President Obama used his State of the Union address this week to announce a new federal-state law enforcement project aimed at mortgage origination and securitization practices and to propose a broad federal refinance program for performing underwater non-agency mortgages that would be funded with fees imposed on banks. Most observers say the refi proposal stands little chance in Congress and is mostly a campaign tool aimed at banks and the track record of Republican lawmakers. “I’m sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a...

The never-ending board game over mortgage foreclosure processing errors flailed through another week of meetings between state attorneys general, top lenders and federal officials that were so “informal” many didn’t confirm that they were in attendance. A leaked copy of a new draft settlement indicates that the latest offer on the table includes $17 billion in principal reductions and a $5 billion reserve account for state and federal programs. According to the Associated Press, some of that account would pay for $1,800 checks to homeowners affected by banks’ deceptive practices. Another $3...

Richard Cordray, the new director of the Consumer Financial Protection Bureau, this week parried with a key House Republican over disclosure of the agency’s regulatory agenda, a lengthy to-do list that was virtually dictated by Congress in the Dodd-Frank Act. “Since the onset of the financial crisis, members of Congress have heard from businesses of all sizes that markets ... need certainty. In this regard, the CFPB has failed the test,” said Rep. Patrick McHenry, R-NC, chairman of the House Oversight and Government Reform Subcommittee on TARP, Financial Services and Bailouts of Public and Private...

The Department of Housing and Urban Development rejected a number of industry recommendations to ease the impact of new lender indemnification regulations. The final rule imposes indemnification provisions on all FHA lenders with Lender Insurance authority and revises the methods determining an acceptable claim and default rate. It also amends the two-year performance requirements for considering mortgagees for Lender Insurance (LI) authority in connection with a merger, acquisition or reorganization. The primary change under the new rule is that all direct endorsement lenders with LI authority...

The transition to a housing market not completely dominated by agency financing will result in higher costs for borrowers, according to some industry participants at the American Securitization Forum annual conference held this week in Las Vegas. Even proposed risk sharing between non-agency mortgage-backed security investors and the government-sponsored enterprises is cause for concern.“I just don’t see it working all that well,” said Garry Cipponeri, a senior vice president and director of capital markets at Chase Mortgage Banking. He suggested that risk sharing could ultimately...

With a price tag of $100 billion required to forgive the principal of underwater Fannie Mae and Freddie Mac mortgages, the best bet for the government-sponsored enterprises and for taxpayers is for the GSEs to pursue a policy of principal forbearance, the Federal Housing Finance Agency said. This week, the FHFA released its analysis conducted in 2010 following numerous requests and an eventual threat of subpoena by House Democrats. The agency’s number crunchers found that “principal reduction never serves the long-term interest of the taxpayer when compared to foreclosure.” As of June 30, 2011, Fannie and Freddie...

A cloud of uncertainty continues to hang over the private mortgage insurance industry as companies struggled to get new capital waivers and other relief from their state insurance regulators to stay in business. This week, Mortgage Guaranty Insurance Corp. announced a new two-year waiver from regulatory capital requirements from the Office of the Insurance Commissioner for the State of Wisconsin, which would allow it to write new business through Dec. 31, 2013. The waiver approved on Jan. 23 came after the previous waiver expired at the end of last year. As did the prior order, the new waiver allows MGIC to...

The newly empowered Consumer Financial Protection Bureau is wasting no time jumping into its oversight of mortgage origination practices and procedures at banks and nonbanks alike, issuing a set of M.O. examination procedures that will be used to put mortgage lenders and brokers under a compliance magnifying lens. But one industry attorney warns that in doing so, the CFPB has tilted the playing field against nonbank mortgage originators. CFPB Director Richard Cordray said the CFPB’s supervision of nonbank mortgage originators will “illuminate the entire marketplace by making nonbanks play by ...

The Supreme Court of the United States plans to hear oral arguments late next month in Freeman v. Quicken Loans, a case that could have wide-ranging implications for lenders subject to the Real Estate Settlement Procedures Act. The issue before the high court is whether RESPA Section 8(b) 12 USC 2607(b) prohibits a real estate settlement services provider from charging an unearned fee only if the fee is split between two or more parties.The language of that provision of the statute states that no person “shall give and no person shall accept any portion, split or ...

Regulatory burden will be the biggest issue for mortgage originators in 2012, according to recruiting firm Hammerhouse’s second annual survey of originator opinions. of the 400 active mortgage loan originators surveyed, 51 percent cited further oversight and regulation as a top concern for originators in 2012. Twenty-nine percent said that finding a committed and stable mortgage lender to work with is still one of the areas of utmost concern. Product flexibility and raising interest rates were identified as top concerns by 12 percent and 8 percent, respectively ...