VA Loan Guaranty: New Percentage to Determine Net Value of Collateral. The Department of Veterans Affairs has revised the percentage lenders and mortgage holders in the VA loan guaranty program use in calculating the purchase price of a property that secured a terminated loan. Effective Oct. 8, 2013, the new percentage is 14.95 percent, up from 11.87 percent, which has been in place for the past 12 years. North Carolina Amends Anti-Predatory Lending Law. The Tar Heel State enacted HB 692 on Aug. 23 to strengthen current consumer protections against ...

Ocwen Financial is preparing to enter a settlement with state regulators similar to the $25 billion national servicing settlement. A person with knowledge of the negotiations said regulators are working on settlements with individual servicers as opposed to the multi-servicer agreement with five banks announced last year. “We look forward to finalizing this process, which we expect will occur very soon,” Ronald Faris, Ocwen’s president and CEO, said last week during an earnings call. The servicer said ...

The question of whether the FHA should allow the refinancing of underwater mortgages seized through eminent domain has reemerged as a key issue following a recent decision by the city of Richmond, CA, to use its authority to take over distressed mortgages for restructuring. There is a new twist to the question, however. Could FHA’s refusal to refinance such mortgages be deemed discriminatory against cities and homeowners if eminent domain programs meet the requirements of the FHA Short Refinance program? Is that tantamount to redlining? A top executive of Mortgage Resolution Partners, which developed the eminent domain strategy to help underwater homeowners at risk of foreclosure, said ...

Ocwen Financial expects to reach a settlement with state attorneys general regarding servicing practices “very soon,” according to Ronald Faris, the servicer’s president and CEO. State AGs have been working for more than a year to get other servicers to agree to terms similar to the $25 billion settlement reached with five large bank servicers in February 2012. A person with knowledge of the negotiations said terms with Ocwen have yet to be finalized or sent to the 50 state AGs, suggesting that it could be weeks before the settlement is completed. The source added that future settlements with servicers are likely to be reached on an individual basis, not bundled as they were with the settlement that involved Ally Financial, Bank of America, Citi, JPMorgan Chase and Wells Fargo. Ocwen’s Faris said...

The New York State Department of Financial Services has directed FHA lenders to refrain from applying the FHA’s higher mortgage insurance premiums in calculating a loan’s annual percentage rate and fully indexed rates for 60 days to prevent loans from becoming “high cost” or subprime. At the same time, the department issued guidance to conventional lenders on how to interpret existing provisions in state banking law regarding subprime loans. Statutory changes were made in 2009 to prevent some loans from becoming “subprime,” as defined by state law. Spikes in mortgage interest rates in the past few weeks plus ...

Residential lenders tend to like the mortgage market in the state of New York because home values there have been steadily improving for years, especially in Manhattan and surrounding areas within a decent commuting distance to the city. But for nonbanks seeking licensing approvals for their loan officers, they would like nothing more than to tell state regulators to take a hike. According to interviews with mortgage executives and some of their attorneys, the Empire State is the pits when it comes to ...

The CFPB and the Conference of State Bank Supervisors recently entered into a coordination framework that will help synchronize the supervision of non-depository financial services providers and covered depository institutions with more than $10 billion in assets. This framework provides processes for the coordination of exam schedules; the development of comprehensive supervisory plans for particular institutions; the coordination of information requests; streamlining of information sharing; and the provision of...

The CFPB recently issued some policy guidance on how states may use the Uniform State Test developed by the Nationwide Mortgage Licensing System and Registry as part of a qualified written test under the Secure and Fair Enforcement for Mortgage Licensing Act of 2008. Section 1505(d) of the SAFE Act requires that state-licensed mortgage loan originators pass a “qualified written test.” Under the SAFE Act, this qualified written test must be developed by the NMLSR. A qualified written test must adequately measure the applicant’s...

Lenders are at odds with housing finance agencies over the benefits of a new FHA guidance, which calls for documentation of downpayment assistance (DA) that HFAs provide to borrowers. The new guidance requires mortgagees to show written proof that funds provided by a federal, state or local government entity to help borrowers meet the FHA’s 3.5 percent minimum cash investment requirement actually came from the entity and not from some impermissible source. The guidance follows up on a rule issued by HUD last year clarifying an interpretation of the National Housing Act. The rule expressed HUD’s view that ...

The Texas House of Representatives has approved legislation that will let voters decide on Nov. 5 whether to allow home-equity purchase lending in the Lone Star State. The bill would amend the Texas constitution to authorize Home Equity Conversion Mortgage for Purchase loans, which would make the program available to Texans for the first time. The state legislature voted 139 to 1 in favor of Senate Joint Resolution 18, which the Texas Senate approved unanimously in March. Specifically, the bill would amend the state constitution to ... [One chart]