Compliance & Regulation

A New York real estate attorney this week pleaded guilty to bank fraud and conspiracy to commit bank and wire fraud in connection with a scheme that defrauded residential lenders out of more than $23 million.

A New York appeals court dismissed a lawsuit against bond insurer MBIA brought by twenty of the world's largest financial institutions, including Bank of America, Citigroup, and JPMorgan Chase. The lawsuit claimed that the 2009 split of MBIA amounted to a fraudulent conveyance.

Housing and mortgage trade groups are concerned that federal regulators will propose a narrow exemption to MBS risk retention rules that would impose high capital requirements on plain vanilla mortgages, making them unnecessarily expensive for creditworthy borrowers.

Fannie Mae and Freddie Mac are considering overhauling the 25-basis-point servicing fee they pay to mortgage banking firms that process their loans, according to a report in American Banker.

A group of House Financial Services Democrats are raising questions about whether taxpayers will be fully protected under the terms of a recent settlement over poorly underwritten loans held by Fannie Mae and Freddie Mac.

Recovery in the mortgage insurance sector will continue during 2011, as the sector eyes sustained profitability in 2012, according to an analyst at Credit Suisse.

The Federal Trade Commission’s identity theft red flags rule that required businesses to meet identity theft consumer protection laws before the Dec. 31 deadline is now in full effect. And according to FTC estimations it affects about 11 million businesses, many of which may still be unaware of the law and its impact on their business.

The New York Supreme Court ruled that MBIA Insurance Corp. did not have any way to discover if GMAC Mortgage LLC intentionally misrepresented the true nature of mortgage-backed securities that MBIA insured.

As we start 2011, the industry needs to review, change and implement Quality Control plans that can prevent mortgage fraud and reduce defaults in 2011. All origination platforms need to take the proper steps with quality control that ultimately will provide and support liquidity through all types of market cycles, thus benefitting all the mortgage industry stakeholders for years to come.

Ginnie Mae is raising the minimum net worth requirement for issuers of FHA-insured reverse mortgages to $5 million from $1 million, while establishing a minimum servicing fee for 'home equity conversion mortgage' MBS.