The reallocation of hundreds of millions of dollars of funds paid by the nation’s five largest loan servicers to states as part of this year’s whopping $25 billion national foreclosure settlement has ignited intra-state feuding as to how best utilize the cash windfall, according to a mortgage industry attorney. During a webinar sponsored last week by the State Attorneys General Enforcement Network, Jeremiah Buckley, founding partner of BuckleySandler, noted “emerging controversies” among state elected officials as they do battle, in some cases via the courts, to ensure the funds are used for consumer/mortgage-related purposes. The landmark agreement finalized in April between Ally Financial, Bank of America, Citigroup, JP Morgan Chase and Wells Fargo with a coalition of state attorneys general...

Mortgage lenders and servicers face increased congressional and regulatory attention and pressure over how they should respond to the unique needs and problems active-duty U.S. military personnel face handling their mortgages, particularly when they are transferred. Sen. Richard Shelby, AL, ranking Republican on the Senate Banking, Housing and Urban Affairs Committee, emphasized during a hearing this week the disruptions that Permanent Change of Station orders can cause service members. “When PCS orders are issued, service members are required to move even if they owe more on their mortgage...

The Office of the Comptroller of the Currency and the Federal Reserve Board late last week put out guidance that will be used to calculate the compensation or other remedy that borrowers will receive for financial injury identified during the independent foreclosure review that was set up last spring in the wake of the industry’s foreclosure practice debacle. The Financial Remediation Framework provides examples of situations where compensation or other remediation is required for financial injury due to servicer errors, misrepresentations or other deficiencies...

The Township of Mount Holly, NJ, has formally asked the U.S. Supreme Court to consider a case that once again raises the question of whether disparate impact claims can be brought under the Fair Housing Act. The issues raised in this case are pretty much those in Magner v. Gallagher, the case that would have settled the disparate impact issue except for the last-minute decision by the City of Saint Paul to dismiss its appeal, according to Christopher Willis, a partner with Ballard Spahr, which represents one of the non-township defendants in the case. Township of Mount Holly, NJ, et al.,...

In Rosenfield v HSBC Bank, the U.S. Court of Appeals for the Tenth Circuit recently ruled that borrowers cannot seek rescission after the Truth in Lending Act’s three-year statute of repose expires, even if the borrower had sent a notice of rescission within the three-year period. Beyond the ruling of the facts of the case, the court’s decision is another blow to the Consumer Financial Protection Bureau. Early this year, the CFPB had argued in a friend-of-the-court brief that TILA Section 125 (U.S.C. Section 1635) gives consumers a statutory right to rescind qualifying mortgage...

The conservative watchdog organization, Judicial Watch, has filed a Freedom of Information Act lawsuit against the Consumer Financial Protection Bureau to obtain records detailing President Obama’s controversial appointment of the agency’s director, Richard Cordray.“Given the Obama administration’s penchant for secrecy, I am not at all surprised we have to file a lawsuit to obtain these records on this scandalous appointment,” said Judicial Watch President Tom Fitton. “The Cordray appointment is an abuse of office that disregards the U.S. Constitution and the U.S. Senate’s role...

The Federal Housing Finance Agency’s case against UBS Americas will serve as a test case in a series of lawsuits the agency filed in connection with non-agency MBS purchased by Fannie Mae and Freddie Mac, a Manhattan federal district court ruled last week. In a June 13 decision, Judge Denise Cote of the U.S. District Court for the Southern District of New York denied UBS’s request that it should not be the first of 17 cases to proceed because it is not a loan originator and was not accused of fraud. According to the court, UBS was the best test case because the number of securitizations and...

Current and potential defendants in residential MBS litigation should expect more lawsuits stemming from the mortgage market collapse, particularly by or on behalf of state actors, but entities named in those suits are not without legal countermeasures, according to legal experts. During a webinar sponsored this week by the State Attorneys General Enforcement Network, attorneys Jason Halper and Martin Seidel of the law firm of Cadwalader, Wickersham & Taft predicted that the mortgage industry is only about halfway through the onslaught of MBS litigation to be brought by aggrieved investors. “I think this...

Attorneys representing non-agency mortgage-backed security issuers suggest fighting repurchase-request lawsuits to narrow the claims and eventually settling such lawsuits. Jason Halper and Martin Seidel, partners at the law firm of Cadwalader, Wickersham & Taft, said reducing the claims can help lead to a better settlement for issuers. “You can very often narrow the case substantially,” Seidel suggested this week during a presentation by the State Attorneys General Enforcement Network. Among other issues ...

Berkshire Hathaway became the lead bidder for Residential Capital’s loan portfolio this week while Nationstar Mortgage remained the stalking horse bidder for ResCap’s mortgage servicing rights and origination platform. ResCap’s parent company Ally Financial was previously the top bidder for ResCap’s loan portfolio. Auctions for the MSRs, origination platform and loan portfolio are expected in October. An investigation by the Consumer Financial Protection Bureau helped a borrower receive a ... [Includes two briefs]