Six financial services trade associations presented the mortgage lending industry’s views to the Department of Housing and Urban Development regarding the agency’s proposed rule to implement a disparate-impact legal standard under the Fair Housing Act. One of their arguments was that HUD should postpone its rulemaking pending the United States Supreme Court’s disposition of Magner v. Gallagher (No. 10-1032). The primary issue in the case is whether the disparate-impact theory of discrimination applies under the Fair Housing Act or whether plaintiffs have to prove intentional ...

The Federal Housing Finance Agency might be backing away from its controversial suggestion to change mortgage servicer compensation from the current 25 basis points of outstanding principal balance to a flat fee of $10 per mortgage, per month for current loans, with no incremental fees other than existing incentive compensation for the servicing of non-performing mortgages. “Considering changes to the structure of mortgage servicing compensation is an important component of improving the operations of the future mortgage market,” an FHFA spokeswoman said. “We received useful input on ...

Illinois. State Attorney General Lisa Madigan filed a lawsuit in Cook County Circuit Court alleging that Nationwide Title Clearing, a Florida-based company that prepares documents for use in default servicing and foreclosure actions, filed faulty documents with Illinois county recorders. The lawsuit alleges a number of violations of the Illinois Consumer Fraud and Deceptive Practices Act and the Uniform Deceptive Trade Practices Act. Madigan is asking the court to “require NTC to review and correct all documents it unlawfully created and recorded in Illinois, and pay back all ...

Federal Reserve.Federal Deposit Insurance Corp. Office of the Comptroller of the Currency.National Credit Union Administration. Guidance on Junior Liens Reissued. Federally regulated financial institutions have to monitor all credit quality indicators relevant for home loan borrowers, under guidance that was reissued by the Federal Reserve, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the National Credit Union ...

CitiMortgage is bailing out of its broker channel business. “After careful consideration, CitiMortgage has decided to transition away from our mortgage broker business and sharpen our focus on a customer-centric channel strategy,” Citi Public Affairs Director Mark Rodgers said in an email to the press last week. The move allows the company to focus its attention and efforts on its retail and correspondent channels, which have “the highest opportunity of increasing long-term engagement with our clients,” he said.Further, it allows CitiMortgage to invest its resources in ...

Both the Federal Housing Finance Agency and Freddie Mac are refuting a published report suggesting that a mortgage finance vehicle at one time employed by the government-sponsored enterprise was designed to profit the company by preventing homeowners from refinancing. An article published this week by ProPublica and National Public Radio contended that Freddie stood to profit from hedging investments known as inverse floaters that would pay higher returns if interest rates rose and more homeowners remained in mortgages with high interest rates. According to ProPublica, Freddie purchased inverse floaters...

New regulations are re-shaping the non-agency MBS market, but economic issues, the ratings process and shifting investor appetite may have more to do with the stalled recovery in the sector, experts said during the American Securitization Forum conference last week in Las Vegas. John Arnholz, a partner at Bingham McCutchen LLP, suggested that the regulators will end up issuing a new proposed rule on risk retention, given the widespread opposition to the original proposal. The proposed premium capture recovery fund idea “came out of nowhere,” he said, adding that there is a good deal of dissent among the six...

The Obama administration late last week announced that it is extending its Home Affordable Modification Program for another year and sweetening the inducements to get investors to agree to principal reduction loan mods. MBS analysts generally grade the changes as a positive for the non-agency MBS market, but the impact on Fannie Mae and Freddie Mac securities may depend on whether the government-sponsored enterprises agree to principal reductions. The revised HAMP program will now be available for investor-owned mortgages, and it will feature a revised debt-to-income calculation taking into...

The non-agency portion of the Home Affordable Modification Program is set for significant changes, according to an announcement last week by the Treasury Department. Investors will receive greater incentives for principal reduction mods, eligibility requirements for HAMP will be loosened and the program will be extended through the end of 2013. “Implications for agency MBS investors seem limited but are very meaningful for non-agency investors,” said analysts at Barclays Capital. Incentive payments to loan owners will triple for principal reduction HAMP mods. Previously, the payments ranged from six cents-on-the-dollar to 18 cents-on-the-dollar ...

The mortgage industry is skeptical about President Obama’s proposal for low-cost, non-agency loan refinancing program, administered by the FHA for current, underwater borrowers. Some industry participants called the plan nothing but smoke and mirrors that would likely create unrealistic expectations. But deceptive or not, the proposal first announced by the president in his State of the Union address promises to be different from the earlier, huge unsuccessful FHA experiments in foreclosure prevention – Hope for Homeowners and FHA Short Refinance programs. The proposed refi plan is a combination of ...