The Financial Crimes Enforcement Network.GSE anti-money laundering, SARs reporting proposed. The Financial Crimes Enforcement Network proposed regulations that would require Fannie Mae, Freddie Mac and the Federal Home Loan Banks to develop anti-money laundering programs and file suspicious activity reports with FinCEN. The government-sponsored enterprises currently file fraud reports with their regulator, the Federal Housing Finance Agency, which then files SARs with FinCEN when the facts in a particular fraud report warrant a SAR under FinCEN’s reporting standards.

A white paper put together by a researcher at the Federal Reserve looks into what determines whether federal and state supervisors examine state banks independently or together. The results suggest that supervisors coordinate examinations in order to support states with lower budgets and capabilities and more banks to supervise. “I find that states with larger budgets examine more banks independently, that they accommodate changes in the number of banks mostly through the number of examinations with a federal supervisor and that, when examining banks together, state banking departments that have earned quality accreditation are more likely to write conclusion reports separately from federal supervisors,” researcher Marcelo Rezende said. The results also indicate that regulation affects supervision by changing the characteristics of banks. “Independent examinations decrease with branch deregulation, which is consistent with the facts that this reform consolidated banks within fewer independent firms and that state and federal supervisors are more likely to examine large and complex institutions together,” said Rezende.

The servicing settlement being negotiated between state attorneys general and major banks will likely require principal reduction via loan modifications and possibly refinances. Principal reduction, however, will likely only be required for certain mortgages held in bank portfolios. The Federal Housing Finance Agency has refused to allow principal reduction on mortgages serviced for the government-sponsored enterprises. Non-agency mortgage-backed security investors, meanwhile, have been more accepting of principal reduction of late but the vast majority of such mod activity is already concentrated on portfolio loans. ...

Finding itself in one of the largest mortgage fraud cases ever prosecuted by the federal government, the Department of Housing and Urban Development may have a hard time explaining why it failed to act earlier against a lender that scammed the FHA for nearly a decade. It appears HUD, notwithstanding its assertions of increased vigilance and aggressive enforcement against violators of department regulations, dropped the ball on Allied Home Mortgage Corp. According to a lawsuit filed by the U.S. Attorney in Manhattan district court this week, Allied, an FHA loan correspondent, and its two top executives engaged in ...

The Department of Housing and Urban Development is seeking executive clearance for a final rule which would revise and update requirements for lender indemnification, lender-insurance eligibility and termination under the FHA’s Single-Family Lender Insurance Process. The final rule was sent to the Office of Management and Budget for review on Oct. 18 with possible issuance in the next couple of weeks. HUD declined to discuss the details of the final rule. The three main changes to the program include a more explicit definition of what ...

Allowing direct lenders in the Farm Credit System to participate in FHA mortgage insurance programs as approved mortgagees and lenders may not present a true picture of credit availability in rural areas and could end up costing taxpayers, the Mortgage Bankers Association warned. In a recent letter to HUD’s Office of Lender Activities and Program Compliance, the MBA added that the proposal may be in conflict with the administration’s goal of reducing government participation in the housing finance market. Steve O’Connor, MBA senior vice president, said Farm Credit loans with their implicit government guarantee and FHA-insured loans with their explicit government warranty would ...

Fannie Mae, Freddie Mac and their federal regulator are facing considerable negative pushback from the mortgage industry about their controversial plan to change the economics of the mortgage servicing industry. The Federal Housing Finance Agency and the government-sponsored enterprises are trying to come up with a system that will provide more resources for servicing distressed loans and reduce the volatility lenders face as a result of carrying mortgage servicing right assets on their books. In addition to ultimately improving servicing quality for GSE loans and reducing default losses, the agencies appear to...

Raj Date, special adviser to the Treasury and the acting head of the Consumer Financial Protection Bureau, ran headlong into considerable resistance from Republicans on a House subcommittee this week over the scope of the bureau’s authority and its effectiveness, especially in relation to the mortgage lending activities of community banks. Date was the sole witness to appear before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit this week as it reviewed the first 100 days of the CFPB. Rep. Donald Manzullo, R-IL, put it most forcefully for the GOP opposition when he...

Old Republic International Corp. intends to re-enter the mortgage insurance business with a revamped business risk model, fresh capital and a new subsidiary if it obtains approval from state regulators and its two major policyholders, Fannie Mae and Freddie Mac. The Chicago-based company, which also operates general and title insurance segments, still maintains a long-term strategic interest in mortgage insurance despite the negative trends in the sector, according to company executives during a recent conference call with analysts and investors. “But at this point, we have little, if any, idea as to the...

Federal prosecutors this week sued an FHA lender to recover hundreds of millions of dollars in paid claims in connection with mortgage loans originated through branches that were not approved by the Department of Housing and Urban Development. A lawsuit filed by the U.S. Attorney in Manhattan district court this week alleged that Allied Home Mortgage Corp., President and CEO Jim Hodge and Executive Vice President Jeanne Stell engaged in reckless mortgage lending, flouted FHA mortgage insurance requirements and repeatedly lied about compliance. Such actions, the suit alleged, subsequently led to...