California. Late last month, the state Department of Real Estate warned consumers about illegal loan modification schemes and urged victims to submit formal complaints. The most common ploy is for a scammer to guarantee a loan mod in exchange for a fee paid ahead of time (which is against the law in the state), and then to do little or nothing to obtain the loan mod for the borrower once the fee has been paid. The DRE advised consumers who are looking for a loan mod to never pay an upfront fee for such services, and to be wary of guaranteed success. Indiana. The state Department of Financial Institutions recently expanded the purpose of Title 750, Article 9 of the Indiana Administrative Code to conform the mortgage lending regulation to state and federal laws, rules and regulations, as well as policies and guidance from state and federal authorities. The DFI also revised the IAC to specify that an expunged criminal conviction does not result in an automatic denial or revocation of a mortgage lender or originator’s license. However, the underlying facts of the crime at issue can still be considered.

Only state-certified appraisers can conduct appraisals of properties securing an FHA-insured mortgage under a final rule adopted recently by the Department of Housing and Urban Development. At the same time, the new rule made clear that FHA would no longer allow state-licensed appraisers to perform FHA appraisals. The FHA has not been accepting applications by state-licensed appraisers since Oct. 1, 2008, following the enactment of the Housing and Economic Recovery Act. Previous HUD regulations required that an appraiser be state-licensed or state-certified in order to be placed on the department’s official roster of appraisers. However, HERA mandated only ...

Massachusetts Attorney General Martha Coakley sued five major lenders late last week for allegedly illegal foreclosure practices. One of the firms, GMAC Mortgage, responded by pulling out of Massachusetts lending, prompting Coakley to request a Congressional investigation of GMAC. This week, the AGs of California and Nevada followed suit with a joint announcement of a dual mortgage fraud probe. “We have two clear goals with this lawsuit,” Coakley said. “One is to provide for real accountability for the roles the banks have played in unlawful and illegal foreclosures and second...

The Consumer Financial Protection Bureau is seeking public input on its plans to collect information about legal actions filed by state officials under authority granted in Section 1042(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This section of the law grants state attorneys general and state regulators the authority to bring legal actions against financial institutions to enforce provisions of Title X of Dodd-Frank and its implementing regulations. Back in July, the CFPB put out an interim final rule laying out the notification procedures regarding state legal action taken. The interim final rule establishes that notice should be provided at least 10 days before the filing of an action, with certain exceptions, and sets forth a limited set of information which is to be provided with the notice.

Bank of America has settled two major securities fraud claims with various pensions funds and other investors in connection with Countrywide-related stocks and non-agency MBS. It also faces the prospect of a challenge by two state attorneys general, whose requests to intervene in another multi-billion dollar MBS case were granted by a New York federal court this week. The bank agreed to an undisclosed settlement amount with the California Public Employees’ Retirement System, the Government of Guam Retirement Fund and 14 other large pension and mutual fund investors. Accounting firm...

Saxon Mortgage prevailed in a closely watched case decided by the Arizona State Supreme Court in November. The 5-0 ruling determined that the recording of an assignment is not necessary to enforce a foreclosure under Arizona law. The decision in Vasquez v. Saxon Mortgage could have a wide-ranging impact, according to legal analysts. Jean Braucher, a professor of law at the University of Arizona, said the court essentially approved of servicers’ “sloppy procedures,” ...

Whatever FHA relief the Department of Housing and Urban Development may offer as part of a pending settlement of foreclosure-related charges will not necessarily let mortgage servicers off the hook, said HUD Secretary Shaun Donovan.Donovan assured lawmakers during a House Financial Services Committee hearing this week that any offer of relief from any FHA liability in connection with ongoing robo-signing settlement talks would be “in exchange for significant penalties and help to homeowners who were wronged by bad servicing practices.” The HUD secretary neither confirmed nor denied the ...

Private mortgage insurer PMI Group Inc. circled the wagons last week when it initiated voluntary Chapter 11 bankruptcy protection to “protect stakeholders” as state regulators move to appoint a receiver for the company’s mortgage insurance unit. Headquartered in Walnut Creek, CA, but incorporated in Arizona, the Nov. 23 move to file for bankruptcy protection came one day after a Maricopa County judge rejected PMI Group’s bid to overturn the Arizona Department of Insurance’s seizure of its main unit, PMI Mortgage Insurance Co., in October. As part of the process to...

The Department of Housing and Urban Development has reportedly offered to release major servicers from some liability related to FHA mortgages as part of a pending settlement related to foreclosure problems. While the offer may sweeten the deal for banks to settle with state attorneys general and federal regulators, observers say it’s not a total game changer. The complex negotiations have lasted more than a year, stemming from servicing practices that include robo-signing of foreclosure documents and poor communication with borrowers. A key sticking point has been...

Documenting mortgage lender and broker compliance with the Federal Reserve’s loan originator compensation rule will be just as important as actually complying with it, according to top industry attorneys and state regulators. “Compliance policies and procedures are really not enough” to satisfy the LO comp rule, Richard Andreano, a partner in the Washington, DC, office of the Patton Boggs law firm, told participants in a webinar sponsored this week by Inside Mortgage Finance. “The ability to document compliance will be very important, and people will need to maintain very...