While President Barack Obama and his Republican challenger, Gov. Mitt Romney, differ widely on key issues, both candidates appear to agree on the need to reduce the government’s role in housing and bring private capital back to the mortgage market, industry observers say. Nothing much has been said in public forums or in the first presidential debate (except for a brief mention of the “qualified mortgage” proposal) about the housing issue, but observers say their positions on FHA may not be far apart. Obama’s approach to the housing crisis is ...

A significant increase in the volume of claims following the announcement of the $25 billion joint servicer settlement earlier this year has created a huge backlog that could potentially threaten the FHA Mutual Mortgage Insurance Fund, warned the Department of Housing and Urban Development’s Office of the Inspector General. Separate OIG audits of the five mortgage servicers that signed the groundbreaking settlement pact with federal agencies and state attorneys general in February found that if those servicers were to file all ...

The FHA Mutual Mortgage Insurance Fund appears poised for another potential settlement infusion following this week’s announcement of a federal lawsuit against Wells Fargo Bank for alleged reckless underwriting and fraudulent loan certifications on thousands of FHA-insured loans that ultimately defaulted. Filed by the U.S. Attorney’s Office in Manhattan, the lawsuit accuses Wells Fargo of engaging in “a long standing and reckless trifecta of deficient training, deficient underwriting and deficient disclosure, while relying on the convenient backstop of government insurance.” Ten years of Wells Fargo’s alleged misconduct ...

New York Attorney General Eric Schneiderman this week sued JPMorgan alleging fraudulent and deceptive acts in the pooling and sale of residential MBS by now-defunct Bear Stearns. Filed in the New York Supreme Court in Manhattan, the lawsuit is the first of several legal actions contemplated by the Residential MBS Working Group, a state-federal task force created by President Obama earlier this year to investigate those suspected of contributing to the financial crisis through the sale of defective mortgage certificates. Bear Stearns, which was taken over by JPMorgan, and co-defendant EMC Mortgage perpetuated...

The nature of mortgage fraud evolved over the past few years, and unless mortgage companies adapt to keep pace, they increasingly risk exposing themselves to fraud-driven losses, according to the auditing firm of PriceWaterhouseCoopers. “In the past, mortgage fraud largely occurred in the loan origination process. But with the sharp increase in mortgage defaults, fraudsters have evolved their schemes to target default servicing,” PWC said in a new white paper. “Now, more fraud is occurring among loan ...

The unrelenting pressure to comply with industry regulations and standards is the greatest factor impacting eMortgage and paperless mortgage initiatives, according to a survey by Xerox Mortgage Services. Xerox’s eighth annual Path to Paperless survey found that an ample 86 percent of industry respondents looked to a technological solution to avoid being caught on the wrong side of regulatory enforcement. Mortgage laws, regulations and standards continue to evolve in a direction toward ...

The Consumer Financial Protection Bureau has been discreetly broadening its influence on statutory and regulatory interpretations through its largely unannounced filing of amicus curiae briefs in a handful of important cases brought by private litigants, according to an analysis of the CFPB’s legal activity by two leading industry attorneys.Since December 2011, the bureau has filed six such “friend-of-the-court” briefs in federal appellate cases, always assuming the role of steadfast consumer advocate, according to a review of the briefs by Arthur Axelson and Jeffrey Jamison, senior counsel and associate, respectively, with the Dykema law firm. In fact, “in several of its amicus curiae briefs, the CFPB has even sought to reverse a general consensus among the federal appellate courts,” the pair noted. In Birster v. American Home Mortgage Services, Inc., filed Dec. 21, 2011, in the 11th Circuit Court of Appeals, the question of interest to the bureau was whether activity surrounding foreclosure is immune from the Fair Debt Collection Practices Act. The CFPB argued that it is not. In Marx v. General Revenue Corp., filed Jan. 26, 2012, in the 10th Circuit Court of Appeals, there were...

Gibbs & Bruns, the law firm representing non-agency MBS investors that reached a precedent-setting settlement with Bank of America, is now targeting Wells Fargo and Morgan Stanley. The law firm’s clients issued Wells and Morgan Stanley a notice of non-performance last week identifying covenants in pooling and servicing agreements that the servicers have allegedly failed to perform. “The holders’ notice alleges that each of these failures has materially affected the rights of the certificate holders and constitutes an ongoing event of default in the servicer’s performance under the relevant PSAs,” the law firm said. Bank of America received...

A presidential task force created to investigate the pooling, sale and securitization of residential mortgages is now ready to pursue action against those whose business practices contributed to the financial crisis, according to New York Attorney General Eric Schneiderman. Certain financial institutions have contacted outside counsel after Schneiderman, chairman of the Residential MBS Working Group, told reporters the group is ready to take legal action “sooner rather than later.” A spokesman for the New York AG’s office declined to provide details but confirmed that there are ongoing investigations and that there would be upcoming announcements. “We are looking at conduct that led...

Wells Fargo and Morgan Stanley last week received notices from non-agency mortgage-backed security investors represented by the law firm of Gibbs & Bruns, which helped negotiate the pending $8.5 billion non-agency MBS settlement with Bank of America. Industry analysts suggest that the notices of non-performance could prompt settlements from Wells and Morgan Stanley, though the circumstances differ from the BofA case. The notices identify covenants in pooling and servicing agreements that the servicers ...