Rep. Darrell Issa, R-CA, chairman of the House Committee on Oversight and Government Reform, is planning to quiz top FHA officials about an apparently deliberate effort by the agency to withhold important information from Congress regarding the true financial health of the FHA insurance fund. In a recent letter to FHA Commissioner Carol Galante, Issa said that the stress test employed by Integrated Financial Engineering in its FY 2012 actuarial review of the FHA Mutual Mortgage Insurance Fund yielded a more troubling result than what HUD reported to Congress in November last year. In the actuarial review, IFE reported that ...

The Department of Housing and Urban Development and the reverse mortgage lending industry lauded the U.S. House of Representatives this week for passing bipartisan legislation that would allow the agency to make immediate, necessary changes to the Home Equity Conversion Mortgage Program while working simultaneously on implementing regulations. H.R. 2167, the Reverse Mortgage Stabilization Act of 2012, passed by voice vote after it was added to the House “suspension” calendar, which limits debate on noncontroversial bills for quick passage. Co-sponsored by Reps. Denny Heck, D-WA, and Mike Fitzpatrick, R-PA, the bill responds ...

The likelihood of new loans exceeding the statutory “high-priced mortgage loan” (HPML) threshold due to a recent policy change relating to FHA mortgage insurance premium payments is causing uneasiness among some lenders, said an industry trade group. This week, the Consumer Mortgage Coalition warned that lenders might not originate FHA-insured loans if they thought the new MIP policy would cause the mortgages to turn into HPMLs and subject them to increased liability. Specifically, the new MIP policy might prevent ...

HUD Takes Second Furlough. The Department of Housing and Urban Development this week announced the second of seven furlough days employees are scheduled to take due to mandatory, government-wide budget cuts: June 14. Sequestration went into effect March 1 because Congress failed to pass legislation on balanced deficit reduction. HUD employees took their first forced leave on May 24. Approximately $85 billion will be slashed from the federal budget for the remainder of the fiscal year. The next furlough date is July 5. HUD, however, may not need to ...

U.S Bank may proceed on a limited basis in its legal claim against Bank of America and Countrywide Financial in connection with a soured $1.75 billion MBS deal after a New York state judge ruled last week to narrow the case to just a fraction of the loans in dispute. Judge Eileen Bransten dismissed a breach of contract claim against BofA that sought to force the bank to repurchase some 4,400 loans in the pool due to “pervasive breaches” in the representations and warranties of the securities. U.S. Bank, in its capacity as trustee for HarborView Mortgage Loan Trust, sued BofA and Countrywide in August 2011 seeking repurchase of non-performing loans from the underlying residential MBS. The judge said...

The Federal Housing Finance Agency has settled its second mortgage-backed securities lawsuit in its massive litigation effort against non-agency MBS issuers and underwriters that sold to Fannie Mae and Freddie Mac. Citigroup last week agreed to pay damages to settle allegations that the investment bank sold $3.5 billion of faulty MBS to the two GSEs in the years leading up to the financial crisis. The FHFA filed suit during the summer of 2011 against 18 financial institutions, including Citi, alleging violations of the federal Securities Act of 1933.

The FHA, in a new crackdown on lenders with underwriting and delinquency problems, has sent “notification” letters to at least a dozen firms, Inside Mortgage Finance has learned. Advisors note that as many as 15 mortgage companies may have received warnings from the agency. According to the Collingwood Group, a Washington-based advisory firm, lenders were told they could soon lose their status as direct endorsement lenders, which means they have to get FHA insurance approvals through the Department of Housing and Urban Development. “If you can’t engage...

The Federal Reserve Board Office of Inspector General is putting the CFPB’s controversial use of enforcement attorneys in its examination process under the microscope, according to the OIG’s semiannual report to Congress. “We initiated an evaluation of the CFPB’s integration of enforcement attorneys into its examinations of banking and nonbanking institutions’ compliance with applicable consumer protection laws and regulations,” the OIG said. Its objectives for this evaluation are to assess the potential risks associated...

The U.S. Solicitor General has asked the Supreme Court of the United States not to grant the petition for certiorari pending in Township of Mount Holly v. Mt. Holly Gardens Citizens in Action, Inc., a case that raises the question of whether disparate impact claims can be brought under the Fair Housing Act. Mt. Holly involves a challenge to a redevelopment plan in the Mount Holly Township of New Jersey over questions as to whether it was having a disparate impact on minorities. Last summer, the township formally asked the SCOTUS...

The CFPB filed a complaint in the U.S. District Court for the Southern District of Florida last week against American Debt Settlement Solutions, Inc., alleging that the debt-relief company was abusive and deceptive in misleading consumers across the country and charging illegal fees for its services. “Today we are taking action to halt a debt-relief company we believe has been preying on financially vulnerable consumers,” said CFPB Director Richard Cordray. “Consumers struggling to pay off a debt are among the...