Consumer Financial Services Law Blog
Dykema Gossett PLLC
Dykema Gossett PLLC

Consumer Financial Services Law Blog

Consumer Financial Services Law Blog

News and analysis regarding Consumer Financial Services litigation and regulation, and activities of the Consumer Financial Protection Bureau

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Showing 10 posts in Federal Housing Administration.

FHA Issues New Methodology for Lenders to Report Single-Family FHA Loan Defects

On June 18, 2015, the Federal Housing Administration (FHA) posted the methodology (Single Family Loan Quality Assessment Methodology or “Defect Taxonomy”) it intends to use to categorize loan defects found in single-family FHA endorsed loans. The Defect Taxonomy will inform when a lender must indemnify the FHA. “The framework, part of the ‘Blueprint for Access,’ centers on three core concepts: identifying a defect, capturing the sources and causes of a defect and assessing the severity of a defect.” Press Release, FHA Proposes Clearer Rules For Lenders With Updated Defect Taxonomy, (June 18, 2015).  Read More ›

Quicken Aims to Take Control of DOJ Lawsuit with Stay or Transfer to Detroit

The ongoing saga between Detroit-based mortgage lender Quicken Loans, Inc. (“Quicken”) and the U.S. Department of Justice (“DOJ”) continues, as on April 29, 2015, Quicken filed a motion to stay or transfer the DOJ’s pending lawsuit in the U.S. District Court for the District of Columbia. The motion alleges that the DOJ’s complaint filed on April 23, 2015, is duplicative of the lawsuit filed by Quicken on April 17, 2015, in the U.S. District Court for the Eastern District of Michigan, and that the DOJ is attempting to engage in forum shopping. On May 4, 2015, the D.C. Circuit filed an order to show cause for the DOJ to explain why the suit should not be stayed or transferred to the Eastern District of Michigan on or before May 14, 2015.   Read More ›

HUD’S Distressed Asset Sale Program May Force a Delay in Foreclosures

On April 24, 2015, the U.S. Department of Housing and Urban Development (“HUD”) announced changes it intends to make to its Distressed Asset Sale Program (known as DASP) which will affect mortgage servicers who purchase nonperforming home mortgage loans.  Read More ›

President Announces Reduction in FHA Mortgage Insurance Premiums

In an effort to encourage first-time homebuyers, President Obama announced on January 7th that the Federal Housing Administration will reduce annual mortgage insurance premiums by 0.5% from 1.35% to 0.85%.  Under the announced plan, FHA will retain underwriting standards that were put in place following the economic downturn.  The White House estimates that this reduction means new home buyers would pay $900 less a year than they would without a change in the premiums.  Additionally, current homeowners who refinance into an FHA mortgage would also benefit from the change.

HUD Exceeded its Authority By Creating a Disparate Impact Rule for Homeowners Insurance

The U.S. District Court for the District of Columbia ruled this month that the Department of Housing and Urban Development (HUD) exceeded its authority under the Administrative Procedure Act by creating a disparate impact rule beyond the scope of the language in the Fair Housing Act (FHA). The case, American Insurance Association v. HUD, Case No. 13- cv-966, U.S. District Court, District of Columbia, addresses a HUD-created rule that prevented the pricing of homeowners insurance that has a disparate impact on minorities. Although the FHA bars disparate treatment and intentional discrimination toward minorities in housing practices, the FHA does not address disparate impact. In the housing context, the doctrine of disparate impact holds that practices in housing may be considered discriminatory and unlawful if they have a disproportionate adverse impact on individuals of a protected trait. Read More ›

FHA Expands Use of Electronic Signatures

Last week, the Federal Housing Administration (FHA) issued Mortgagee Letter 2014-03, which announced that FHA would begin accepting electronic signatures for FHA Single Family Title I and II Mortgages and Home Equity Conversion Mortgages.  Prior to the issuance of the letter, FHA allowed electronic signatures only in the case of third party documents (see FHA Mortgagee Letter 2010-14).  Now, electronic signatures will also be accepted on the “Authorized Documents” outlined below.  The mortgagee will be required to comply with all requirements of the federal ESIGN Act as well as additional requirements outlined below. Read More ›

FHA Establishes Lender Self-Reporting Requirements

In June 2013, the Consumer Financial Protection Bureau (CFPB) issued Bulletin 2013-06 to encourage lenders to self-report serious violations in order to advance the CFPB’s enforcement mission.  To complement the CFPB’s bulletin, the Federal Housing Administration (FHA) issued Mortgagee Letter 2013-41 on November 13, 2013 to establish mandatory self-reporting requirements for all single family FHA approved lenders.  Mortgagee Letter 2013-41 specifies what lenders must report, deadlines for when lenders must report findings internally to senior management and externally to FHA, and how those finding must be reported to FHA.  The letter also identifies FHA’s review process and repercussions of failing to report.    Read More ›

FHFA Limits Fannie and Freddie to “Qualified Loans”: Another Strike Against Non-Qualified Loans and the Consumers Who Rely on Them

In January, the CFPB issued its final Qualified Mortgage Rule (QMR) creating a safe harbor for lenders from liability for loans that meet its criteria for a “qualified mortgage.” The Federal Housing Finance Authority (FHFA) has endorsed this Rule by barring Fannie Mae and Freddie Mac from purchasing non-qualified mortgages. This means that, beginning in January 2014 when the QRM takes effect, Fannie and Freddie will no longer be permitted to purchase: (i) loans with terms over 30 years, (ii) interest-only loans; (iii) negative amortization or ballooning principal loans; or (iv) loans with points and fees exceeding the thresholds set by the CFPB. The one exception the FHFA made is for loans that meet Fannie’s and Freddie’s underwriting and delivery standards. According to the FHFA, the “[a]doption of these new limitations by Fannie Mae and Freddie Mac is in keeping with FHFA’s goal of gradually contracting their market footprint and protecting borrowers and taxpayers.” These limitations also add to the growing number of disincentives for lenders to offer non-qualifying loans, which could constrict access to credit for those who may need it the most.  Read More ›

Obama Nominates Rep. Watt to Head FHFA--An Exercise in Futility or a Smart Political Move?

President Obama has nominated North Carolina Rep. James Watt to head the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac. Few question Rep. Watt’s qualifications. Watt, a Yale-educated lawyer, was elected to the U.S. House of Representatives in 1992 and during his tenure he has held key positions on the House Financial Services and House Judiciary committees. Watt also played an instrumental role in the passage of the Dodd-Frank Act. In addition, Watt has co-sponsored various versions of the Mortgage Reform and Anti-Predatory Lending Act and championed access to mortgage loans for minority and low-income consumers. President Obama explained his choice by saying  “Mel understands as well as anybody what caused the housing crisis. He knows what it's going to take to help responsible homeowners fully recover.” Read More ›

U.S. Sues Wells Fargo Under False Claims Act

Yesterday (10/9/12), the federal government continued its aggressive assault on financial institutions by filing suit against Wells Fargo, seeking multiple hundreds of millions of dollars in damages and civil penalties under the False Claims Act (FCA) and the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA). The suit, filed in U.S. District Court for the Southern District of New York, claims that for the past 10 years Wells Fargo falsely certified over 6,500 loans to meet the eligibility standards for government insurance. In a press release, U.S. Attorney Preet Bharara claims that his Civil Fraud Unit found, “yet another major bank has engaged in a longstanding and reckless trifecta of deficient training, deficient underwriting and deficient disclosure, all while relying on the convenient backstop of government insurance.” So much for the concept of being innocent before proven guilty. Wells Fargo has denied these allegations and has promised to “vigorously defend itself against this action.” Read More ›