure homes. State Attorney General Martha Coakley filed suit in June against the Federal Housing Finance Agency, as GSE conservator, alleging that Fannie and Freddie are violating state law by refusing to negotiate lower terms for distressed Bay State homeowners.

The CFPB finalized its annual privacy notices rule last week, leaving it unchanged from its May proposed rule, other than some technical and clarifying revisions. The new rule creates an alternative delivery method for the privacy disclosure required every year under Regulation P (the implementation regulation of the Gramm-Leach-Bliley Act), which financial institutions will be able to use under certain circumstances. The new rule applies to both banks and those nonbanks that are within the CFPB’s jurisdiction under the GLBA. More specifically, the rule applies to “financial institutions,” as defined in Reg P. That includes banks, credit unions, mortgage companies, mortgage brokers and debt buyers. Under the CFPB’s new rule, financial institutions will be able to post privacy notices online ...