Compliance & Regulation

Tavant and Wolters Kluwer Financial Services said they are working together to make the compliance documentation process for mortgage lenders easier, faster and more accurate while giving them multiple document delivery options. The two companies have integrated Wolters Kluwer Financial Services' Document Services Platform with Tavant's point-of-sale solution suite. The new integration will enable users to generate standard and customized compliance documents and disclosures through Wolters Kluwer Financial Services' Document Services Platform, and then electronically deliver them to borrowers for e-consent and signature. The platform also gives lenders the option of completely and securely outsourcing the printing and mailing of paper disclosures when needed or requested by the borrower through Wolters Kluwer Financial Services' SAS 70-certified mail fulfillment center.

The Mortgage Bankers Association has named Catherine Cruz Wojtasik associate vice president of legislative affairs. Among other duties, Ms. Wojtasik will focus her efforts on commercial mortgage issues as they affect MBA's members. She joins the trade group from Popular, Inc. where she served as vice president and director of government affairs. She will report to Francis Creighton, MBA's vice president and chief lobbyist.

Freddie Mac purchased or guaranteed $27.2 billion of mortgages in September, a slight gain from the multi-year low of $25.8 billion established the month before. The GSE was placed in a conservatorship on September 7. Its regulator, the Federal Housing Finance Agency, has directed the secondary market giant to increase purchases of its own mortgage-backed securities. However, Freddie reported that its holdings of its own MBS declined by $22.6 billion to $375 billion in September. Its investment portfolio declined by $24 billion to $738.9 billion. Freddie issued $22 billion in guaranteed MBS in September, nearly matching its issuance in the previous month. The mortgage company has added a new data table ("Other Investments") to its monthly summary report. The September issue shows that Freddie purchased $10.4 billion of private-label "non-mortgage" asset backed securities.

The Federal Deposit Insurance Corp. is in the process of mailing 15,000 loan modification proposals to mortgage customers of IndyMac Bank of California. The effort is part of the agency's pilot program to help 40,000 mortgagors who are delinquent on their IndyMac home loans. FDIC chairman Sheila Bair testified before a Senate Committee yesterday that, "Specifically, the government could establish standards for loan modifications and provide guarantees for loans meeting those standards." FDIC has been operating IndyMac as a conservatorship since taking control of the thrift in July. It is in the process of taking bids on the lender/servicer. (For full details see the Monday edition of National Mortgage News.)

GSE regulator James Lockhart is not impressed with Fannie Mae and Freddie Mac's loss mitigation efforts -- but he anticipates that will change now that both are in conservatorships under his watchful eye. "Now that they are in conservatorship, their activities will increase significantly," the Federal Housing Finance Agency director told the Senate Banking Committee. An FHFA report shows the loan modifications by the government sponsored enterprises dropped by 20% from the first quarter to the second quarter while foreclosures rose 20%. In the second quarter, the GSEs modified 4,126 loans a month, compared to 5,204 loans a month during the first quarter. On average, the two completed 12,729 foreclosures a month during the second quarter, up from 10,511 a month during the first quarter.

If there was one point that a state legislator and an industry representative agreed on during a panel on state and federal regulation at the Mortgage Bankers Association, it was that any legislative solutions being crafted have to avoid unintended consequences. California State Sen. Michael Machado said there is a need to update statutes but the effort need not to be so capricious it would hurt the marketplace. Being able to meet the desires of those who live in their districts and take actions that do not exacerbate the problem is a balancing act, he said. Jack Konyk, senior vice president at National City Corp., said, "Everybody is trying to find a fair solution to a complex problem." The problem is finding out what exactly constitutes a fair approach. He then gave the example of an iceberg where it is easy to see and react to the 5% above the water, but it takes patience and perseverance to see the 95% below the water. It is easy, Mr. Konyk said, to call for a moratorium on foreclosures. But it is a difficult task for loan servicers, who are still responsible for advancing principal and interest payments to the investor whether they are made or not.

The Department of Housing and Urban Development will issue a final rule by year-end revising the Real Estate Settlement Procedures Act, HUD secretary Steve Preston told attendees at the Mortgage Bankers Association's annual convention in San Francisco. Bankers and lenders, who have long opposed the rule, will have a year to implement it, he said. "With so many families in trouble with their mortgages because in many cases they didn't understand, our goal is to make sure it never happens again," he said. On RESPA reform, he said the "unnecessary complexity" of mortgages had contributed to the housing crisis. "We must make mortgages more understandable and the process more transparent," he said. HUD has proposed a four-page form that would require mortgage lenders and brokers to provide an estimate of closing costs, interest rates, monthly mortgage payments as well as settlement services, prepayment penalties and balloon payments.

Metavante Corp. now offers support for new FHA compliance regulations enabling lenders to take advantage of this significant business opportunity. According to the Federal Housing Administration (FHA), twice as many people with subprime loans are refinancing into government-insured FHA mortgage loans and these types of loans are also ideal for first time homebuyers and those who may have less than perfect credit. Metavante's LOS supports the FHA Loan Transmittal, the Maximum Mortgage Worksheet for 203k and 203k Streamline loans and the Mortgage Credit Analysis Worksheets (MCAW-PUR for purchases and MCAW-W/S for refinances). Metavante's LOS also supports key components of the FHA Modernization Act of the Housing and Economic Recovery Act of 2008 (HERA), as well as the minimum cash investment requirement and maximum combined loan-to-value changes.

Federal Housing Commissioner Brian Montgomery urged lenders Monday to take part in the Hope for Homeowners program but acknowledged some problems. "Explaining this to consumers, trying to explain the shared equity and appreciation, and training your staff is difficult," Mr. Montgomery told lenders at the Mortgage Bankers Association's annual convention in San Francisco. So far 100 lenders have signed up for the program and the Federal Housing Administration is fielding roughly 1,000 calls a day from interested borrowers, he said. "Please look into using this new product," he said. "The demand is not going to go away any time soon."

Clayton Holdings, which is cooperating with an investigation into mortgage underwriting fraud on Wall Street, named Paul T. Bossidy its new chief executive officer on Tuesday. A spokeswoman said he replaces Frank Fillips who retired from the Connecticut-based Clayton this summer. Mr. Bossidy, 48, has worked for various divisions of General Electric, including GE Vendor Financial Services. Clayton is owned by Greenfield Partners, a hedge fund. Earlier this year New York attorney general Andrew Cuomo granted Clayton immunity from prosecution in exchange for providing information on the due diligence work it conducted for Wall Street firms that securitized subprime mortgages over the past five years. One key issue AG Cuomo is looking at is underwriting "exceptions" granted by projects managers working for Clayton on Wall Street accounts. Over the past three years subprime firms funded $1.7 trillion in A- to D and other non-conforming loan types -- much of it securitized through Wall Street firms such as Bear Stearns, Credit Suisse, Deutsche Bank, Lehman Brothers, and Merrill Lynch.