The Department of Housing and Urban Development is working on a proposed regulation that seeks to harmonize existing standards for determining when a housing practice with a discriminatory impact violates the Fair Housing Act. The proposed rule would cover the liability standards in instances in which a racially neutral housing practice has a discriminatory effect. The disparate impact theory has been used in fair housing cases to allege discriminatory activity when the terms of a business policy are neutral toward protected classes but the policy is shown to have greater impact on minorities or other protected groups. There has been debate over...

The nation’s top mortgage servicers had to submit remedial plans for their foreclosure practices this week as part of their consent agreements with federal banking regulators, after having been granted an extension from the original submission timeline. Some servicers told Inside Mortgage Finance their plans are confidential and couldn’t be released to the public. An official at the Office of the Comptroller of the Currency said there are no plans for the agency to release those plans or to summarize their contents. The affected servicers are...

Experts sharply disagreed on the Federal Reserve Board’s controversial new rules on loan officer compensation during a hearing this week in the House Financial Services Committee, with some claiming it is a confused mess and others saying it’s a shield for low-income and minority borrowers. Marc Savitt, president of the Mortgage Center and testifying on behalf of the National Association of Independent Housing, said the rule caused massive job loss among small mortgage businesses and fewer consumer loan options. “As an active participant in meetings with the FRB during the comment period, it was evident the FRB was unwilling to...

The Department of the Treasury and state banking regulators strenuously objected to a proposed rule issued by the Office of the Comptroller of the Currency regarding federal preemption of state consumer financial law even as calls to withdraw the proposal or reopen its comment period mounted. As the comment period ended June 27, the Treasury Department responded unfavorably to the preemption rule proposed by one of its own bureaus, saying that the agency’s approach is incompatible with the federal preemption text of the Dodd-Frank Act and its ...

The strength of the non-agency market has become a major point of concern as a diverse coalition of market participants lobbies for changes to a proposed rule for mandatory risk retention. The impact on the non-agency market is second only to the group’s concerns about downpayment requirements in the qualified residential mortgage debate. “The proposed narrow QRM rule discourages...

The challenges confronting the recovery of the non-agency MBS market are many, but legacy issues, such as representations and warranties, are the cause of huge frustration in the industry, according to panelists at the American Securitization Forum this week. “Some of these legacy issues have very far-reaching tentacles,” observed Mani Sabapathi, principal at Prudential Fixed Income. The housing finance world has been bracing for the coming risk-retention rule with great apprehension, he said, raising the possibility that reps and warrants could be included as a part of it. “I think it can be an important aspect to the extent that if you have these loans that don’t meet...

Mortgage servicers are being squeezed by inadequate compensation, intense scrutiny and a surge of new regulation, but Fannie Mae and the Treasury Department say they are trying to even the score. Servicers no longer see their job as financially rewarding and have been leaving their positions accordingly, claimed Diane Pendley, managing director of Fitch Ratings, during a panel session at this week’s annual meeting of the American Securitization Forum. “We’re seeing them fighting – they’re coming out swinging, just really to get some balance,” echoed Gwen Muse-Evans, vice president and chief risk officer at Fannie Mae. “There’s definitely a perception that...

A bill that would create a legislative framework for a covered bond market in the U.S., as well as a potential competitor for the Federal Home Loan Bank system, cleared committee this week following some fine-tuning by its sponsors and is headed to the full House for consideration.The House Financial Services Committee voted 44-7 in favor of H.R. 940, the U.S. Covered Bond Act of 2011.

Top servicers flagged for their faulty foreclosure practices will have an extra month to submit their mitigation plans, although federal regulators continue to bear down on the industry and are starting to withhold loss mitigation incentive payments from some companies. The Office of the Comptroller of the Currency and the Office of Thrift Supervision this week said they will give 12 servicers subject to consent orders extra time to submit “comprehensive action plans” that detail the financial resources the bank will commit to...

Office of the Comptroller of the CurrencyFederal Reserve SystemFederal Deposit Insurance Corp.Securities and Exchange CommissionFederal Housing Finance AgencyDepartment of Housing and Urban Development Credit Risk Retention – Proposed Rule: Comments Due. Public comments on the interagency proposed rule on credit risk retention are due June 10, 2011. (See...