Opponents of the Dodd-Frank Wall Street Reform and Consumer Protection Act that created the CFPB are finding some initial success in chipping away at various provisions of the law through legal challenges. So far, authorities of the bureau itself have escaped the crosshairs of such legal challenges. However, the legitimacy of President Barack Obama’s appointment of Richard Cordray as director of the CFPB has been challenged in a round-about manner. So far, federal regulators have twice lost in court in their efforts to defend some of the rules they put in place...

A federal district court in Minnesota rejected a mortgage securitization trustee’s plea to compel a lender to repurchase defective home loans after finding that the loans no longer existed following the foreclosure and sale of the mortgaged properties. Ruling in MASTR Asset-Backed Securities Trust 2006-HE3 v. WMC Mortgage Corp., U.S. District Court Judge John Tunheim granted the lender’s motion for partial summary judgment after determining that the loans had been extinguished when the trustee foreclosed on the properties and charged off the remaining principal balances. The dispute boiled down...

In collaboration with the Residential Mortgage-Backed Securities Working Group, New York Attorney General Eric Schneiderman filed a lawsuit last week against JPMorgan Chase and two related entities. The lawsuit targets underwriting on nonprime MBS deals, and Schneiderman said it could serve as a model for future planned actions by the Obama administration’s RMBS Working Group. “There are more cases to come,” he said. “We believe that this is a workable template for future actions against issuers of ...

Fitch Ratings completed a review of ratings of jumbo mortgage-backed securities last week, resulting in downgrades of 6 percent of outstanding jumbo MBS. The downgrades were concentrated on pre-2005 MBS. “Adverse selection and structural features vulnerable to tail-risk have increased negative rating pressure for seasoned jumbo MBS,” Fitch said. The rating service noted that 14 percent of jumbo MBS remains on watch for downgrade and a determination on the ratings is expected by the end ... [Includes two briefs]

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 ...