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.

The Federal Housing Finance Agency’s announcement last week that Fannie Mae and Freddie Mac will increase their guarantee fees on new single-family MBS is likely just the first step in a progression of fee hikes over the next two years, MBS analysts predict. The across-the-board 10 basis point increase in guarantee fees for single-family MBS will take effect April 1, according to announcements by the two government-sponsored enterprises this week. The fee hike implements provisions in the Temporary Payroll Tax Cut Continuation Act of 2011, H.R. 3765, passed by Congress and signed by...

Bank of America reached a landmark $335 million agreement with the Department of Justice to settle allegations that Countrywide systematically discriminated against African-American and Hispanic borrowers during the housing boom, manipulating them into taking subprime loans when they were qualified for prime financing. It’s the largest settlement ever for a residential fair lending claim. The case also marks the first time the Justice Department has alleged and obtained relief for borrowers who were steered into mortgages on the basis of their race or national origin, a practice that placed...

Last month, as part of the Consumer Financial Protection Bureau's "Know Before You Owe" project, the CFPB unveiled two new prototypes for a single mortgage disclosure to replace the HUD1 Settlement Statement and final Truth in Lending disclosures. This month, the bureau is paying close attention to closing costs by trying to figure out which of two different designs communicates both the closing costs and transaction details clearly. One is similar to the existing HUD]1 settlement statement that consumers now receive when they close a mortgage loan. The other is based on the prototype for the disclosure consumers get when they first apply. gWefre curious to see if something different may work even betterh than the earlier iterations, the CFPB said. gThis new design provides the same information as the other prototype, but it uses a format for the closing costs that is based on our application disclosure prototype. It has sections that correspond to the application disclosure and a little more plain language.h

The U.S. Solicitor General and a group of state attorneys general filed pro-borrower briefs in Freeman v. Quicken Loans, a case in which the U.S. Supreme Court will decide whether a plaintiff has to prove that an unearned fee for a real estate settlement service was divided between two or more persons.The court’s ruling is expected to determine the ability of the mortgage lending industry to decide on its own what to charge borrowers at the point of origination.At issue is Section 8(b) of the Real Estate Settlement Procedures Act, 12 U.S.C. §2607(b), which states that no person “shall give and no person shall accept any portion, split or percentage of any charge made or received for the rendering of a real estate settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed.”

The Supreme Court of the United States considered oral arguments recently in its second high-profile case this session that addresses key issues under the Real Estate Settlement Procedures Act.The case is First American Financial v. Edwards, in which the fundamental question is whether a private purchaser of real estate settlement services has standing under Article III, §2 of the U.S. Constitution to maintain an action in federal court in the absence of any claim that the alleged violation affected the price, quality or other characteristics of the settlement services provided. In this case, respondent Denise Edwards purchased a home in Cleveland in September 2006, obtaining title insurance through Tower City, which issued policies on behalf of First American. Edwards paid $455.43 towards the purchase of the policies (one for her lender and one for herself); the seller of the home paid $273.42.

There’s been a notable changing of the guard among attorneys in the mortgage banking practices at the law firms of Patton Boggs, Ballard Spahr and Dykema. Partners Richard Andreano, John Socknat and Michael Waldron and associate Reid Herlihy left Patton Boggs recently with upwards of 100 clients and signed on with the newly created Mortgage Banking Group at Ballard Spahr. The new unit is part of Ballard Spahr’s larger effort to build up its Washington, DC, office. Meanwhile, Dykema augmented its regulatory presence by bringing on board former Patton Boggs senior lawyers Heather Hutchings and Haydn Richards to its Financial Services Regulatory and Compliance practice.

The FHA will continue to play a critical role in the nation’s housing markets in 2012 even as it tries to balance the need to extend credit while reducing its market share to open the way for private capital to return to the mortgage market, according to industry observers. That means walking a tightrope in trying to keep the Mutual Mortgage Insurance Fund actuarially sound while trying to avoid piling on more fees and additional restrictions, which could hamper housing recovery, observers said. “We can’t have an economic recovery without a housing recovery,” said Brian Chappelle, a mortgage industry consultant. “The philosophical debate about the role of government in housing should be ...

United Wholesale Mortgage last week announced its “The Big and Easy” wholesale jumbo program, claiming it can close loans in two weeks. “Gone are the days when an originator has to tell a borrower how difficult it is to close a jumbo loan,” said Jaime Hunt, an account executive at UWM. The loans are available for amounts up to $2.5 million for principal residences as well as second homes, for purchase or refinance. UWM is looking for borrowers with credit scores of at least 720 and loan-to-value ratios of no more than 80 percent ...

The Department of Housing and Urban Development has proposed to create a new system that would facilitate the transfer and streamline the collection of records under the FHA’s lender approval and recertification process. The new, fully automated records system, the Lender Electronic Assessment Portal, will assume full custody and control of lender records currently maintained by the HUD/FHA Lender Approval Files System of Records Notice (SORN), which is a manual and labor-intensive process. The current system contains records of principals or officers of financial institutions who are approved or seeking approval to ...