Compliance

Regulators’ efforts to strengthen the oversight of the shadow U.S. banking system, which plays an important role in mortgage-backed securities financing, appear to be paying off.

Two recent and largely unrelated developments have renewed attention to two recurring post-downturn themes that persist even though the bubble’s bursting is receding further into the rear-view mirror, namely: The potential for heightened buyback sensitivities and for covered bonds to make more inroads domestically.

The nation’s megabanks are continuing to sit on their nonperforming residential loans, although some are currently out in the market with mid-sized packages.

The working group investigates potential false or misleading statements, deception or other type of misconduct when mortgage-backed securities are created and sold.

The Federal Reserve Board this week released the last details of how two mortgage servicers—Citigroup Inc. and HSBC Finance Corp.—plan to fix problems in their home loan servicing and foreclosure processes.

The Supreme Court late this week ruled that federal regulators cannot use RESPA as a price-setting statute to deter lenders and other settlement service providers from charging excessive fees or even “unearned” or bogus fees for which no service is provided.

Fannie Mae hopes to banish banks from any involvement in the purchase of force-placed insurance under a plan to lower the cost of the product.

With more effective outreach to municipalities and better internal processes, servicers can minimize their risks of code violations and stiff penalties, and build stronger relationships with code enforcement departments to protect the condition and value of properties in their portfolios.

The Senate late this week passed a 60-day extension of the flood insurance program, preventing a shutdown of coverage by the beginning of June.

As the Litigation Compliance Law Center explained during a May 10 webinar, it was offering to pay finders' fees to mortgage brokers for recruiting homeowners who themselves paid a $5,000 up-front "retainer" to affiliated attorneys.

The Consumer Financial Protection Bureau outlined procedures Thursday for notifying nonbanks that they may be subject to supervision if they pose a risk to consumers.

Up to 90% of the borrowers underwater are current and continue to pay their mortgage on time.

New regulations have, and are expected to continue to impact the commercial real estate mortgage servicing industry, while process redesign and technology implementations are helping organizations improve efficiency, expand offerings and in many cases, retain staff.

WarehouseOne of Trenton, N.J., which has been in business since 1998, is demanding that a troubled lender with a similar-sounding name stop using that name.

Recently announced prepayments pending on certain Freddie Mac securities stem from what the lender involved said is a resolved technical error that caused a buyback of $330 million in mostly current loans.

WASHINGTON–The heads of the U.S. government’s two financial-market watchdogs did not learn of trades that led to sharp losses at JPMorgan Chase until they heard media reports about it, the agency chiefs told Congress on Tuesday.

The Financial Industry Regulatory Authority on Tuesday fined Citigroup Global Markets Inc. $3.5 million in a settlement related to charges of nonconforming residential mortgage-backed securities violations that Citi neither admitted to nor denied.

A federal judge this week dismissed portions of the Securities and Exchange Commission's case against two former executives of IndyMac Bank, the now-defunct alt-A giant that was initially started by Countrywide Financial Corp.

The Federal Deposit Insurance Corp. has sued Bank of America, Citigroup, JPMorgan Chase and other banks for a cumulative $92 million in damages on mortgage-backed securities, alleging that shoddy appraisals and other underwriting defects tainted their sale.

Bank servicers are doing what they can to avoid depressing home prices, by focusing on reducing foreclosures rather than flooding the market with their backlog of properties.