Law and regulation

Also, loan officer compensation trial victory for Prospect Mortgage and employment contract news.

Freddie Mac will return $10.4 billion in profits to the Treasury Department next month, bringing total payments to about $10 billion above what it got in aid under conservatorship.

Due to the roll-out of new regulations and recent supervision reports, servicers are facing more regulatory challenges than at any time in recent memory.

A "tangled web of conflicts could create incentives that harm borrowers and push homeowners unduly into foreclosure," Benjamin Lawsky warns.

The new rules are causing originator sales paralysis because of their complexity.

The Securities and Exchange Commission wants public input on the idea of requiring loan-level data disclosure to be made through an investor website rather than on the public EDGAR system.

Private issuers need certainty to create a new secondary mortgage market, MBA and SIFMA officials say.

The Consumer Financial Protection Bureau levied a $83,000 civil money penalty on Monday against Connecticut-based First Alliance Lending, a specialty firm that focuses on providing loss-mitigation financing to distressed borrowers.

By now, every servicer appreciates the Consumer Financial Protection Bureau's single-point-of-contact expectations and the importance of using this staffing model to manage distressed borrowers. However, in order to outperform, servicers must go beyond SPOC and develop a “case ownership” perspective that more closely links all the people involved in servicing a borrower’s loan.

Prospect Mortgage did everything right to defend itself against overtime and minimum wage claims from salespeople, though some industry attorneys caution the rulings in its favor may have limited applicability.

Lenders should be aware auditors are focusing on 1099 payments due to the concern that the payments could be a vehicle for compensation no longer permissible under the Dodd-Frank Act.

The ability to repay rule states that a lender "shall not make a mortgage loan unless the creditor makes a reasonable and good faith determination at or before consummation that the consumer will have a reasonable ability to repay the loan according to its terms."

Mortgage servicing has long been a scale business, but rising compliance costs are now threatening the survival of smaller operations that lack efficient systems or staff expertise, industry experts say.

One of the first court decisions related to new Dodd-Frank servicing regulations finds allegedly unfair loss mitigation and dual track foreclosure proceedings can be privately enforced, but to a limited extent.

Two Florida men have been sentenced to serve seven years in federal prison for swindling more than $4 million from borrowers who were behind on their mortgages.

The Consumer Financial Protection Bureau's crackdown on mortgage servicers' operations will increase the pressure on lenders to improve their processes, paperwork and communications with borrowers. National Mortgage News journalists discuss how both banks and nonbank servicers can get ahead of the new regulatory scrutiny.

Lenders must give these to consumers who apply for home equity lines of credit and adjustable rate mortgages.

After eight straight profitable quarters and record annual income, Fannie Mae's dividend payments to the U.S. Treasury now exceed the bailout funds it's received since 2008.

Having all the information about a borrower’s loan status readily available and being able to prove a servicer made an effort to reach out to a distressed homeowner are critical.

The answer will depend on how Washington politics play out, how much balance sheet relief private securitization really provides to sellers, and how much borrowers and investors ultimately demand it.