State Regulators Start Work on a Next-Generation Technology Platform. The Conference of State Bank Supervisors has initiated what it characterizes as a major redesign of the Nationwide Multistate Licensing System (NMLS), which is the core technology platform state bank regulators utilize. According to the CSBS, the redesign will enable the regulators to transform the licensing and supervision of non-bank financial institutions, including financial technology companies, or so-called fintechs. “Technology and data are powerful tools that can create sweeping benefits throughout the financial regulatory system,” said Louisiana Office of Financial Institutions Commissioner John Ducrest. “And that vision drives our efforts with the next-generation NMLS. We are committed to nothing less than modernized state regulation for a modernized financial services industry.” The ...

The U.S. Attorney for the District of Texas indicted the former CEO of the Federal Home Loan Bank of Dallas, along with two other former bank employees, for fraud. They were accused of creating fake travel reimbursement requests for lavish trips and embezzlement schemes that began back in 2008. Terrence Smith, at the helm of the bank from 2000 to 2013, and Nancy Parker, chief information officer around the same time, were charged with six counts of making false statements, according to the Department of Justice. And Michael Sims, chief financial officer from 2005 to 2014, was charged with three counts of making false statements.

There is good news for GSE lenders and servicers, as a recent court ruling found that Nevada’s super-priority lien law cannot be used to foreclose on government-owned mortgages. In Berezovsky v. Moniz, the court ruled that the Federal Foreclosure Bar, part of the Housing and Economic Recovery Act of 2008, preempted state law and banned a homeowners association from being able to eliminate a GSE’s interest and foreclose on a property. The court rejected arguments that the Federal Foreclosure Bar did not apply in the Nevada HOA context. Attorneys with Bradley Arant Boult Cummings said, “The Berezovsky decision represents a resounding win for lenders and servicers of Freddie Mac and Fannie Mae loans.”

A former employee of Standard & Poor’s Rating Services beat fraud charges alleging she loosened S&P’s rating methodology for commercial MBS to generate business for her employer. However, she was found liable of the lesser charge of negligence for failing to disclose the change. In his initial Aug. 29 decision, Administrative Law Judge James Grimes of the Securities and Exchange Commission’s administrative court said that while Barbara Duka did change the firm’s rating methodology for CMBS, he found no evidence that she intended to manipulate, deceive or defraud investors. Rather, Duka, manager of S&P’s CMBS rating group, did...

PHH Corp. and Realogy Holdings Corp. and some of their subsidiaries and affiliates recently agreed to a $17 million settlement to bring to an end a putative class-action lawsuit over allegedly deceptive and collusive practices in violation of the Real Estate Settlement Procedures Act. At issue were allegations of arranging kickbacks for unlawful referrals of title services. The plaintiffs in the case alleged...

Lenders and servicers of Fannie Mae and Freddie Mac mortgages notched a big win in the U.S. Court of Appeals for the Ninth Circuit, which found that a federal bar on foreclosure on government-sponsored enterprise loans preempted Nevada’s superiority lien law. As a published decision, the court’s ruling in Berezovsky v. Moniz resolves the dispute in favor of the federal foreclosure bar, according to Marc James Ayers and R. Aaron Chastain, attorneys with Bradley Arant Boult Cummings. It serves as a binding precedent in the Ninth Circuit and should guide other circuits in deciding cases involving homeowners associations’ super-priority liens, they said. In Berezovsky, the panel affirmed...

The Department of Housing and Urban Development this week announced changes to the FHA-insured reverse mortgage program, including a 200 basis point adjustment in the upfront mortgage insurance premium that may shut out some potential borrowers. HUD officials acknowledged during a press call that changes in both the upfront MIP and the HECM principal limit factors could reduce the number of borrowers initially by as much as 20 percent. Officials estimated that there are approximately 24 million seniors with untapped equity in their homes. “Overall, it is still a very large potential market,” said one official who spoke on background. “In the last few years, we did about 45,000 to 50,000 reverse mortgages annually. The net effect of all these changes is a better and safe HECM program for seniors. We’ll just have to wait and see how it plays out.” The revisions would help stabilize the ...

Working past age 62 is usually a less costly way to increase a senior’s Social Security benefit than borrowing a reverse mortgage, according to the Consumer Financial Protection Bureau. In a report published last week, the CFPB warned that a strategy touted by financial consultants to seniors – borrowing a reverse mortgage loan to get more SS benefits later – could result in significant costs that may erase gains from delaying SS benefits. The strategy would require older homeowners to borrow a reverse mortgage at age 62, the minimum age a person can begin collecting SS benefits, in order to delay claiming such benefits. This means retirees would use the proceeds from a reverse mortgage to replace the money they would otherwise receive from SS in the years between 62 up to their full benefit age of 66 (for those born before 1960) and 67 (for those born after 1960), or their maximum ...

The FHA this week extended temporary rules for approving condominium projects for FHA financing indefinitely. The extension will remain in place until the condominium rulemaking process is completed, the agency said in a mortgagee letter. Temporary approval requirements were first issued in 2012 and later modified in 2015. The current temporary provisions expired on Aug. 31, 2017. Under a proposed rule issued for comment on Sept. 27, 2016, elderly condominium owners would find it easier to obtain a Home Equity Conversion Mortgage. FHA proposes to reinstate “spot condo” approvals whereby individual units are approved by FHA rather than the entire condominium project as required under current rules. Spot-condo approvals would require property recertification every three years rather than the current two-year requirements. Processing recertifications would be streamlined under the ...

As Hurricane Harvey’s floodwaters recede, federal agencies that provide guarantees on mortgages are faced with the daunting task of identifying and assisting borrowers with government-backed mortgages in disaster-stricken areas of Texas. FHA, VA, the U.S. Department of Agriculture’s Rural Housing Service and Ginnie Mae have issued special relief guidance for approved lenders following Hurricane Harvey. The FHA has issued guidance to remind lenders and servicers that FHA-insured mortgages secured by properties in a presidentially-declared major disaster area are subject to a 90-day moratorium on foreclosures following a natural disaster. FHA also provides lenders an automatic 90-day extension upon expiration of the moratorium to begin or re-start foreclosure action or evaluate the borrower’s need for loss mitigation. In addition, FHA urged servicers to brush up on the 203(h) and the ...