The Democratic and Republican state attorneys general are scheduled to meet separately Monday, Jan. 23, to discuss the foreclosure practices settlement terms sent out last week, amidst varying criticism that the agreement will be either a shakedown for banks or an inadequate answer to homeowner woes. Monday’s meetings come after Housing and Urban Development Secretary Shaun Donovan announced last week that the pending settlement was “very close” and would benefit about 1 million families through principal reduction for homeowners and, in some cases, direct compensation for people wrongfully ...

California. In Balderas v. Countrywide Bank, N.A., the U.S. Court of Appeals for the Ninth Circuit recently ruled that the Truth In Lending Act’s delivery obligation requires borrowers be permitted to keep written copies of the right-to-rescind notice. The court noted that to “deliver” the notice as per TILA requires a “permanent physical transfer from one party to another,” as opposed to momentary delivery. Illinois. Earlier this month, the Department of Financial and Professional Regulations published amendments to the state’s mortgage originator licensing requirements. One change ...

Insurance companies will likely increase their investment in non-agency residential MBS, with market and regulatory influences encouraging movement toward hybrid and floating-rate securities as opposed to fixed-rate bonds, according to some top securities industry analysts. The primary driver on the regulatory level is the anticipated slight rise in capital requirements expected to result from a recent action by the National Association of Insurance Commissioners, the association of state insurance regulators. On Dec. 27, 2011, the NAIC released updated pricing designations that...

Shaun Donovan, secretary of the Department of Housing and Urban Development, this week said the multistate foreclosure settlement is “very close” to reaching its conclusion, during a speech at the U.S. Conference of Mayors. However, a meeting last week among more than a dozen state attorneys general to discuss alternatives and to air grievances suggests there is still a lot of work to do. Some of the state AGs attending the meeting have been outspoken regarding their frustrations with the process. They included Kamala Harris of California and Eric Schneiderman of New York, who are not currently...

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,” ...