Settlement talks between JPMorgan Chase and federal and state negotiators have reportedly focused on a possible $11 billion to resolve a string of investigations into the bank’s mortgage lending and securitization practices. The amount under negotiation has ballooned from JPMorgan’s initial offer of $3 billion to $4 billion, which negotiators rejected. The talks cover federal probes in Philadelphia, Washington and Sacramento. The Department of Justice, Department of Housing and Urban Development and New York Attorney General Eric Schneiderman, who co-chairs a presidential task force investigating bank securitization deals, are involved...

A federal district court judge in Manhattan this week rejected Wells Fargo’s plea to dismiss a lawsuit alleging it lied about the quality of home loans submitted to the Department of Housing and Urban Development for FHA insurance over a 10-year period. District Court Judge Jesse Furman allowed government claims under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 to proceed but ruled that legal injury claims based on events that transpired before June 2009 were time-barred and that the government had waited too long to file a lawsuit. The judge also threw out claims of negligence and unjust enrichment. The government filed...

A federal district court judge in California this week dismissed without prejudice an action brought by securitization trustees to stop the City of Richmond, CA, and its partners from implementing an eminent domain strategy to seize and refinance underwater mortgages. Judge Charles Breyer of the U.S. District for Northern California said he decided to dismiss the case rather than hold it in abeyance because “the plaintiffs’ claims are not yet ripe for adjudication.” In other words, one can’t sue over something that has not happened or is not bound to happen. In fact, certain developments, such as the finalization of an agency rule or the resolution of pending suits in other jurisdictions, may leave...

Five years after it filed for Chapter 11 protection, the remains of the investment bank Lehman Brothers is asking a New York bankruptcy judge to rebuff a legal claim by Freddie Mac that would put the GSE at the front of the line of creditors. In papers filed with U.S. Bankruptcy Court in Manhattan last week, Lehman Brothers Holdings Inc. said that Freddie is not entitled to a “priority recovery” under Lehman’s confirmed plan of reorganization as the GSE seeks to recover $1.2 billion in unpaid loans. Freddie had been...

The Office of Management and Budget has cleared a proposed rule setting qualified mortgage standards for FHA-insured single-family mortgages for issuance in the coming weeks. The OMB signed off on the proposed standards on Sept. 12 and the Department of Housing and Urban Development has a few more refinements to perform before publishing the proposal for public comment. HUD declined to discuss the contents of the proposed standards or indicate a timetable for a final QM rule. Industry participants, on the other hand, said they would be surprised if ...

The end of the fiscal year is drawing near, which means in a couple of weeks the FHA again will be in the hot seat as Congress, mortgage industry participants and consumer groups pore over the results of the latest fiscal year audit of the FHA’s Mutual Mortgage Insurance Fund. This time, stakeholders might find some encouraging data, observers say. The findings of the FY 2012 actuarial review conducted by Integrated Financial Engineering, Inc. brought a lot of heat on the FHA and the Department of Housing and Urban Development, reigniting calls for FHA reforms in the House and the Senate. Reform bills are currently ...

The Department of Housing and Urban Development has issued a final rule aligning its streamlined reporting requirements for small lenders with those of federal banking regulators. HUD’s regulations currently require all supervised lenders and mortgagees, regardless of their asset size, to submit annual audited financial statements as a condition of FHA lender approval and recertification. Federal banking regulators, on the other hand, do not require their “small supervised lenders” to submit audited financial statements, but allow them to submit unaudited financial regulatory reports. Unaudited financial reports include a ...

Banks, investors and their allies opposed to the City of Richmond, CA, using eminent domain to seize underwater mortgages, refinance and repackage them for sale to other investors were scheduled to have their first hearing in court at week’s end. Current investors, through trustees Wells Fargo and Deutsche Bank AG, have sued in U.S. District Court to block the plan. Parties in Wells Fargo Bank, National Association, as Trustee, et al., plaintiffs, vs. City of Richmond, California, a municipality; and Mortgage Resolution Partners LLC, defendants, Case No. CV-13-3663-CRB, were to appear Sept. 12 and Sept. 13, before Judge Charles Breyer of the U.S. District Court for the Northern District of California in San Francisco. The Securities Industry and Financial Markets Association and the U.S. Chamber of Commerce jointly submitted...

Vacant foreclosed properties with mortgages backed by Fannie Mae and Freddie Mac are not subject to the City of Chicago’s registration ordinance, according to a recent ruling from the U.S. District Court for the Northern District of Illinois. The ordinance, which took effect in November 2011, requires mortgage lenders to register vacant properties with the city and pay a $500 registration fee. The ordinance also directs lenders to secure and maintain vacant buildings in accordance with city requirements.

Standard & Poor’s this week threw another counterpunch against the federal government’s civil fraud lawsuit filed earlier this year, slamming the litigation as “retaliation” for the rating agency’s August 2011 downgrade of the country’s AAA credit rating. The Justice Department in February filed a $5.0 billion lawsuit accusing S&P of knowingly inflating its ratings in residential MBS and collateralized debt obligations to boost its revenue and market share in the years leading up to the 2008 financial crisis. The filing in the U.S. District Court in Santa Ana, CA, by S&P’s parent company McGraw-Hill Co. seeks...