Tag Archives: Federal Reserve

More legal woes have developed for Bank of America, as some of its mortgage investors brought a lawsuit against the lender in an attempt to force the bank to buy back bad loans. The original balance of securitized loans involved in the case was $2.8 billion, and the plaintiffs claim their trustee ""unreasonably failed"" to sue BofA. Another group of investors, which is engaged in talks with the bank in hopes of avoiding a legal battle in court, has nearly doubled the amount of allegedly faulty loans it wants Bank of America to repurchase.

Research released this week by the senior research economist at the Federal Reserve Bank of Cleveland reveals homeownership is more sustainable for people who come to the table with down payments. The study examines the types of homeowner assistance that the government uses to promote homeownership -- generally down payment subsidies or interest rate subsidies -- and finds down payment subsidies are more helpful and less expensive.

The Federal Reserve Board on Wednesday issued a final rule and proposed a second rule to revise the escrow account requirements under Regulation Z, and requested public comment on the second rule. The revisions would revise escrow account requirements for certain home mortgage loans.Under the final rule issued Wednesday, the escrow account for first-lien loans would only be required if the loan's annual percentage rate is 2.5 percentage points or more above the average prime offer rate.

When evidence surfaced last fall of flawed foreclosure documentation and robo-signers within some of the nation's largest servicing shops, federal regulators launched an investigation into the foreclosure and servicing practices of 14 companies. Officials say they've uncovered ""critical deficiencies and shortcomings"" and will be enforcing sanctions and penalties against servicers and developing a set of national mortgage servicing standards for the industry.

Veros, a provider of collateral valuation technology, enterprise risk management, and predictive analytics, recently released a white paper titled ""Interagency Appraisal & Evaluation Guidelines: Insights into Understanding and Integrating the New Guidance."" The white paper seeks to clarify the expanded language in the guidelines issued by federal regulators last December.

Federal Reserve Governor Sarah Bloom Raskin says the biggest drag on the nation's economy is the absence of any substantial recovery in the housing sector. She has challenged mortgage servicers to step up to the plate and make home retention their top priority. Raskin says too many servicing practices have been developed and defended solely on the basis of ""standard industry practice"" but according to her, many practices are not only standard but ""shoddy.""

In the House Financial Services Committee's oversight plan released this week, the committee said it will examine the implementation of new rules issued by the Federal Reserve governing mortgage originator compensation, which are scheduled to become effective April 1, 2011. The committee says it is concerned that the rules may have an adverse impact on the ability of small businesses that originate mortgages.

In the face of new loan officer compensation rules to take effect on April 1, one trade group is fighting back with threats of legal action against the Federal Reserve Board. The National Association of Independent Housing Professionals (NAIHP) said on its Web site that it has also held several high level meetings with various agencies like the Consumer Financial Protection Bureau and the Financial Crisis Inquiry Commission, and with high powered administrators like Elizabeth Warren.

The latest loan officer survey from the Federal Reserve shows a more positive outlook for certain sectors of the lending industry, but says little improvement is expected in residential real estate this year. Although, about 45 percent of banks responded that they experienced recent growth in their residential mortgage portfolios, despite weakened demand. Around one-third reported having originated a large amount of loans that are not eligible for guarantee by the Federal Housing Administration and cannot be sold to Fannie Mae and Freddie Mac.

The Federal Reserve said this week that it ""does not expect"" to finalize three pending rule changes under TILA that would have mandated new consumer disclosure requirements for mortgage loans. The Fed began crafting the new regulations more than a year ago in response to claims that borrowers did not understand the terms of the loans they were signing. However, rulemaking authority for TILA and jurisdiction over consumer disclosures is scheduled to transfer to the new Consumer Financial Protection Bureau within a few months.