Mortgage Lending – Page 10 – Consumer Financial Services Watch

No More Mister Nice Guy: Indemnification Now Required by FHA Lender Insurance Regulations

Jan 31 2012

By: Phillip L. Schulman, Krista Cooley, Holly Spencer Bunting

To view the complete alert online, click here.

FHA’s Lender Insurance Program Will Soon Cost Lenders More Money

Jan 24 2012

By: Krista Cooley, Phillip L. Schulman, Holly Spencer Bunting

FHA mortgagees participating in the Lender Insurance (“LI”) program will be required to indemnify HUD for self-endorsed loans that HUD deems ineligible for FHA insurance based on a final regulation to be published by HUD on January 25, 2012. Since January 1, 2006, FHA mortgagees, with approval from HUD, have been permitted to endorse loans themselves, without first having to send the loans to HUD. The final regulation marks the first time HUD will make significant changes to the LI program, one of which automatically increases LI lenders’ liability for the loans they close and self-endorse. These changes finalize LI regulations proposed by HUD in October 2010 and will take effect on February 24, 2012. Read More

CFPB Releases “Mortgage Origination Examination Procedures” Governing Banks and Nonbanks – Not a Prelude to a Kiss

Jan 20 2012

By: Jonathan D. Jaffe

The CFPB wants to get to know you – well. But it’s not a prelude to a kiss.

On January 12, 2012, the CFPB released its new Mortgage Origination Examination Procedures Governing Banks and Nonbanks (the “Procedures”). The release of the Procedures follows close on the heels of the CFPB’s October 13, 2011 release of its mortgage servicing examination procedures (see The CFPB Mortgage Servicing Examination Procedures Fail to Harmonize – Isn’t It Ironic? ), and its January 5, 2012 announcement of its nonbank supervision program (see CFPB Officially Launches Nonbank Supervision Program). Read More

MERS and Foreclosure Law in Massachusetts: Culhane v. Aurora Loan Services

Jan 19 2012

By: Andrew C. Glass, Gregory N. Blase, Roger L. Smerage

A Massachusetts federal court recently confirmed MERS’s ability to assign mortgages under Massachusetts law and approved MERS’s practices in doing so.

In Culhane v. Aurora Loan Services, — F. Supp. 2d —-, 2011 WL 5925525 (D. Mass. Nov. 28, 2011), a borrower sued her loan servicer to prevent foreclosure. The court granted summary judgment for the servicer, addressing two principal issues. First, the court examined whether Massachusetts law requires that the same entity hold both the note and mortgage before initiating the foreclosure process. Predicting how the Massachusetts Supreme Judicial Court may rule in a pending appeal, Eaton v. Federal National Mortgage Association, SJC-11041 (argued Oct. 3, 2011), the federal court concluded that under Massachusetts law, the mortgagee must either be the noteholder, or the servicer of the noteholder acting pursuant to authority from the noteholder, to foreclose on property pursuant to the power of sale. Read More

GSE Loan Repurchase Policies Impede Economic Recovery

Jan 10 2012

By: Laurence E. Platt

The loan repurchase policies of Fannie Mae and Freddie Mac are one of the factors that have exacerbated the U.S. housing crisis and impeded economic recovery, according to two recent releases by notable federal government actors. These reports call into question whether the aggressive repurchase stance of the Federal Housing Finance Agency, as conservator of the GSEs, to reduce short-term losses to U.S. taxpayers instead might work to the long-term detriment of such taxpayers. Lenders reportedly responded by saying: “like, duh!” Read More

Are Valuation Review Standards on the Federal Banking Agencies’ Radar?

Jan 09 2012

By: Nanci L. Weissgold and Kerri M. Smith

Mandated by the Dodd-Frank Act, lenders and appraisal management companies (known as AMCs) are awaiting a series of joint rules addressing appraisal issues. While rules addressing pre-funding reviews of appraisals or evaluations is not a topic specifically required by the January 21, 2013 deadline, the FDIC’s Winter 2011 issue of Supervisory Insights hints that it may be addressed in the joint rule establishing minimum requirements for AMCs’ state registration. This may be a welcome development for regulated banking institutions subject to the revised Interagency Appraisal and Evaluation Guidelines (“Guidelines”). Those Guidelines, issued jointly by the federal banking agencies on December 2, 2010 (and effective on that date), update and replace existing guidance in response to changes in the real estate valuation industry and those mandated by the Dodd-Frank Act.

Supreme Court Brief Filed on Behalf of Mortgage Lenders

Jan 05 2012

By: Paul F. Hancock, Andrew C. Glass, Melanie Hibbs Brody, Melissa S. Malpass, Gregory N. Blase

On December 29, 2011, K&L Gates filed a brief as amici curiae before the United States Supreme Court in Magner v. Gallagher, a case in which the Court will consider whether the disparate impact theory of discrimination is cognizable under the Fair Housing Act or whether plaintiffs must instead prove intentional discrimination. The brief was filed on behalf of the Independent Community Bankers of America, the Consumer Mortgage Coalition, and the American Financial Services Association, and contends that proof of discriminatory intent is required to establish a violation of the Act. A copy of the brief is available here. The Court has scheduled oral argument in the matter for February 29, 2012.

CFPB Puts Inherited Consumer Financial Protection Regulations on the Table

Dec 23 2011

By: David A. Tallman

Adding to its already full plate, the Bureau of Consumer Financial Protection (the “CFPB” or the “Bureau”) recently requested public comment on its review of the various consumer financial protection regulations it has inherited from other agencies. The request signals that the Bureau does not intend for its higher-profile mortgage finance initiatives to overshadow its mandate to update, modify (or even eliminate) outdated, unduly burdensome, or unnecessary existing regulations. It also suggests that the CFPB is contemplating that its initial review of the inherited regulations may extend beyond mere technical corrections to more significant substantive changes.

Customary and Reasonable Appraisal Rates Rule Faces State Opposition

Dec 15 2011

By: Nanci L. Weissgold and Kerri M. Smith

It is old news that the Dodd-Frank Act sets standards for pricing appraisals and subjects appraisal management companies, known as AMCs, to federal and state oversight. The news for 2012 is that lenders may need to contend with alternate state law requirements addressing the payment of fee appraisers, some of which may be inconsistent with federal law.

AMCs – the business entities that administer networks of independent appraisers to procure real estate appraisal assignments on behalf of lenders – are now subject to supervision by state governments through their appraisal boards. Under the Dodd-Frank Act, the federal banking agencies must jointly by rule establish minimum requirements to be applied by a state, including state registration and supervision of AMCs, and that appraisals be conducted in compliance with Section 129E of TILA. While states have three years from the date the federal agencies finalize their rules establishing minimum requirements, AMC registration laws now exist in 28 states.

CFPB Now Accepting Mortgage Complaints from Consumers

Dec 07 2011

By: Kathryn M. Baugher

On December 1, 2011, the Consumer Financial Protection Bureau began accepting mortgage complaints from consumers through the agency’s home page. This development follows the Bureau’s October announcement that it would be expanding the coverage of its consumer complaint portal to include products such as mortgages and student loans. Consumers have been able to submit credit card complaints through the Bureau’s web site since last July. Read More

Catagory:Mortgage Lending