A New York federal judge has denied a motion by former Fannie Mae top executives to dismiss a civil action brought against them by the Securities and Exchange Commission concerning the company’s misrepresentations about its exposure to subprime and Alt A mortgages in the two years leading up to the GSE’s government takeover. On Aug. 10, U.S. District Court Judge Paul Crotty rejected the motion brought by former Fannie CEO Daniel Mudd, former Chief Risk Officer Enrico Dallavecchia and former EVP for Single Family Thomas Lund. The defendant trio argued that investors had sufficient information to form their own conclusions about the viability of Fannie’s subprime and Alt A portfolio.

The new amicus brief filing policy publicly articulated by the Consumer Financial Protection Bureau in recent weeks has some industry legal representatives concerned. The CFPB’s proactive approach in this regard is dramatically different to the approach taken by the Federal Reserve Board when it was charged with implementing federal consumer financial protection statutes such as the Truth in Lending Act, according to Barbara Mishkin, of counsel in the consumer financial services practice group at the Ballard...

The Federal Housing Finance Agency became the biggest opponent of proposals for local governments to use eminent domain to seize underwater loans from non-agency mortgage-backed securities. “FHFA has determined that action may be necessary on its part to avoid a risk to safe and sound operations at its regulated entities and to avoid taxpayer expense,” the conservator of the government-sponsored enterprises said in response to the proposed use of eminent domain to forgive principal on mortgages ...

The securities industry may be winning the battle to convince local governments not to use eminent domain to seize performing underwater mortgages from non-agency MBS pools after Chicago Mayor Rahm Emmanuel and other elected officials expressed their opposition to or reluctance about the controversial concept. “I don’t think it’s the right way to address the problem,” Emanuel told the Chicago Tribune this week after the city’s Joint Committee on Finance and Housing and Real Estate held a hearing to discuss the plan. “I think there are other places to do it. I don’t think it’s the power of the city to do, to deal with the housing issue. We have a national issue. I think we have to address the issue. I just don’t think that’s the right instrument.” Several members of the Chicago joint committee also expressed...

A three-judge federal panel this week agreed to hear a rare interlocutory appeal by one of the defendants in a series of lawsuits that the Federal Housing Finance Agency has filed in connection with non-agency MBS purchased by Fannie Mae and Freddie Mac. The Second Circuit Court of Appeals accepted UBS Americas’ appeal, which had been certified by Judge Denise Cote of the U.S. District Court of New York in late June. UBS seeks to re-argue and reverse Judge Cote’s May 4 denial of the bank’s motion to dismiss on statute of limitation grounds. The FHFA sued...

Wells Fargo recently determined that it will refinance up to 40,000 borrowers as part of the recent $25.0 billion national servicing settlement. The bank had previously estimated that it would refi 20,000 loans under the settlement, which targets portfolio loans with negative equity. “The expectations ... exceed the amounts that would result from just meeting our minimum commitments under the refinance program due to the significantly higher than expected response we have received from our customers in ...

It has been another busy week in the turbulent world of litigation over non-agency mortgage-backed securities. The Federal Deposit Insurance Corp. filed lawsuits regarding non-agency MBS, Wells Fargo agreed to settle non-agency MBS-related charges with the Securities and Exchange Commission and the Department of Justice and the SEC dropped its non-agency investigation into actions by Goldman Sachs. The FDIC lawsuits against 15 issuers and underwriters relate to $1.46 billion in AAA tranches of non-agency MBS ...

The Department of Housing and Urban Development is looking into SunTrust Bank’s FHA-related lending practices, the bank reported in its latest regulatory filing. SunTrust, Atlanta’s largest bank, disclosed the investigation in its second-quarter filing with the Securities and Exchange Commission but provided no additional details. HUD notified the bank of the probe on April 25. SunTrust said it is “cooperating with the investigation,” which is being conducted by HUD’s Office of the Inspector General. The bank did not respond to a request for comment and the IG office neither ...

Ocwen Financial Corp. and joint venture partner Altisource will soon be buying FHA-insured loans from lenders through a special vehicle, Correspondent One, for future securitization. In its second quarter filing with the Securities and Exchange Commission, Ocwen said it expects Correspondent One will be able to use its relationship with Lenders One to grow its volume substantially. “Correspondent One has seen significant, positive environmental changes in the correspondent lending market, [and] there has been a contraction in correspondent lending,” Ocwen said, alluding to ...

VA Flunks ‘Plain Writing’ Test. The Department of Veterans Affairs got an “F” for not following the requirements of the Plain Writing Act, which directs federal agencies to take steps to ensure they are communicating clearly with businesses, consumers and stakeholders. The statute went into effect July 2011 and the Center for Plain Language, a nonprofit organization that grades government agencies on their efforts to comply with the Act, evaluated and graded 12 agencies for compliance. The center gave two grades – the first grade represents how well the agency followed the requirements of the act, and the second grade reflects ...