Mortgage Loan Compliance | Debt Settlement Fees

Since the start of the recession, the Better Business Bureau says it received more than 3,500 complaints about debt settlement companies. The Federal Trade Commission’s new financial regulations are trying to change that.

Companies that promise to reduce or eliminate credit card balances and other debt for customers will no longer be allowed to charge an upfront fee.

The Federal Trade Commission said Thursday the new rule is intended to crack down on the debt settlement industry, which has flourished in the downturn as borrowers struggle to pay their bills. The rule goes into effect October 27th, 2010.
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Mortgage Loan Compliance | Oregon vs. Countrywide Financial Corp.

Countrywide Financial Corp. of Delaware and its underwriters are being sued by the State of Oregon for misleading investors into buying risky mortgage-backed securities. That alleged deceit ultimately cost Oregon: The Oregon Public Employee Retirement Fund was allegedly induced to invest $200 million into home loans originated by Countrywide, and lost $29 million as a result of misrepresentations by Countrywide and its financial underwriters, the lawsuit says.

"Oregon is taking a stand against predatory lenders and the financial wreckage they caused for families and for investors including Oregonians," said Oregon Treasurer Ted Wheeler. "With this lawsuit, we are attempting to recover losses from lenders that took advantage of innocent families, whose only fault was wanting to participate in the American dream and own a home."

The lawsuit, filed in federal court in California, accuses Countrywide of violating securities law by making statements to investors that were materially false and misleading because they misrepresented and/or failed to disclose information crucial to investors' ability to accurately assess the risks of their investments.

According to the lawsuit, Countrywide’s ability to originate residential mortgages on such a massive scale was facilitated, in large part, by its ability to rapidly package -- or "securitize" -- those loans and then, through the activities of the underwriter defendants, sell them to investors as purportedly investment grade mortgage-backed securities.

"Oregon is currently No. 3 nationwide in foreclosures," said Oregon Attorney General John Kroger. "This lawsuit will hold the responsible companies accountable"

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Mortgage Loan Compliance | FDIC Sues Former IndyMac Executives

During the Savings and Loans Bank crisis of 1980’s and 1990’s the Federal Deposit Insurance Corp। filed dozens of civil complaints against officers and directors of failed institutions, including one against then Vice President Bush's son, Neil Bush.

This month the FDIC has filed a $300-million negligence lawsuit against four former executives at IndyMac Bank FSB, accusing them of granting loans to homebuilders who were unlikely to repay the loans। This is the first professional liability suit the FDIC has brought in connection with the more than 200 bank failures that began in 2008.

The four men accused operated the Homebuilder Division at IndyMac and according to court filings they approved 64 loans described in the 309-page lawsuit। A FDIC spokesman noted that the agency has three years from the date of the failure to file civil cases.

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Mortgage Loan Compliance | FDIC’s Unlimited Authority

The Federal Deposit Insurance Corp.'s board has approved an agreement between the insurance agency and regulators at the Federal Reserve and the Treasury Department. It clearly spells out the FDIC's authority to make special examinations of banks. It was approved 5-0.

Federal bank regulators have agreed to give the FDIC unlimited authority to investigate banks, clarifying the agency's power that was in question during the financial crisis. Federal bank regulators were widely criticized during the financial crisis for failing to signal high-risk practices before the institutions failed.

The FDIC, which takes over failed banks, has said it lacked access to needed information to evaluate banks' risk.

"The past financial crisis provided us with a strong and sober reminder that the activities of large banks are often very complex and opaque," FDIC Chairman Sheila Bair said before the vote by the agency board at a public meeting. "The FDIC needs to have a more active on-site presence and greater direct access to information and bank personnel in order to fully evaluate the risks to the deposit insurance fund on an ongoing basis and to be prepared for all contingencies."

The FDIC is the "backup" regulator for banks, empowered to examine banks' condition and operations. That is in addition to the authority held by their primary federal regulators: the Fed and two Treasury Department agencies, the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

The agreement, a so-called memorandum of understanding, was signed by the FDIC, the Fed and the two Treasury Department agencies. It updates a similar accord that took effect in 2002.

The FDIC has said that during the financial crisis, the 2002 agreement limited its ability to effectively assess risk at weakening banks and to put together strategies for resolving them after they failed. Among other things, the 2002 agreement required the FDIC to conduct its special exams of banks at the same time as the periodic reviews by their primary regulator. The FDIC was blocked from examining banks that were deemed financially healthy by their primary regulators.
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Mortgage Loan Compliance | Tighter Multifamily Underwriting Standards

The Federal Housing Administration tightened guidelines for multifamily mortgages for the first time in the 40 years it has insured such loans and just months after raising standards for single-family lenders.

Among the new requirements, the FHA is raising debt service coverage ratios and lowering loan-to-value and loan-to-cost ratios. The maximum loan to value on "affordable" rental properties, for example, is being cut to 87% from 90%. The agency is also requiring additional verification of a property's financial performance, an expanded review of the borrower's credit and the prescreening of certain applications to weed out loans that might not make it to closing.

The measures, announced Wednesday, did not surprise some apartment lenders, but they nonetheless did not welcome the news. "We're not surprised by anything nowadays," said Menzo Case, the president and chief executive of Seneca Falls Savings Bank in upstate New York. "It's just another nail in the coffin."

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Mortgage Loan Compliance | FHA Monitoring Excessive Fees

A conference call was hosted by the FHA to summarize new regulatory changes regarding loan correspondents and net worth requirements that took effect in May. Although the agency has been "very responsive" to questions about the new regulations, including the issuance of two separate mortgage letters offering guidance about how to comply with the changes lenders and brokers are still flooding the government with questions.

The Federal Housing Administration is closely monitoring all fees charged by mortgage brokers and other third-party originators who are sponsored by FHA-approved lenders, agency officials said during an unusual industry conference call last week.

The officials said they will examine closely fees charged by all FHA-approved lenders and TPOs, and will question lenders about those which do not appear to be reasonable and customary for that particular geographic area. They also said lenders will be held accountable for any fees found to be either bogus or excessive.

FHA officials on the call said they plan to issue a third mortgagee letter, hopefully by mid-August and with a mid-September effective date, to address industry concerns. Among other things, that letter is expected to cover entering TPO information into the FHA Connection system. Meanwhile, participants were told during the discussion that TPO employees could be paid either on a W-2 or 1099 basis under the new rules, and that TPOs could even have dual employment status, acting as both a real estate agent and a loan broker. But as it did in a previous mortgagee letter, the government warned lenders to be certain their TPOs comply with state laws.

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Mortgage Loan Compliance® The Forensic Loan Audit Company

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Mortgage Loan Compliance | M&I Bank Foreclosure Moratorium Extended

Marshall & Ilsley Bank tried its first moratorium in December 2008. The bank's homeowner assistance program offered refinancing with reduced rates and term extensions.

Now moratoriums are once again the foreclosure prevention tool of choice for M&I Bank, which has given an additional three-month breathing space to distressed borrowers.

The Milwaukee bank said it has extended foreclosure moratoriums through September 30, 2010. The moratorium applies to all owner-occupied residential loans "for customers who agree to work in good faith to reach a successful repayment agreement."

The move reflects proposed Fannie Mae policy changes that encourage borrowers to work with lenders and servicers.

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Mortgage Loan Compliance® The Forensic Loan Audit Company

Order Your $59 Rapid Report Forensic Audits Or A $295 Certified Forensic Compliance Audits. Get The Facts, Audit Your Loan, and Protect Your Rights!

Call Today 1-866-966-6615 or Visit http://www.ml-compliance.com/