New FHA guidance for dealing with mortgages with a Property Assessed Clean Energy (PACE) obligation went into effect last week but uncertainty lingers and its full impact remains to be seen, according to an industry attorney. The Department of Housing and Urban Development has issued guidance specifically allowing properties encumbered by a PACE lien to be eligible for FHA mortgage financing for both purchase and refinance loans. The department of Veterans Affairs has issued similar guidance. According to Erika Sonstroem, an attorney with the law firm Bradley Arant Boult Cummings, the PACE industry is touting the guidance in its pitches to lenders as posing no risk to mortgage investors. PACE is a program that lends money to homeowners for home-energy savings projects. It is treated much like a tax lien on a property and is included in the ...

The CFPB recently provided some written guidance on its mortgage rules to the Conference of State Bank Supervisors. The guidance, in the form of a letter, highlights some of the important changes to the mortgage rules that likely apply to many of the small lenders that CSBS members supervise. The letter, a copy of which was obtained by Inside the CFPB, came in response to a meeting this spring between Texas Department of Banking Commissioner and CSBS Chairman Charles Cooper, members of the ...

A federal court in Texas has dismissed a disparate-impact lawsuit against the Texas Department of Housing and Community Affairs, finding, after years of litigation, that the plaintiff had failed to show sufficient reason for a charge of unlawful discrimination under the Fair Housing Act. The recent decision in The Inclusive Communities Project, Inc. v. The Texas Department of Housing and Community Affairs, et al., is the latest in a series of decisions applying the landmark U.S. Supreme Court decision that found disparate impact is a cognizable claim under the FHAct. The court’s Aug. 26 decision basically reaffirms...

CFPB Proposes Changes to FOIA Procedures, Treatment of Information; Would Expand Disclosure of Confidential Supervisory Information to State AGs. The CFPB has proposed amendments to the procedures used by the public to obtain information from the bureau under the Freedom of Information Act, the Privacy Act of 1974, and in legal proceedings.... Bank of America Close to Fulfilling Settlement Obligations. Bank of America has conditionally fulfilled more than 91 percent of its obligation to provide $7 billion worth of consumer relief under the terms of its historic mortgage settlement agreement with the U.S. Department of Justice and six states, according to Eric Green, the independent monitor of the agreement...

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 ...

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 ...

Among three nonbank servicers that grew significantly after the financial crisis, Nationstar Mortgage has managed to continue to acquire mortgage servicing rights and subservicing while Walter Investment Management and Ocwen Financial have recently sold MSRs and taken huge losses. Officials at Nationstar said the nonbank is on track to board servicing with an unpaid principal balance of $130.0 billion between August and the end of the year. The new servicing includes acquisitions of MSRs and subservicing agreements. Nationstar handled a $369.0 billion servicing portfolio at June 30, down from $386.0 billion in servicing at the end of March. “I don’t think...

Ocwen Financial reported a net loss of $87.20 million for the second quarter of 2016, with most of the loss related to so-called legacy issues. A planned settlement with the Department of Justice of two lawsuits involving the Home Affordable Modification Program and FHA mortgages caused $40.10 million in pre-tax losses for the nonbank lender-servicer. The company also paid $28.10 million during the quarter to cover the cost of monitoring settlements involving federal regulators ...

There was a significant increase last year in the number of coordinated examinations of non-bank financial services companies between the CFPB and state banking regulators. The number of such exams rose from nine in 2014 to 16 in 2015, the State Coordinating Committee of the Conference of State Bank Supervisors reported recently in its annual report. Examinations that are scheduled between the SCC and the CFPB are performed simultaneously between state regulators and the CFPB. The examinations involve coordinated planning, shared resources, concurrent onsite visits, and sharing of confidential and non-confidential supervisory information, including findings and reports of exam. The SCC also indicated there was “an expansion into new industry types as the CFPB established additional supervision authority by rule.” ...

The rapid growth among nonbank mortgage servicers and its potentially adverse effect on consumer experience became a challenge in 2015, underscoring the importance of effective technology and the underlying systems that comprise a servicing platform, according to the latest state supervisory report on non-banks. The report by the Conference of State Bank Supervisors (CSBS) and the Multi-State Mortgage Committee (MMC) features the result of last year’s review of supervisory examinations and risk-assessment of nonbank mortgage servicers. The MMC is the oversight body responsible for the coordination and supervision of multi-state mortgage entities.