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...

California’s Attorney General has reportedly issued subpoenas to Fannie Mae and Freddie Mac seeking details of the government-sponsored enterprises’ mortgage lending and foreclosure practices, possibly as a way to cajole the Federal Housing Finance Agency to overcome its resistance to principal reductions for GSE loans. The subpoenas seek information about how Fannie and Freddie are handling thousands of foreclosed properties, as well as details about the GSEs’ mortgage-servicing and home-repossession practices. According to published reports, State AG Kamala Harris, a Democrat, also is looking into how...

The Department of Housing and Urban Development is pondering its next move after a federal district court judge in Houston reversed a suspension order against Allied Home Mortgage Corp., an authorized FHA lender, and its chief executive officer, last week. In a Nov. 15 ruling, U.S. District Court Judge Melinda Harmon granted a motion by the Houston-based mortgage banker and its CEO, James Hodge, to temporarily stop HUD from enforcing a suspension of the plaintiffs’ authority to underwrite and originate FHA loans until a related lawsuit is resolved. On Nov. 1, the government intervened in a False...

In today’s dramatically changed mortgage lending and regulatory environment, lenders must aggressively manage their originator compensation structures if they want to guarantee their compliance with all applicable laws and regulations, according to a top industry consultant. The first step is “to eliminate all incentive arrangements that pay commissions or bonuses based on any of the terms or conditions of the loans such as interest rates, demand features, prepayment penalties or proxies for these loan terms,” said Henry Oehmann, national executive compensation services executive director for Grant Thornton. Lenders...

Despite its fairly impressive success rate in fending off hostile litigation, MERSCorp and its Mortgage Electronic Registration Systems remain popular targets. This time around, it’s Delaware Attorney General Beau Biden filing suit in Delaware Chancery Court against them, alleging repeated violations of the state’s Deceptive Trade Practices Act. “Since at least the 1600s, real property rights have been a cornerstone of our society,” said AG Biden. “MERS has raised serious questions about who owns what in America. A man or woman’s home is not just his or her largest investment, it’s their castle. Rules matter. A homeowner has the obligation to pay the mortgage on time, and lenders must follow the rules if they are seeking to take away someone’s house through foreclosure. The honor system won’t work.”

The nation’s five largest mortgage servicing companies now face a tab of $25 billion to bring to a conclusion the long-running negotiations with the state attorneys general over industry foreclosure practices, according to published reports of the latest behind-the-scenes developments. The deal with the big five servicers – Ally Financial Inc., Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. – is now said to include $5 billion in cash penalties, along with the requirement to produce $3 billion in mortgage refinances. Other aspects of the settlement are said to include principal reductions and other forms of aids to struggling homeowners. The top servicers would be released from certain claims having to do with loan servicing and origination, according to the reports – but to what extent exactly remains unclear. And there would be no release from claims related to mortgage securitization.

Old Republic International Corp. intends to re-enter the mortgage insurance business with a revamped business risk model, fresh capital and a new subsidiary if it obtains approval from state regulators and its two major policyholders, Fannie Mae and Freddie Mac. The Chicago-based company, which also operates general and title insurance segments, still maintains a long-term strategic interest in mortgage insurance despite the negative trends in the sector, according to company executives during a recent conference call with analysts and investors. “But at this point, we have little, if any, idea as to the...