Compliance & Regulation

WASHINGTON—When it comes to Fannie Mae and Freddie Mac, the maverick chair of the Federal Deposit Insurance Corp. believes the Obama administration must either fish or cut bait.

The list of states seeking to halt foreclosures is growing longer. On Oct. 6, Ohio attorney general Richard Cordray announced a civil lawsuit challenging foreclosures in which legal documents were apparently executed by so-called robo-signers.

The Federal Housing Finance Agency has hired a private law firm as it continues to review subpoenaed loan documents from banks and Wall Street firms that sold Fannie Mae and Freddie Mac private-label MBS.

In drafting risk retention rules, federal regulators should consider the impact capital and accounting requirements will have on issuers of private-label MBS, according to a new report from the Federal Reserve Board.

The Cook County's Sheriff's office — the second largest sheriff's department in the U.S. — said it will not carry out any foreclosure evictions filed by Bank of America, J.P. Morgan Chase, and GMAC/Ally Financial, until these servicers can "provide complete assurance that the foreclosure was done properly and legally."

Among more immediate implications of widely publicized foreclosure procedure concerns for some existing residential mortgage-backed securities at press time last week was the indemnity question, although there are several other developments to monitor.

The Department of Housing and Urban Development started a review of several FHA mortgage servicers during the summer, discovering what it calls "significant differences" in the way they handle defaulted borrowers in the loss mitigation process.

Rep. Maxine Waters (D-Calif.) announced plans for a hearing on the foreclosure paperwork debacle that has raised questions about the legality of thousands of foreclosures nationwide.

The Federal Reserve Board's new rule on appraisal independence does not prohibit the selection of appraisers by mortgage brokers or loan officers.

WASHINGTON—Congress passed another extension on the $729,750 maximum GSE loan limit cap before leaving town for the November elections. The bill also extends the current maximum loan limit for the Home Equity Conversion Mortgage Program.The timely approval is a relief for lenders who were concerned about possible disruptions in the mortgage market, particularly the “conventional jumbo market.”