Lawmakers in California this week pulled from their agenda a series of bills designed to help borrowers in a significant, if temporary, victory for the mortgage industry in the long drawn-out legal battles spawned by the mortgage collapse in 2008. The proposed California Homeowner Bill of Rights featured many of the requirements that have been incorporated in evolving national servicing standards. One new provision would require servicers to pay a $25 “fine” each time a borrower defaults; the money would go to a fund to investigate fraud. But two of the six bills in the package were suddenly pulled from...

Ally Financial Inc. is cutting back significantly on its wholesale mortgage business and moving away from its correspondent and broker channel so that it can focus more on originations through the retail and direct channels. In recent filings with the Securities and Exchange Commission, Ally said the shift to the higher-margin retail and direct channels will not have a significant impact on profitability overall if both channels can assume the current volume of government-backed mortgages coming through the correspondent and broker wholesale conduits. “We will continue to evaluate this...

The mortgage lending industry is apprehensive about the multitude of mortgage servicing rules coming its way, and that anxiety is probably well justified, leading industry representatives suggests. Beyond last year’s consent orders and last month’s $25 billion mortgage servicing settlement and all the ramifications they have for industry servicing practices going forward, the most immediate concern has to do with a proposed rule on mortgage servicing due out this summer from the Consumer Financial Protection Bureau. Last week, the CFPB made a public “pre-announcement” of the...

With all the concern thatfs been raised about loan originator compensation since the mortgage marketfs collapse in 2008, and given a certain amount of gget-toughh rhetoric from leadership at the Consumer Financial Protection Bureau, the agency seemed to take a quick-and-dirty approach when issuing its first pronouncement in topic earlier this month. Back in September 2010, the Federal Reserve put out loan originator compensation rules under the Truth in Lending Act and Regulation Z, effective as of April 6, 2011. Then with enactment of the Dodd-Frank Act of 2010...

The U.S. Attorney General’s recently released 2011 annual report to Congress on the Equal Credit Opportunity Act Amendments of 1976 provides some useful insight as to what prompts it to litigate referrals from other agencies, as opposed to bumping them back for administrative resolution. Referrals that are most likely to be returned generally share a few characteristics, such as whether the practice at issue had ceased and there is little chance that it will be repeated. Another characteristic is whether the violation may have been accidental or stemmed from ignorance of the...

The Federal Reserve Board recently brought a consent order against Morgan Stanley to deal with what it characterized as a pattern of misconduct and negligence in residential mortgage servicing and foreclosure processing at the Wall Street firm’s Saxon Mortgage Services subsidiary, once the 34th largest mortgage servicer in the United States. “As noted in the announcements relating to the 2011 enforcement actions, the Federal Reserve believes monetary sanctions are appropriate and plans to announce monetary penalties in these cases,” the Fed said. The monetary penalties...

The Securities and Exchange Commission has charged two officials of Houston-based bank holding company Franklin Bank Corp., with setting up increasingly aggressive loan modification programs during the last six months of 2007 to hide from investors the true amount of the bank’s nonperforming assets and to artificially inflate Franklin’s net income and earnings. According to the SEC, CEO Anthony Nocella and CFO Russell McCann instituted three loan modification schemes that caused Franklin to account for its significantly increasing portfolio of delinquent...

An unusual coalition of dozens of lender, realtor, consumer and civil rights groups late last week urged the Consumer Financial Protection Bureau to write a broadly defined “qualified mortgage” as part of the ability-to-repay final rule it’s putting together as per the Dodd-Frank Wall Street Reform and Consumer Protection Act. The CFPB is expected to issue a proposed rule defining a QM shortly. As per the ability-to-repay standards of Dodd-Frank Section 1412, a qualified mortgage cannot have points and fees in excess of 3 percent of the loan amount. The groups are worried...

Four mortgage- and financial services-related trade groups told the Consumer Financial Protection Bureau they’re unhappy the CFPB hasn’t adopted more of the suggestions they’ve made over the numerous iterations the bureau has put out of its Know Before You Owe consolidated consumer disclosure project. The CFPB is currently on the ninth version of its evolving disclosures model. “During the Know Before You Owe iterations, we have submitted a large number of comment letters that walk the CFPB through a large number of very technical, but important details,” the groups said...

U.S. District Court for the District of Columbia. Mortgage Servicing Settlement Approved. Earlier this month, the U.S. District Court for the District of Columbia gave its approval to the consent orders that make up the $25 billion mortgage servicing settlement by federal regulators and 49 state attorneys general into alleged mortgage-related violations by the nationfs five largest mortgage servicers. The federal agencies that signed on to the settlement are the Department of Justice, the Department of Housing and Urban Development, the Department of Treasury...