The Mortgage Bankers Association strongly urged the Department of Housing and Urban Development and the FHA to issue authoritative guidelines for lenders participating in state and local housing finance programs that rely on premium pricing to fund downpayment assistance. In a recent letter to members, the MBA recommended that FHA lenders “tread carefully” and seek legal advice until HUD provides more definitive guidance on downpayment assistance and premium pricing. Lenders should consider carefully whether and when to participate in DPA programs from housing finance agencies that rely on premium-pricing mechanisms, the letter said. The MBA said it would continue to press HUD for clarification on this contentious issue. The FHA and HUD’s inspector general are currently at odds over permissible sources of single-family downpayment assistance offered through housing finance agencies. Although the ...

A new audit report from the Department of Housing and Urban Development’s inspector general recommended that the agency continue its efforts to collect millions of dollars in partial claims that came due during fiscal year 2015. According to a HUD IG report, the department left uncollected approximately 1,361 partial claims, worth about $21.5 million. The IG discovered the oversight during an audit of HUD’s partial claim collections. The IG reviewed a statistical sample of 135 of 10,561 partial claims associated with FHA loans that terminated in FY 2015. “HUD had not collected 36 of the claims that should have been collected,” the report stated. “We used this result to project that a total of 1,361 partial claims were not collected.” The claims were never returned to the FHA mortgage insurance fund, as required by agency rules, to strengthen FHA solvency, the report said. A partial claim is a loss ...

The Federal Communications Commission has issued a baffling final rule restricting the way servicers can collect on or service student loans, mortgages and other debts owed to the federal government.Specifically, the rule implements a key provision in the Bipartisan Budget Act of 2015 amending the Telephone Consumer Protection Act to exclude robocalls from the TCPA consent requirement if they are made solely to collect a debt owed to or guaranteed by the federal government.The TCPA generally requires a caller to obtain “prior express consent” from the call recipient before making a telemarketing call or an auto-dial call to the recipient’s landline or cell phone.However, the mortgage industry raised concerns that TCPA’s consent requirement could create potential liability for important servicing calls that could help homeowners save their homes, which prompted Congress to pass the Budget Act amendment. Last month, the FCC specifically excluded the federal government from the TCPA’s consumer protections by ruling that the government is not a “person” subject to the TCPA. Here is where the FCC rule gets confusing. commission is authorized to adopt rules to “restrict or limit the number and duration” of any wireless calls to collect debt owed to the federal government.”

The FHA has announced new streamlined procedures to help delinquent homeowners avoid foreclosure and stay in their homes. The agency is revising loss-mitigation procedures servicers use when evaluating and choosing the best home-retention options for delinquent borrowers by reducing waiting time for results. The new streamlined procedures are designed to enhance servicers’ ability to evaluate foreclosure-avoidance alternatives, especially for the FHA-Home Affordable Modification Program (FHA-HAMP). Specifically, FHA will require servicers to convert successful three-month trial modifications into permanent modifications within 60 days instead of the average four to six months. Borrowers who have three missed mortgage payments would be able to opt for a partial claim to bring their arrearages current versus the previous four-month minimum. In addition, the FHA will eliminate the ...

Mortgage Company President Charged with Defrauding Ginnie Mae. Robert Pena, president and founder of the now-defunct Mortgage Security Inc., was charged in federal district court in Boston for allegedly bilking Ginnie Mae out of nearly $3 million. MSI was an approved participant in the Ginnie Mae mortgage-backed securities program, pooling eligible single-family mortgages and selling the securitized products to investors. The firm also serviced the underlying loans. In 2011, Pena allegedly began diverting borrower payments and huge loan-payoff amounts into secret accounts, which he used to fund personal and business activities. Likewise, he is said to have funneled borrowers’ escrow funds and mortgage-insurance premiums into other personal accounts. In total, Pena pocketed $3 million due Ginnie Mae, which had to pay investors whose investments it had guaranteed, according to the ...

Fannie Mae and Freddie Mac introduced a new impasse and management escalation process this week as a middleman between the normal loan dispute appeal process and the final independent dispute resolution (IDR) process for seller/servicers. The government-sponsored enterprises said they hope to resolve as many disputes as possible before any IDR process begins. The GSEs introduced...

New legal requirements enacted in the state of New York in the wake of the financial crisis pose particular compliance challenges for mortgage servicers, according to a new report by analysts at S&P Global Ratings. The S&P team recently reviewed a series of laws the state legislature passed in June that attempts to address several issues related to “zombie” foreclosures, which refers to the phenomenon of a servicer initiating foreclosure on a vacant property but not going so far as to actually take title. Urban community activists complain such properties languish unsold for a prolonged period of time, contributing to neighborhood blight in communities least able to handle it – hence, state lawmakers decided to act.One resulting requirement “imposes conditions ...

One mortgage lender recently inquired of Michael Goldhirsh, director of legal and regulatory compliance for the Lenders Compliance Group, as to whether the definition of “application” in the CFPB’s TILA/RESPA Integrated Disclosure rule (TRID) triggers or otherwise affects reporting under the Home Mortgage Disclosure Act. In a recent blog posting, he replied: “The short answer is that receipt of some or all of the six pieces of TRID application information does not necessarily trigger an application for purposes of HMDA reporting.” Goldhirsh went on to explain that Regulation C defines an application for HMDA reporting purposes as an oral or written request for a home purchase loan, a home improvement loan, or a refinancing that is made in accordance with ...

A New York State Supreme Court judge recently signed off on JPMorgan’s proposed $4.5 billion settlement with a revised list of MBS trusts, while three other Wall Street banks lost in separate bids to have MBS claims against them dismissed. On Aug. 12, Justice Marcy Friedman of the New York State Supreme Court approved JPMorgan’s representation-and-warranties settlement offer for 319 MBS trusts. She concluded that the trustees exercised their discretionary power reasonably and in good faith in accepting the settlement. JPMorgan and a group of 20 large institutional investors that hold approximately 32.5 percent of the securities issued by the MBS trusts negotiated the settlement. Among these prominent investors were Fannie Mae, Freddie Mac and the Federal Home Loan Bank ...

Recent rulings in Nevada favor the mortgage industry when it comes to super-liens imposed by homeowners associations on loans in foreclosure. Twenty-two states have super-lien laws that allow HOAs to take priority over first mortgages and foreclose the property to collect up to six months of unpaid fees. In 2014, the Nevada Supreme Court ruled that an HOA could extinguish a senior mortgage. But the Ninth Circuit Court recently ruled that an HOA foreclosure sale extinguishing the first deed of trust is unconstitutional. In the case of Bourne Valley Trust v. Wells Fargo Bank, the court ruled that Bourne Valley seeking to purchase the property at an HOA foreclosure sale violated the first-lien holder’s due process rights. Attorneys at Bradley ...