The Cato Institute recently filed an amicus brief challenging the Federal Housing Finance Agency’s denial of compensation benefits to a former Freddie Mac CFO at the start of the conservatorship. The FHFA terminated Anthony Piszel two weeks after the government took over the GSEs in September 2008. The primary issue was whether a government prohibition on making golden parachute (severance) payments to terminated Freddie employees was illegal or not. Piszel appealed a judgment from the U.S. Court of Federal Claims dismissing his complaint that Freddie breached its contract and owed him payment for his golden parachute compensation.

Fairholme Files Motion to Force Government to Produce Docs ASAP. Plaintiffs in Fairholme Funds Inc. v. United States, et al, filed an emergency enforcement motion this week arguing that the government is purposely taking too long to produce documents and requesting unnecessary extensions. “The defendant has repeatedly delayed complying with the court’s order,” said Fairholme in the court documents. The judge gave the government until Nov. 1 to produce the documents. Freddie prices $217M K-deal. Freddie Mac priced a new offering of Structured Pass-Through Certificates (K Certificates) that are backed by underlying collateral consisting of supplemental multifamily mortgages. The company expects to issue approximately $217 million in K Certificates, which...

In a class-action ruling that could have implications for legacy MBS lawsuits, a federal appeals court confirmed a recent U.S. Supreme Court landmark decision on standing and statutory damages. Ruling in Nicklaw v. CitiMortgage earlier this month, the U.S. Court of Appeals for the Eleventh Circuit held that to establish standing in order to bring a lawsuit alleging only a statutory violation, a plaintiff must allege a concrete harm or injury resulting from the violation. Relying on the alleged statutory violation alone would only result in a dismissal, the court warned. The 11th Circuit decision is...

The Department of Housing and Urban Development inspector general, over the last several weeks, has reported a series of final civil actions that resulted in an enforcement action or monetary settlement between an FHA lender and the federal government. On Oct. 6, the IG announced the results of an audit of TXL Mortgage Corp., a direct endorsement lender, in Houston. The audit found TXL in violation of HUD requirements and that it had no acceptable quality-control plan in place. Specifically, 16 of the 20 sample loans the IG reviewed did not comply with HUD standards. Of the 16 loans, eight had significant underwriting defects and failed to qualify for FHA mortgage insurance. Two loans qualified but were over-insured, according to the report. As a result, TXL exposed HUD to more than $713,000 in unnecessary insurance risk and caused the department to incur more than ...

One of the key documents VA lenders require veteran borrowers to submit is the certificate of eligibility (COE). A VA loan application will not move forward without a COE, a requirement for any active-duty servicemember or veteran seeking to take advantage of the VA’s home-loan guaranty program. The COE verifies to the lender a loan applicant’s eligibility for a VA loan. The evidence a lender might require depends on the nature of the applicant’s eligibility. Veterans and current or former National Guardsmen or reservists who have been called to active duty must submit DD Form 214. The form would show the character of service and the reason for separation from the service. Active-duty servicemembers must submit a current statement of service signed by a superior, the unit commander or the adjutant, higher headquarters or the personnel office. The statement must contain the ...

Last week’s closely-watched appeals court ruling in the wrangling between PHH Mortgage and the Consumer Financial Protection Bureau over Section 8 of the Real Estate Settlement Procedures Act is being widely viewed by many as a clipping of the agency’s wings. But expectations about just how restrained the CFPB will be in enforcement actions going forward vary from compliance attorney to compliance attorney. Lawyers with the Stinson Leonard Street law firm pointed out that the director still holds all of the same enforcement power as before, despite the court’s conclusion that the bureau’s leadership structure, with a sole, independent director who can only be removed for cause, is unconstitutional. “For example, the CFPB administrative appeals process is...

A federal court ruling that the Consumer Financial Protection Bureau’s structure is unconstitutional raises questions that similarly-structured agencies such as the Federal Housing Finance Agency could also be challenged. A DC Circuit Court judge in the PHH Corp. v. Consumer Financial Protection Bureau case ruled that the CFPB’s single-director structure was not constitutional because it lacked a multi-member board of directors and its sole director cannot be fired without cause. In court, lawyers from the CFPB called...

With Hispanics predicted to make up more than half of all new households formed between 2020 and 2030, their relatively low homeownership rate should be a growing concern in the mortgage market, according to the Urban Institute. In 2013, just 45 percent of Hispanic households owned their homes compared with 71 percent of whites, said UI researchers Jim Parrott and Yamillet Payano. “If one were to hold those rates constant as Hispanics become an increasing percentage of the pool of homebuyers, the homeownership rate would drop precipitously, causing considerable economic upheaval,” they said. Credit score is...

The CFPB took a whipping last week in the long-awaited court ruling in its dispute with PHH Mortgage – so much so, in fact, that not only are its future enforcement actions likely to be curtailed, but even past actions might be challenged by the affected industry participants. “The ramifications of this case go far beyond restricting the CFPB’s reach, clarifying the interpretation of the Real Estate Settlement Procedures Act, and resolving the question of how statutes of limitation apply to the CFPB’s enforcement actions,” said Craig Nazzaro, of counsel with the Baker Donelson law firm in Atlanta, in a review of the case. As he sees it, this case makes clear that the bureau has exceeded its bounds and that ...

Last week, the U.S. Court of Appeals for the District of Columbia Circuit brought the powerful CFPB down to earth in its legal wrangling with PHH Mortgage, ruling that two aspects of the bureau’s structure – the dismissal of the director of the agency only for cause, and the single directorship as opposed to a multi-member bipartisan commission – were unconstitutional. “As an independent agency with just a single director, the CFPB represents a sharp break from historical practice, lacks the critical internal check on arbitrary decision-making, and poses a far greater threat to individual liberty than does a multi-member independent agency,” wrote Circuit Judge Brett Kavanaugh on behalf of the court. “All of that raises grave constitutional doubts about the CFPB’s ...