Mortgage Servicing – Page 7 – Consumer Financial Services Watch

FHA Issues Annual Financial Report to Congress

Nov 27 2012

On Friday, November 16, 2012, the U.S. Department of Housing and Urban Development released its 2012 Annual Report to Congress and announced that the FHA Mutual Mortgage Insurance (MMI) Fund suffered a $16.3 billion deficit. In addition, for the fourth year in a row, the MMI Fund has failed to meet its 2% statutory reserve amount, an amount required under the National Housing Act to be held back to cover excess loss.

Is It Illegal Under Federal Law to Opt Out Of Jurisdictions Exercising Eminent Domain?

Sep 11 2012

By: Laurence E. Platt

Is a refusal to make or buy residential mortgage loans from jurisdictions that seize loans through eminent domain a federal crime or a reasoned response to excessive government intervention? That’s the question that people are asking today in light of the comments of Lt. Governor of California Gavin Newsom. Yesterday, he asked the U.S. Department of Justice to investigate and prosecute those in the industry who advocate staying away from jurisdictions exercising eminent domain. Did he expect the industry instead to send thank you notes? Read More

Servicemembers’ Civil Relief Act Protections Extended

Aug 27 2012

By: David I. Monteiro

On August 6, 2012, President Obama signed into law another extension to the protections from nonjudicial foreclosure afforded to members of the military under the federal Servicemembers’ Civil Relief Act (Honoring America’s Veterans and Caring for Camp Lejeune Families Act of 2012, or the “Act”). Prior to the Act, the SCRA prohibited nonjudicial foreclosures on mortgage loans to active-duty members of the military, both during military service and for nine months after termination of active service. The Act extends these protections from nine months to one year following the end of military service. This extension takes effect on February 2, 2013. Read More

CFPB Legislates Loss Mitigation Through Proposed Servicing Regulations

Aug 13 2012

By: Laurence E. Platt

For those who wondered how the Consumer Financial Protection Bureau (the “Bureau”) would seek to convert portions of the global foreclosure settlement into federal law, last Friday’s proposed servicing rules provide an answer. The Dodd-Frank Act (“DFA”) amended the Real Estate Settlement Procedures Act (“RESPA”) in several ways to address discrete loan servicing issues, such as escrow accounts, flood insurance, and qualified written requests. What it did not do, however, is address loss mitigation or foreclosure. Many thought that the Bureau would use its general authority to issue regulations prohibiting unfair, deceptive or abusive acts and practices to craft loss mitigation requirements, but that authority would not afford consumers with a federal private right of action. Read More

Rural Housing Service Publishes Final Rule Regarding New Annual Fee

Jul 11 2012

By: Kathryn M. Baugher

The U.S. Department of Agriculture’s Rural Housing Service (RHS) today published a final rule implementing the new annual fee that will be charged on all RHS-guaranteed single family housing loans obligated on or after October 1, 2011.

The Housing Act of 1949 was amended in July 2010 to authorize RHS to charge an annual fee. The purpose of the annual fee is to make the RHS loan guarantee program “subsidy neutral,” meaning that it will not require taxpayer funding to continue operating at its current size. While RHS acknowledges that the annual fee will increase the cost of RHS-guaranteed loans for borrowers (by approximately $20 per month for the average loan), RHS believes that the annual fee is necessary to avoid a reduction in the size of the program, which would result in fewer RHS-guaranteed loans being made. Read More

The Massachusetts Supreme Judicial Court Issues Its Long-Anticipated Eaton Decision

Jun 28 2012

By: Phoebe S. Winder

In a long-anticipated decision, the Massachusetts Supreme Judicial Court (“SJC”) ruled in Eaton v. Federal National Mortgage Ass’n, 2012 WL 2349008 (June 22, 2012) (“Eaton”) that when conducting a non-judicial foreclosure in Massachusetts, a foreclosing entity must not only hold the mortgage – it also must hold the note or be authorized to act on behalf of the note holder. But if the goal of consumer advocates was to void a large volume of foreclosures, then they failed in that goal, and Eaton should be seen as a victory for those who have foreclosed, or who are seeking to foreclose, on mortgage loans in Massachusetts. Read More

Conflicted Out: When Must a Servicer Follow FHA Guidelines over the Global Foreclosure Settlement Servicing Standards?

Apr 30 2012

By: Krista Cooley, Rebecca Lobenherz

The National Servicing Standards, outlined in the March 2012 Global Foreclosure Settlement, are difficult to reconcile with the already stringent servicing requirements in place for the Federal Housing Administration’s (“FHA”) single family loan insurance program. The National Servicing Standards are expressly subject to and must be interpreted in accordance with applicable federal, state and local laws, rules and regulations, and the terms and provisions of the requirements, binding directives and investor guidelines of the mortgage insurer, including FHA. In the event of a conflict between such requirements and the National Servicing Standards such that a servicer cannot comply with the National Servicing Standards without violating these requirements or being subject to adverse action, then the servicer must document such conflicts and notify the monitoring committee that the servicer intends to comply with the FHA requirements to the extent necessary to eliminate the conflict. Read More

Force-Placed Insurance Standards in the Global Foreclosure Settlement

Apr 20 2012

By: Steven M. Kaplan, Rebecca Lobenherz

Force-placing insurance could be a hazardous practice if not done appropriately. The Consumer Financial Protection Bureau (“CFPB”) has made force-placed insurance a main focus of its desired mortgage servicing reforms and new rules on the issue are expected to be released by the CFPB as soon as this week. This is in addition to high-profile investigations into force-placed insurance by New York and California. Therefore, it should be no surprise that a significant section of the March 2012 Global Foreclosure Settlement lays out new force-placed insurance standards for parties to the settlement agreement. Read More

Tenants’ Rights under the Global Foreclosure Settlement Agreement

Apr 12 2012

By: Nanci L. Weissgold, Morey E. Barnes Yost

Buried deep in the 40-plus pages of “Servicing Standards” that are part of the recently announced global foreclosure settlement agreement (the “Agreement”) are two bullets on a topic that could impact thousands: tenants’ rights.

Specifically, the Agreement requires subject servicers to: (1) comply with all applicable state and federal laws governing the rights of tenants living in foreclosed residential properties; and (2) develop and implement written policies and procedures to ensure compliance with such laws. Read More

National Mortgage Foreclosure Settlement Tackles “Dual Tracking” of Foreclosure and Loan Modification

Apr 05 2012

By: Stephanie C. Robinson, Kerri M. Smith

At what point is it appropriate after a borrower defaults to initiate foreclosure proceedings? As soon as the borrower defaults? Few, if any, servicers follow this rule. During a review of loss mitigation options? During a trial modification? Servicers long have felt that the extraordinary delays in completing foreclosures based on some state laws weigh in favor of starting the foreclosure process as soon as possible. Of course, the servicer always can call off the foreclosure if the loss mitigation option succeeds, but a decision to delay the initiation of foreclosures can result in investor claims. On the other hand, borrowers who think they are in the running for a loan modification often are angry and dismayed when the foreclosure notice arrives. The national foreclosure settlement between the country’s five largest residential mortgage loan servicers and the federal government and 49 state attorneys general places a number of restrictions on the controversial but common practice of “dual tracking” foreclosures and loan modifications. Read More

Catagory:Mortgage Servicing