Just like everything fraud involving the Banks, Fannie and Freddie…wait until they get their hands on the rentals!

WSJ-

New York’s top financial regulator is expanding an investigation of insurers that force homeowners policies on borrowers after turning up evidence that consumers were charged too much, according to people familiar with the situation.

Benjamin M. Lawsky, superintendent of the New York Department of Financial Services, is issuing new subpoenas and formal document requests to several insurers, demanding justification for how their rates and loss ratios were calculated, these people said.

The loss ratio is the percentage of premiums collected by an insurer that is paid out to policyholders. Based on information gathered in initial inquiries since the probe was launched in October, Mr. Lawsky…

[WALL STREET JOURNAL]

WSJ-

Home buyers take out homeowners’ insurance policies to protect the value of their home and personal property in the event of a burglary or a natural disaster. The insurance is typically required to get a home loan, and if borrowers fall into default, banks have the right to make sure the property still has such coverage.

However, officials at the state and federal level have been concerned that insurers have been charging too much for something known as “force-placed insurance,” which takes the place of a lapsed policy.

This week, a new U.S. consumer watchdog and mortgage giant Fannie Mae have been promising a crackdown on those homeowners insurance policies.

In a speech Tuesday, the director of the new federal Consumer Financial Protection Bureau, Richard Cordray, said his agency will issue rules “to prevent (mortgage) servicers from charging for this product unless there is a reasonable basis to believe that borrowers have failed to maintain their own insurance.”

[WALL STREET JOURNAL]

THE WHITE HOUSE

Office of the Press Secretary

FACT SHEET: President Obama’s Plan to Help Responsible Homeowners and Heal the Housing Market

In his State of the Union address, President Obama laid out a Blueprint for an America Built to Last, calling for action to help responsible borrowers and support a housing market recovery. While the government cannot fix the housing market on its own, the President believes that responsible homeowners should not have to sit and wait for the market to hit bottom to get relief when there are measures at hand that can make a meaningful difference, including allowing these homeowners to save thousands of dollars by refinancing at today’s low interest rates. That’s why the President is putting forward a plan that uses the broad range of tools to help homeowners, supporting middle-class families and the economy.

Key Aspects of the President’s Plan

• Broad Based Refinancing to Help Responsible Borrowers Save an Average of $3,000 per Year: The President’s plan will provide borrowers who are current on their payments with an opportunity to refinance and take advantage of historically low interest rates, cutting through the red tape that prevents these borrowers from saving hundreds of dollars a month and thousands of dollars a year. This plan, which is paid for by a financial fee so that it does not add a dime to the deficit, will: 

•  Provide access to refinancing for all non-GSE borrowers who are current on their payments and meet a set of simple criteria.
• Streamline the refinancing process for all GSE borrowers who are current on their loans.
• Give borrowers the chance to rebuild equity through refinancing.

Homeowner Bill of Rights: The President is putting forward a single set of standards to make sure borrowers and lenders play by the same rules, including:

• Access to a simple mortgage disclosure form, so borrowers understand the loans they are taking out.
• Full disclosure of fees and penalties.
• Guidelines to prevent conflicts of interest that end up hurting homeowners.
• Support to keep responsible families in their homes and out of foreclosure.
• Protection for families against inappropriate foreclosure, including right of appeal.

First Pilot Sale to Transition Foreclosed Property into Rental Housing to Help Stabilize Neighborhoods and Improve Home Prices: The FHFA, in conjunction with Treasury and HUD, is announcing a pilot sale of foreclosed properties to be transitioned into rental housing.

Moving the Market to Provide a Full Year of Forbearance for Borrowers Looking for Work: Following the Administration’s lead, major banks and the GSEs are now providing up to 12 months of forbearance to unemployed borrowers.

• Pursuing a Joint Investigation into Mortgage Origination and Servicing Abuses: This effort marshals new resources to investigate misconduct that contributed to the financial crisis under the leadership of federal and state co-chairs.

Rehabilitating Neighborhoods and Reducing Foreclosures: In addition to the steps outlined above, the Administration is expanding eligibility for HAMP to reduce additional foreclosures, increasing incentives for modifications that help borrowers rebuild equity, and is proposing to put people back to work rehabilitating neighborhoods through Project Rebuild.

1.      Broad Based Refinancing Plan

Millions of homeowners who are current on their mortgages and could benefit from today’s low interest rates face substantial barriers to refinancing through no fault of their own. Sometimes homeowners with good credit and clean payment histories are rejected because their mortgages are underwater. In other cases, they are rejected because the banks are worried that they will be left taking losses, even where Fannie Mae or Freddie Mac insure these new mortgages.  In the end, these responsible homeowners are stuck paying higher interest rates, costing them thousands of dollars a year.

To address this challenge, the President worked with housing regulators this fall to take action without Congress to make millions of Americans eligible for lower interest rates. However, there are still millions of responsible Americans who continue to face steep barriers to low-cost, streamlined refinancing. So the President is now calling on Congress to open up opportunities to refinancing for responsible borrowers who are current on their payments.

Under the proposal, borrowers with loans insured by Fannie Mae or Freddie Mac (i.e. GSE-insured loans) will have access to streamlined refinancing through the GSEs. Borrowers with standard non-GSE loans will have access to refinancing through a new program run through the FHA. For responsible borrowers, there will be no more barriers and no more excuses.

Key components of the President’s plan include:

• Providing Non-GSE Borrowers Access to Simple, Low-Cost Refinancing: President Obama is calling on Congress to pass legislation to establish a streamlined refinancing program. The refinancing program will be open to all non-GSE borrowers with standard (non-jumbo) loans who have been keeping up with their mortgage payments. The program will be operated through the FHA.

Simple and straightforward eligibility criteria: Any borrower with a loan that is not currently guaranteed by the GSEs can qualify if they meet the following criteria:

• They are current on their mortgage: Borrowers will need to have been current on their loan for the past 6 months and have missed no more than one payment in the 6 months prior.
• They meet a minimum credit score. Borrowers must have a current FICO score of 580 to be eligible. Approximately 9 in 10 borrowers have a credit score adequate to meet that requirement. 
• They have a loan that is no larger than the current FHA conforming loan limits in their area: Currently, FHA limits vary geographically with the median area home price – set at $271,050 in lowest cost areas and as high as $729,750 in the highest cost areas
• The loan they are refinancing is for a single family, owner-occupied principal residence.  This will ensure that the program is focused on responsible homeowners trying to stay in their homes.

Streamlined application process: Borrowers will apply through a streamlined process designed to make it simpler and less expensive for borrowers and lenders to refinance. Borrowers will not be required to submit a new appraisal or tax return. To determine a borrower’s eligibility, a lender need only confirm that the borrower is employed. (Those who are not employed may still be eligible if they meet the other requirements and present limited credit risk. However, a lender will need to perform a full underwriting of these borrowers to determine whether they are a good fit for the program.)

Program parameters to reduce program cost: The President’s plan includes additional steps to reduce program costs, including:

• Establishing loan-to-value limits for these loans. The Administration will work with Congress to establish risk-mitigation measures which could include requiring lenders interested in refinancing deeply underwater loans (e.g. greater than 140 LTV) to write down the balance of these loans before they qualify. This would reduce the risk associated with the program and relieve the strain of negative equity on the borrower.
• Creating a separate fund for new streamlined refinancing program. This will help the FHA better track and manage the risk involved and ensure that it has no effect on the operation of the existing Mutual Mortgage Insurance (MMI) fund.

EXAMPLE: How Refinancing Can Benefit a Borrower With a Non-GSE Loan

•  A borrower has a non-GSE mortgage originated in 2005 with a 6 percent rate and an initial balance of $300,000 – resulting in monthly payments of about $1,800.

• The outstanding balance is now about $272,000 and the borrower’s home is now worth $225,000, leaving the borrower underwater (with a loan-to-value ratio of about 120%).

• Though the borrower has been paying his mortgage on time, he cannot refinance at today’s historically low rates.

• Under the President’s legislative plan, the borrower would be eligible to refinance into a 4.25% percent 30-year loan, which would reduce monthly payments by about $460 a month.

Refinancing Plan Will Be Fully Paid For By a Portion of Fee on Largest Financial Institutions: The Administration estimates the cost of its refinancing plan will be in the range of $5 to $10 billion, depending on exact parameters and take-up. This cost will be fully offset by using a portion of the President’s proposed Financial Crisis Responsibility Fee, which imposes a fee on the largest financial institutions based on their size and the riskiness of their activities – ensuring that the program does not add a dime to the deficit.

Fully Streamlining Refinancing for All GSE Borrowers: The Administration has worked with the FHFA to streamline the GSEs’ refinancing program for all responsible, current GSE borrowers. The FHFA has made important progress to-date, including eliminating the restriction on allowing deeply underwater borrowers to access refinancing, lowering fees associated with refinancing, and making it easier to access refinancing with lower closing costs.

To build on this progress, the Administration is calling on Congress to enact additional changes that will benefit homeowners and save taxpayers money by reducing the number of defaults on GSE loans. We believe these steps are within the existing authority of the FHFA. However, to date, the GSEs have not acted, so the Administration is calling on Congress to do what is in the taxpayer’s interest, by:

 a.     Eliminating appraisal costs for all borrowers: Borrowers who happen to live in communities without a significant number of recent home sales often have to get a manual appraisal to determine whether they are eligible for refinancing into a GSE guaranteed loan, even under the HARP program. Under the Administration’s proposal, the GSEs would be directed to use mark-to-market accounting or other alternatives to manual appraisals for any loans for which the loan-to-value cannot be determined with the GSE’s Automated Valuation Model. This will eliminate a significant barrier that will reduce cost and time for borrowers and lenders alike.

 b.     Increasing competition so borrowers get the best possible deal: Today, lenders looking to compete with the current servicer of a borrower’s loan for that borrower’s refinancing business continue to face barriers to participating in HARP. This lack of competition means higher prices and less favorable terms for the borrower. The President’s legislative plan would direct the GSEs to require the same streamlined underwriting for new servicers as they do for current servicers, leveling the playing field and unlocking competition between banks for borrowers’ business.

 c.      Extending streamlined refinancing for all GSE borrowers: The President’s plan would extend these steps to streamline refinancing for homeowners to all GSE borrowers. Those who have significant equity in their home – and thus present less credit risk – should benefit fully from all streamlining, including lower fees and fewer barriers. This will allow more borrowers to take advantage of a program that provides streamlined, low-cost access to today’s low interest rates – and make it easier and more automatic for servicers to market and promote this program for all GSE borrowers.

Giving Borrowers the Chance to Rebuild Equity in their Homes Through Refinancing: All underwater borrowers who decide to participate in either HARP or the refinancing program through the FHA outlined above will have a choice: they can take the benefit of the reduced interest rate in the form of lower monthly payments, or they can apply that savings to rebuilding equity in their homes. The latter course, when combined with a shorter loan term of 20 years, will give the majority of underwater borrowers the chance to get back above water within five years, or less.

To encourage borrowers to make the decision to rebuild equity in their homes, we are proposing that the legislation provide for the GSEs and FHA to cover the closing costs of borrowers who chose this option – a benefit averaging about $3,000 per homeowner. To be eligible, a participant in either program must agree to refinance into a loan with a no more than 20 year term with monthly payments roughly equal to those they make under their current loan. For those who agree to these terms, the lender will receive payment for all closing costs directly from the GSEs or the FHA, depending on the entity involved.  

EXAMPLE: How Rebuilding Equity Can Benefit a Borrower

• A borrower has a 6.5 percent $214,000 30-year mortgage originated in 2006. It now has an outstanding balance of $200,000, but the house is worth $160,000 (a loan-to-value ratio of 125). The monthly payment on this mortgage is $1,350.

• While this borrower is responsibly paying her monthly mortgage, she is locked out of refinancing.

• By refinancing into a 4.25 percent 30-year mortgage loan, this borrower will reduce her monthly payment by $370. However, after five years her mortgage balance will remain at $182,000.

• Under the rebuilding equity program, the borrower would refinance into a 20-year mortgage at 3.75 percent and commit her monthly savings to paying down principal. After five years, her mortgage balance would decline to $152,000, bringing the borrower above water.

• If the borrower took this option, the GSEs or FHA would also cover her closing costs – potentially saving her about $3,000.

Streamlined Refinancing for Rural America: The Agriculture Department, which supports mortgage financing for thousands of rural families a year, is taking steps to further streamline its USDA-to-USDA refinancing program. This program is designed to provide those who currently have loans insured by the Department of Agriculture with a low-cost, streamlined process for refinancing into today’s low rates. The Administration is announcing that the Agriculture Department will further streamline this program by eliminating the requirement for a new appraisal, a new credit report and other documentation normally required in a refinancing. To be eligible, a borrower need only demonstrate that he or she has been current on their loan.

Streamlined Refinancing for FHA Borrowers:  Like the Agriculture Department, the Federal Housing Authority is taking steps to make it easier for borrowers with loans insured by their agency to obtain access to low-cost, streamlined refinancing.  The current FHA-to-FHA streamlined refinance program allows FHA borrowers who are current on their mortgage to refinance into a new FHA-insured loan at today’s lower interest rates without requiring a full re-underwrite of the loan, thereby providing a simple way for borrowers to reduce their mortgage payments. 

However, some borrowers who would be eligible for low-cost refinancing through this program are being denied by lenders reticent to make loans that may compromise their status as FHA-approved lenders. To resolve this issue, the FHA is removing these loans from their “Compare Ratio”, the process by which the performance of these lenders is reviewed. This will open the program up to many more families with FHA-insured loans.

2.      Homeowner Bill of Rights

EXAMPLE: How Rebuilding Equity Can Benefit a Borrower:

The Administration believes that the mortgage servicing system is badly broken and would benefit from a single set of strong federal standards   As we have learned over the past few years, the nation is not well served by the inconsistent patchwork of standards in place today, which fails to provide the needed support for both homeowners and investors. The Administration believes that there should be one set of rules that borrowers and lenders alike can follow. A fair set of rules will allow lenders to be transparent about options and allow borrowers to meet their responsibilities to understand the terms of their commitments.

The Administration will therefore work closely with regulators, Congress and stakeholders to create a more robust and comprehensive set of rules that better serves borrowers, investors, and the overall housing market. These rules will be driven by the following set of core principles: 

• Simple, Easy to Understand Mortgage Forms: Every prospective homeowner should have access to clear, straightforward forms that help inform rather than confuse them when making what is for most families their most consequential financial purchase. To help fulfill this objective, the Consumer Financial Protection Bureau (CFPB) is in the process of developing a simple mortgage disclosure form to be used in all home loans, replacing overlapping and complex forms that include hidden clauses and opaque terms that families cannot understand. 

• No Hidden Fees and Penalties: Servicers must disclose to homeowners all known fees and penalties in a timely manner and in understandable language, with any changes disclosed before they go into effect.

• No Conflicts of Interest: Servicers and investors must implement standards that minimize conflicts of interest and facilitate coordination and communication, including those between multiple investors and junior lien holders, such that loss mitigation efforts are not hindered for borrowers.

• Assistance For At-Risk Homeowners:

• Early Intervention: Servicers must make reasonable efforts to contact every homeowner who has either demonstrated hardship or fallen delinquent and provide them with a comprehensive set of options to help them avoid foreclosure. Every such homeowner must be given a reasonable time to apply for a modification.

• Continuity of Contact: Servicers must provide all homeowners who have requested assistance or fallen delinquent on their mortgage with access to a customer service employee with 1) a complete record of previous communications with that homeowner; 2) access to all documentation and payments submitted by the homeowner; and 3) access to personnel with decision-making authority on loss mitigation options.

• Time and Options to Avoid Foreclosure: Servicers must not initiate a foreclosure action unless they are unable to establish contact with the homeowner after reasonable efforts, or the homeowner has shown a clear inability or lack of interest in pursuing alternatives to foreclosure. Any foreclosure action already under way must stop prior to sale once the servicer has received the required documentation and cannot be restarted unless and until the homeowner fails to complete an application for a modification within a reasonable period, their application for a modification has been denied or the homeowner fails to comply with the terms of the modification received.

• Safeguards Against Inappropriate Foreclosure
  • Right of Appeal: Servicers must explain to all homeowners any decision to take action based on a failure by the homeowner to meet their payment obligations and provide a reasonable opportunity to appeal that decision in a formal review process.
  • Certification of Proper Process: Prior to a foreclosure sale, servicers must certify in writing to the foreclosure attorney or trustee that appropriate loss mitigation alternatives have been considered and that proceeding to foreclosure sale is consistent with applicable law. A copy of this certification must be provided to the borrower.

The agencies of the executive branch with oversight or other authority over servicing practices –the FHA, the USDA, the VA, and Treasury, through the HAMP program – will each take the steps needed in the coming months to implement rules for their programs that are consistent with these standards.

3.      Announcement of Initial Pilot Sale in Initiative to Transition Real Estate Owned (REO) Property to Rental Housing to Stabilize Neighborhoods and Improve Housing Prices

When there are vacant and foreclosed homes in neighborhoods, it undermines home prices and stalls the housing recovery. As part of the Administration’s effort to help lay the foundation for a stronger housing recovery, the Department of Treasury and HUD have been working with the FHFA on a strategy to transition REO properties into rental housing. Repurposing foreclosed and vacant homes will reduce the inventory of unsold homes, help stabilize housing prices, support neighborhoods, and provide sustainable rental housing for American families.

Today, the FHFA is announcing the first major pilot sale of foreclosed properties into rental housing. This marks the first of a series of steps that the FHFA and the Administration will take to develop a smart national program to help manage REO properties, easing the pressure of these distressed properties on communities and the housing market.

4.      Moving the Market to Provide a Full Year of Forbearance for Borrowers Looking for Work

Last summer, the Administration announced that it was extending the minimum forbearance period that unemployed borrowers in FHA and HAMP would receive on their mortgages to a full year, up from four months in FHA and three months in HAMP. This forbearance period allows borrowers to stay in their homes while they look for jobs, which gives these families a better chance of avoiding default and helps the housing market by reducing the number of foreclosures. Extending this period makes good economic sense as the time it takes the average unemployed American to find work has grown through the course of the housing crisis: nearly 60 percent of unemployed Americans are now out of work for more than four months.

These extensions went into effect for HAMP and the FHA in October. Today the Administration is announcing that the market has followed our lead, finally giving millions of families the time needed to find work before going into default.

• 12-Month Forbearance for Mortgages Owned by the GSEs: Fannie Mae and Freddie Mac have both announced that lenders servicing their loans can provide up to a year of forbearance for unemployed borrowers, up from 3 months. Between them, Fannie and Freddie cover nearly half of the market, so this alone will extend the relief available for a considerable portion of the nation’s unemployed homeowners.

• Move by Major Servicers to Use 12-Month Forbearance as Default Approach: Key servicers have also followed the Administration’s lead in extending forbearance for the unemployed to a year. Wells Fargo and Bank of America, two of the nation’s largest lenders, have begun to offer this longer period to customers whose loans they hold on their own books, recognizing that it is not just helpful for these struggling families, but it makes good economic sense for their lenders as well.

• A New Industry Norm: With these steps, the industry is gradually moving to a norm of providing 12 months of forbearance for those looking for work. This is a significant shift worthy of note, as only a few months ago unemployed borrowers simply were not being given a fighting chance to find work before being faced with the added burden of a monthly mortgage payment.

 5.      Joint Investigation into Mortgage Origination and Servicing Abuses

The Department of Justice, the Department of Housing and Urban Development, the Securities and Exchange Commission and state Attorneys General have formed a Residential Mortgage-Backed Securities Working Group under President Obama’s Financial Fraud Enforcement Task Force that will be responsible for investigating misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities. The Department of Justice has announced that this working group will consist of at least 55 DOJ attorneys, analysts, agents and investigators from around the country, joining existing state and federal resources investigating similar misconduct under those authorities.

The working group will be co-chaired by senior officials at the Department of Justice and SEC, including Lanny Breuer, Assistant Attorney General, Criminal Division, DOJ; Robert Khuzami, Director of Enforcement, SEC; John Walsh, U.S. Attorney, District of Colorado; and Tony West, Assistant Attorney General, Civil Division, DOJ. The working group will also be co-chaired by New York Attorney General Schneiderman, who will lead the effort from the state level.  Other state Attorneys General have been and will be joining this effort.

 6.      Putting People Back to Work Rehabilitating Homes, Businesses and Communities Through Project Rebuild

Consistent with a proposal he first put forward in the American Jobs Act, the President will propose in his Budget to invest $15 billion in a national effort to put construction workers on the job rehabilitating and refurbishing hundreds of thousands of vacant and foreclosed homes and businesses. Building on proven approaches to stabilizing neighborhoods with high concentrations of foreclosures – including those piloted through the Neighborhood Stabilization Program – Project Rebuild will bring in expertise and capital from the private sector, focus on commercial and residential property improvements, and expand innovative property solutions like land banks. 

In addition, the Budget will provide $1 billion in mandatory funding in 2013 for the Housing Trust Fund to finance the development, rehabilitation and preservation of affordable housing for extremely low income families. These approaches will not only create construction jobs but will help reduce blight and crime and stabilize housing prices in areas hardest hit by the housing crisis.

7.      Expanding HAMP Eligibility to Reduce Additional Foreclosures and Help Stabilize Neighborhoods

To date, the Home Affordable Mortgage Program (HAMP) has helped more than 900,000 families permanently modify their loans, providing them with savings of about $500 a month on average. Combined with measures taken by the FHA and private sector modifications, public and private efforts have helped more than 4.6 million Americans get mortgage aid to prevent avoidable foreclosures. Along with extending the HAMP program by one year to December 31, 2013, the Administration is expanding the eligibility for the program so that it reaches a broader pool of distressed borrowers. Additional borrowers will now have an opportunity to receive modification assistance that provides the same homeowner protections and clear rules for servicers established by HAMP. This includes:

• Ensuring that Borrowers Struggling to Make Ends Meet Because of Debt Beyond Their Mortgage Can Participate in the Program: To date, if a borrower’s first-lien mortgage debt-to-income ratio is below 31% they are ineligible for a HAMP modification. Yet many homeowners who have an affordable first mortgage payment – below that 31% threshold – still struggle beneath the weight of other debt such as second liens and medical bills. Therefore, we are expanding the program to those who struggle with this secondary debt by offering an alternative evaluation opportunity with more flexible debt-to-income criteria.

• Preventing Additional Foreclosures to Support Renters and Stabilize Communities: We will also expand eligibility to include properties that are currently occupied by a tenant or which the borrower intends to rent. This will provide critical relief to both renters and those who rent their homes, while further stabilizing communities from the blight of vacant and foreclosed properties. Single-family homes are an important source of affordable rental housing, and foreclosure of non-owner occupied homes has disproportionate negative effects on low-and moderate-income renters.

8.      Increasing Incentives for Modifications that Help Borrowers Rebuild Equity

Currently, HAMP includes an option for servicers to provide homeowners with a modification that includes a write-down of the borrower’s principal balance when a borrower owes significantly more on their mortgage than their home is worth. These principal reduction modifications help both reduce a borrower’s monthly payment and rebuild equity in their homes. While not appropriate in all circumstances, principal reduction modifications are an important tool in the overall effort to help homeowners achieve affordable and sustainable mortgages. To further encourage investors to consider or expand use of principal reduction modifications, the Administration will:

• Triple the Incentives Provided to Encourage the Reduction of Principal for Underwater Borrowers: To date, the owner of a loan that qualifies for HAMP receives between 6 and 21 cents on the dollar to write down principal on that loan, depending on the degree of change in the loan-to-value ratio. To increase the amount of principal that is written down, Treasury will triple those incentives, paying from 18 to 63 cents on the dollar.

• Offer Principal Reduction Incentives for Loans Insured or Owned by the GSEs: HAMP borrowers who have loans owned or guaranteed by Fannie Mae or Freddie Mac do not currently benefit from principal reduction loan modifications. To encourage the GSEs to offer this assistance to its underwater borrowers, Treasury has notified the GSE’s regulator, FHFA, that it will pay principal reduction incentives to Fannie Mae or Freddie Mac if they allow servicers to forgive principal in conjunction with a HAMP modification.

###

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BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1024

[Docket No. CFPB-2011-0030]
RIN 3170-AA06

Real Estate Settlement Procedures Act (Regulation X)

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Interim final rule with request for public comment.

SUMMARY: Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) transferred rulemaking authority for a
number of consumer financial protection laws from seven Federal
agencies to the Bureau of Consumer Financial Protection (Bureau) as of
July 21, 2011. The Bureau is in the process of republishing the
regulations implementing those laws with technical and conforming
changes to reflect the transfer of authority and certain other changes
made by the Dodd-Frank Act. In light of the transfer of the Department
of Housing and Urban Development’s (HUD’s) rulemaking authority for the
Real Estate Settlement Procedures Act (RESPA) to the Bureau, the Bureau
is publishing for public comment an interim final rule establishing a
new Regulation X (Real Estate Settlement Procedures Act). This interim
final rule does not impose any new substantive obligations on persons
subject to the existing Regulation X, previously published by HUD.

DATES: This interim final rule is effective December 30, 2011. Comments
must be received on or before February 21, 2012.

ADDRESSES: You may submit comments, identified by Docket No. CFPB-2011-
0030 or RIN 3170-AA06, by any of the following methods:
Electronic: http://www.regulations.gov. Follow the
instructions for submitting comments.

Mail: Monica Jackson, Office of the Executive Secretary,
Bureau of Consumer Financial Protection, 1500 Pennsylvania Ave. NW.,
(Attn: 1801 L Street), Washington, DC 20220.

Hand Delivery/Courier in Lieu of Mail: Monica Jackson,
Office of the Executive Secretary, Bureau of Consumer Financial
Protection, 1700 G Street NW., Washington, DC 20006.

All submissions must include the agency name and docket number or
Regulatory Information Number (RIN) for this rulemaking. In general,
all comments received will be posted without change to http://www.regulations.gov. In addition, comments will be available for public inspection and copying at 1700 G Street NW., Washington, DC 20006, on
official business days between the hours of 10 a.m. and 5 p.m. Eastern
Time. You can make an appointment to inspect the documents by
telephoning (202) 435-7275.

All comments, including attachments and other supporting materials,
will become part of the public record and subject to public disclosure.
Sensitive personal information, such as account numbers or social
security numbers, should not be included. Comments will not be edited
to remove any identifying or contact information.

FOR FURTHER INFORMATION CONTACT: Joseph Devlin or Jane Gao, Office of
Regulations, at (202) 435-7700.

[ipaper docId=76548832 access_key=key-1qm31nrrlszscec04ask height=600 width=600 /]

image: hlstx

“Obama may talk of the “99 percent” but his administration is engaged in an aggressive coverup of bank crimes.”

Politico-

Bubbling under the surface of politics is the foreclosure crisis — where the power of big finance is brushing up against the rule of law. The party leaders seem to have decided it is essentially a giant — but unavoidable — tragedy. GOP presidential candidate Mitt Romney said foreclosures have to clear for the housing market to reset. The Obama administration, meanwhile, has spent only about $2 billion of the $75 billion authorized for the Home Affordable Modification Program.

But the foreclosure crisis is not only a few million personal tragedies. It is a few million crime scenes.

[POLITICO]

H/T Matt Stoller

December 15, 2011

The Honorable Eric Holder, Jr.

U.S. Department of Justice

950 Pennsylvania Avenue, NW

Washington, DC 20530-0001

Dear Attorney General Holder:

I write regarding the ongoing settlement talks between state attorneys general, federal fraud regulators, the White House, and large financial institutions over alleged illegal foreclosure and mortgage servicing practices and abuses.

I am concerned that recently reported settlement proposals will effectively absolve these financial institutions of substantial civil and criminal liability in one of the largest alleged fraud schemes during the financial crisis. Specifically, I am concerned that the proposed settlement includes a release from liability that may be far too sweeping, does not adequately compensate victims, does not require enough of banks to reform the system that led to the crisis in the first place, and is being made before all the facts are known and without the backing of a full inquiry into the size and scope of the alleged fraud.

Large financial institutions helped inflate the housing bubble through tranching and securitizing mortgages at a frenetic pace while disregarding mortgage and foreclosure laws. Collecting fees from issuing mortgages then selling to investors securities backed by these mortgages allowed the largest financial institutions to pump up profits and home prices, while dumping any potential losses on homeowners, taxpayers, and investors. When the housing bubble burst taxpayers were forced to bail out the largest financial institutions. It is estimated that the federal government disbursed over $4.7 trillion to financial institutions, and guaranteed an additional $13.87 trillion, during the financial crisis.

Without a thorough investigation, it is impossible to truly estimate just how pervasive the defects in the foreclosure and securitization process are. Continued reports of wrongful foreclosures, forged documents, and an inability of servicers and banks to prove chain of title and the legal right to foreclosure, raises the very alarming possibility that these defects were endemic to the mortgage servicing industry across the country. The sheer magnitude of the potential fallout from these defects demands that we undertake a full investigation to uncover the true scope of wrongdoing before providing blanket immunity to the perpetrators.

I am also concerned that reports of a settlement in the range of $20 billion, as recently reported, may not adequately compensate the victims of the foreclosure crisis. As a result of the pump-and-dump scheme perpetrated by the nation’s largest banks that inflated – and burst – the housing bubble, an estimated 14 million Americans are underwater, owing $700 billion more on their homes than those homes are worth. A $20 billion settlement is woefully inadequate to compensate the wrongfully evicted or homeowners struggling to stay in their homes. Much more should be required of banks to provide meaningful help underwater homeowners and compensate foreclosure fraud victims.

A settlement with mortgage servicers must also require reforms to ensure such abuses do not happen again. The goal of servicing mortgages must be accuracy and adherence to the law, not expediency and corner-cutting. Confidence must be restored that proper transference of notes and mortgages was followed and clear chains of titles are available for all mortgages. Until then, the burden of proof must be on financial institutions to prove that they have the legal authority to foreclose. The Mortgage Electronic Registration System should be dissolved and shut down, and the shortcut that allowed banks to avoid hundreds of millions, if not billions, in local fees to local registrars of deeds be closed off. It is critical that large banks not be allowed to shirk their tax obligations to local governments. A settlement in this case must compensate state and local governments for taxes and fees which were owed but not collected.

The crisis in our housing and financial markets has shaken the confidence of the American people in our financial system and in government. Holding banks accountable for abusive and fraudulent practices, while compensating damaged homeowners, wrongfully evicted, local governments, and defrauded investors is vital to restoring that confidence. I urge you to ensure that any settlement with mortgage servicers over alleged foreclosure abuses does not absolve liability for crimes and wrongdoing that has yet to be fully investigated, and ensures just compensation for victims.

I appreciate your attention to this matter.

Sincerely,

U.S. Senator Maria Cantwell

###

[ipaper docId=75811029 access_key=key-3akr4fq4pq5lfwoyir3 height=600 width=600 /]

Little by little they are working their way up to freedom.

All their eggs are almost in the basket…

WSJ-

Banks are demanding that the Consumer Financial Protection Bureau relinquish the right to sue over certain flawed mortgage originations, in exchange for their participation in a proposed multibillion-dollar settlement of alleged foreclosure abuses.

The banks say their inability to secure a sufficiently broad release from the new bureau, which was sidelined in earlier discussions as it launched, would be a deal breaker. The five biggest U.S. mortgage banks, state attorneys general and Obama administration officials are pushing to finalize a deal before the end of the year that would be worth $19 billion or more.

[WALL STREET JOURNAL]

We already knew this and if you expect any real restitution, you’re in for a surprise!

HW-

A mortgage servicer will be granted a waiver from future claims depending on what sort of remediation a borrower gets from the foreclosure reviews conducted under federal consent orders.

Independent consultants, approved by the Office of the Comptroller of the Currency and the Federal Reserve, will review nearly 4.5 million foreclosure files over the next several months. They will be looking for any harm caused by improper practices uncovered last year.

[HOUSING WIRE]

Planned…just in time for the Holidays around the corner!

Here’s hoping you forget when you get back from celebrating!

WSJ-

Five large lenders could be forced to make concessions worth roughly $19 billion as bank representatives and government officials push to put the finishing touches on a settlement of most state and federal investigations of alleged foreclosure improprieties.

Housing and Urban Development Secretary Shaun Donovan and state officials hope to reach a deal as soon as this week, though any agreement could be delayed by unresolved issues including the naming of a monitor to oversee the agreement.

The settlement would end months-long negotiations among federal officials, state attorneys general and the nation’s five largest mortgage servicers: Ally Financial Inc., Bank …

[WALL STREET JOURNAL]

For some background information on Sheila Bair please read Joe Nocera’s great article: Sheila Bair’s Bank Shot

 Bloomberg-

Sheila Bair, the former Federal Deposit Insurance Corp. chairman, is a leading candidate among state officials to ensure banks comply with any settlement of a nationwide foreclosure probe, a person familiar with the matter said.

Bair, who led the agency from 2006 until stepping down this year, is supported by some state officials as a third-party monitor of any settlement with mortgage servicers, including Bank of America Corp. (BAC), the person said. At least one bank in the talks, Citigroup Inc. (C), opposes her selection, said the person, who didn’t want to be named because the talks are private.

[BLOOMBERG]

Doing something — anything — quickly but poorly is no substitute for taking the time to do what needs to be done well.

American Banker-

Congresswoman Maxine Waters (D-CA) is fearful that the quick-and-poor may prevail with mortgage servicer reviews, based on what she sees planned in response to last April’s consent orders from federal regulators.

“The only thing worse than no accountability for the banks,” according to Waters, “is for regulators to create the illusion of accountability, while putting no enforcement power behind their efforts.”

[AMERICAN BANKER]

Washington, DC (Dec. 6, 2011) – Today, Rep. Elijah Cummings, Ranking Member of the House Committee on Oversight and Government Reform, sent a letter to Senators Harry Reid, Mitch McConnell, Tim Johnson, and Richard Shelby expressing strong support for Richard Cordray to serve as the first Director of the Consumer Financial Protection Bureau (CFPB).  President Obama nominated Cordray on July 18, 2011, and the Senate Banking Committee subsequently approved his nomination.  Yesterday, Senate Majority Leader Harry Reid filed cloture on the nomination, and a vote could occur this week.

The full letter follows:

December 6, 2011

The Honorable Harry Reid                    The Honorable Tim Johnson
Majority Leader                                         Chairman
United States Senate                                Senate Committee on Banking,
S-221 United States Capitol                  Housing and Urban Affairs
Washington, DC 20510                         136 Hart Senate Office Building
                                                                        Washington, DC 20510

The Honorable Mitch McConnell            The Honorable Richard C. Shelby
Minority Leader                                             Ranking Member
United States Senate                                    Senate Committee on Banking,
S-230 United States Capitol                     Housing and Urban Affairs
Washington, DC 20510                              304 Russell Senate Office Building
                                                                             Washington, DC 20510

Dear Majority Leader Reid, Minority Leader McConnell, Chairman Johnson, and Ranking Member Shelby:

I am writing to express my strong support for Richard Cordray’s nomination to serve as the Director of the Consumer Financial Protection Bureau (CFPB), and I encourage the Senate to confirm his nomination as soon as possible.

As Ranking Member of the House Committee on Oversight and Government Reform, I have consistently underscored the importance of the consumer protections in the Dodd-Frank Wall Street Reform and Consumer Protection Act, and I have pressed for prompt action to ensure that our financial system is fair and transparent for American consumers.

The Oversight Committee has conducted considerable oversight of the CFPB, and this oversight has highlighted the critical need for the Bureau to assume its full role, as envisioned under the Dodd-Frank Act, to protect American consumers and taxpayers.

This year, for example, the Oversight Committee has been investigating illegal foreclosures and inflated fees charged against U.S. servicemembers by the nation’s largest banks and mortgage servicing companies.  As a result of our ongoing investigation, we have become convinced of the crucial role CFPB currently plays, and will play in the future, in protecting mortgage holders across the nation. 

In addition, the Bureau must be able to exercise its supervisory and enforcement authority over non-bank financial institutions, including debt collectors, credit reporting agencies, and payday lenders.  As you know, the Bureau cannot exercise its full authority under the Act until a director is confirmed.

We need a CFPB director who will make consumers a top priority, and Mr. Cordray has a proven track record of protecting consumers and holding financial institutions accountable for their actions.  For all of these reasons, I respectfully urge you to confirm Mr. Cordray’s nomination as the CFPB’s first director.

                        Sincerely,

                        Elijah E. Cummings
                        Ranking Member

cc:    The Honorable Darrell E. Issa, Chairman
    Committee on Oversight and Government Reform

[ipaper docId=74953033 access_key=key-24w8bajml24eocsmm2vq height=600 width=600 /]

source: http://democrats.oversight.house.gov

Washington, DC (Nov. 22, 2011)—Ranking Member Elijah E. Cummings released the following statement today regarding the public release of highly redacted “engagement letters” between mortgage servicing companies and independent consultants they hired to review past foreclosure abuses:

“Although I am encouraged that some information is being made public today, our Committee should issue subpoenas to obtain full, unredacted copies of these documents so we can ensure that homeowners are being fully and appropriately compensated.  Six months is too long to wait to conduct oversight of mortgage servicing companies that illegally foreclosed against homeowners.”

Today, the Office of the Comptroller of the Currency released copies of the engagement letters with significant redactions, including the removal of sections regarding past work, actual and potential conflicts of interest, and the procedures available to homeowners to file claims and complaints due to errors, misrepresentations, or other deficiencies in a foreclosure process.

Cummings first asked for full copies of these engagement letters on May 31, 2011, following a report issued by federal regulators finding “critical weaknesses” and “widespread risk” with 14 of the nation’s largest mortgage servicing companies’ foreclosure practices.

The regulators ordered the mortgage servicing companies to hire private consultants to conduct more comprehensive reviews of their foreclosure actions, but the regulators allowed them to propose the terms of the reviews, including the methodology of the reviews, the criteria guiding the selection of cases to be reviewed, and any proposed sampling techniques.  Some have criticized this approach for providing insufficient oversight of the banks’ actions.

In their responses to Cummings, the regulators explained that, by law, they cannot produce the full engagement letters until they are legally compelled to do so.

As a result, on October 27, Cummings wrote to Committee Chairman Darrell Issa requesting that he either issue subpoenas for the engagement letters or schedule a subpoena vote for the Committee’s business meeting on November 17, 2011.  Issa declined to take either step, stating at the business meeting that he preferred to wait until Thanksgiving to determine whether the engagement letters would be released voluntarily.

source: http://democrats.oversight.house.gov

UPDATE: Mr. Bryan Hubbard Director of Public Affairs Operations at the Office of the Comptroller of the Currency (OCC) has informed this site of the following after several blogs learned that a former David J. Stern’s Attorney, Miriam Mendieta was to assist in reviewing of 4.5 Million foreclosure fraud cases:

Foreclosure Review Services (FRS) has not been contracted by any of the independent consultants conducting independent foreclosure reviews required by the consent orders issued by the OCC in April. The OCC and Federal Reserve reviewed independent consultant and subcontractors for conflicts of interest prior to approval. FRS was neither proposed nor reviewed.

Bryan Hubbard
Director, Public Affairs Operations
Office of the Comptroller of the Currency

UPDATE:  Foreclosure Review Services (FRS) was neither proposed nor reviewed by either OCC or Federal Reserve

Rumor was Miriam may be working for Florida Default Law Group aka NetDirtector, ReoClosings.com?

And remember what Prof. Levitin was saying, watch out for Robo-Signing 2.0!

Lets not forget about a famous deposition from a former Stern paralegal where she mentions Miriam knew about the documents and was a controlling attorney for the firm!

I wonder who owns FRS?

Foreclosure industry veterans offer foreclosure review services in response to the Office of the Comptroller of the Currency’s “Independent Foreclosure Review” program.

Miami, FL (PRWEB) November 21, 2011

Foreclosure Review Services (FRS) provides contract attorneys who diligently review cases to determine whether a homeowner may have suffered financial injury as a result of errors, misrepresentations, or other deficiencies in the foreclosure process.

FRS’s Director of Operations and Training, Miriam Mendieta, Esq.,is a nationally recognized industry expert with over 15 years of hands-on experience. Miriam served as the managing attorney for one of the largest creditor’s rights firms in the country where she was responsible for the oversight of all the aspects of foreclosure and bankruptcy related services.

FRS’s team of contract attorneys are extensively trained to properly review and analyze each case. FRS will review each foreclosure case to determine if the homeowner suffered financial injury as a result of errors made during the foreclosure process.

The reviews are part of a series of compliance actions initiated by the Office of the Comptroller of the Currency.

FRS has facilities in Dallas and South Florida and also provides consultants onsite.

FRS: Foreclosure Review Services
1395 Brickell Ave., Ste. 800
Miami, FL 33131
888-603-5559
info(at)frserv(dot)com
EXPERTS IN DEFAULT SERVICES * EXPERTS IN DOCUMENT REVIEW

###

Credit Slips-

The New York Times came out with a strong editorial urging state AGs and the Administration not to rush into the proposed multi-state settlement deal. I think it’s worthwhile reviewing what we know about the deal and the arguments for and against it.  Let’s start with the facts that we know.  There aren’t many that are publicly confirmed; the Administration, the AGs leading the multi-state settlement, and the banks very much want to avoid public comment on the deal–they want to present it as a fait accompli.  As a result, there hasn’t been definitive reporting on the contents of the term sheet currently circulating among AGs.  It appears, however, the the deal has the following features.

[CREDIT SLIPS]

Looking over the so called Foreclosure Review FAQ’s, I found it extremely surprising that the word “ROBO” was not in there, heck not even close to any interpretation that your review may consist of any robo-signed documents.

The most disturbing part is that the servicers are going to start sending out letters today, the question is to whom? THE PEOPLE WERE ALREADY EVICTED, IDIOTS!!

This leads to the next information as Prof. Adam Levitin explained:

Financial harm? Yes. How much? Impossible to determine. Will it be considered? Not a chance. Welcome to Robosigning 2.0.

As if we were going to turn the right or left cheek to this and think all this bullshit would actually be “independent“ when the regulators let the banks hire the Foreclosure Fraud reviewers.

Once again more proof you’re being thrown under the bus!

p.s. anyone prior to 2009, you’re out of luck as well. AND we know there is thousands of you.

Below are the FAQ’s

[ipaper docId=71154619 access_key=key-mdtam8drwzevothfgsg height=600 width=600 /]

As I’ve said it before, Don’t expect this bunch of dog sh*t to benefit you.

Prof. Adam Levitin wrote a devastating and I mean devastating piece of you guessed it, yours truly, Robo-Signing 2.0 that demands an investigation.

Don’t fall for any of these so called regulators to help you. It’s NEVER going to happen! Get it through to your head.

Oh and by the way …Funny sh*t is, Citi Group just recently made a call like this. But go read Prof. Levitin’s piece and come back to check Citi’s Help Wanted ad to “Sign legal affidavits for purpose of foreclosure hearings.”

Credit Slips-

Do you have what it takes to be a Mortgage Foreclosure File Reviewer Level 2?  An intrepid researcher forwarded to me a job ad for a mortgage foreclosure reviewer who will be reviewing bank foreclosures per the OCC/Fed servicing fraud consent orders.

[Credit Slips]

Now C’mon don’t act too surprised.

We know what’s going to be the end result and it’s not going to benefit the 99%.

American Banker-

Can you count on the emperor’s handpicked ministers to tell him when he’s naked? Banking regulators seem to think so.

The April consent orders against mortgage servicers let the companies pick one or more professional-services firms to review their foreclosure actions for abuses and report the findings to the agencies.

Allowing the banks to choose their own judge, jury, and jailer presents almost untenable conflicts of interest. A …

[AMERICAN BANKER]

Washington, D.C. — Today Representatives Elijah E. Cummings, Ranking Member of the House Committee on Oversight and Government Reform, Adam Smith, Ranking Member of the Committee on Armed Services, and Robert Andrews, Ranking Member of the Subcommittee on Health, Employment, Labor and Pensions, joined nine Members in writing to federal housing regulators requesting a comprehensive review of the challenges facing servicemembers who are forced to relocate for work and risk losing their homes.

“Men and women in uniform, who make unyielding sacrifices to protect our nation, are not immune to the worst economic downturn in nearly a century,” the Members wrote.  “We urge you to protect their homes by adjusting current home foreclosure prevention programs and pressing mortgage servicers to address the unique challenges of military homeowners.”

The Members sent letters to Departments of Treasury and Housing and Urban Development, the Federal Housing Finance Agency, and the Securities and Exchange Commission, after hearing concerns from servicemembers about the difficulties they face when receiving Permanent Change of Station (PCS) orders, and attempting to qualify for home foreclosure prevention programs. Servicemembers and their families are often unable to sell their homes quickly at prices that will enable them to pay off their mortgages, and they cannot generate enough rental income to cover their mortgage payments or retain their homes until housing prices return to normal values.

The Ranking Members have led congressional efforts to help servicemembers and their families stay in their homes.

In July, Members led a forum with Senator Jay Rockefeller to examine illegal foreclosures against servicemembers and their families. Holly Petraeus, the director of the Office of Servicemember Affairs at CFPB, appeared alongside servicemembers and other experts to begin developing recommendations to help servicemembers with housing issues.

Below is the letter.

September 27, 2011

The Honorable Timothy Geithner                       The Honorable Shaun Donovan
Secretary of Treasury                                              Secretary of Housing and Urban Development
U.S. Department of the Treasury                        U.S. Department of Housing
1500 Pennsylvania Avenue, N.W.                     and Urban Development
Washington, D.C. 20220                                        451 7th Street, S.W.
                                                                                         Washington, D.C. 20410

Edward DeMarco                                                     The Honorable Mary L. Schapiro.
Acting Director                                                        Chairman
Federal Housing Finance Agency                    Securities and Exchange Commission
1700 G Street, N.W., 4th Floor                         100 F. Street, N.E.
Washington, D.C. 20552                                      Washington, D.C. 20549

Dear Secretary Geithner, Secretary Donovan, Chairman Schapiro and Director DeMarco:

We write to urge you to take action to protect military families who have been particularly hard hit by the ongoing foreclosure crisis.  Men and women in uniform, who make unyielding sacrifices to protect our nation, are not immune to the worst economic downturn in nearly a century.  We urge you to protect their homes by adjusting current home foreclosure prevention programs and pressing mortgage servicers to address the unique challenges of military homeowners.

We hear repeatedly from servicemembers and their families about challenges they face with Permanent Change of Station (PCS) orders.  These servicemembers are typically current on their mortgages, but they are forced to move because the military requires them to do so.   Like so many other Americans, servicemembers and their families are often unable to sell their homes quickly at prices that will enable them to pay off their mortgages, and they cannot generate enough rental income to cover their mortgage payments or retain their homes until housing prices return to normal values.  Many of these families are also forced to make ends meet with lower housing allowances at their next duty stations, and they sometimes lose the incomes of non-military spouses as they try to find new employment.

Military servicemembers with PCS orders often do not qualify for mortgage modifications because they are not delinquent on their mortgages or because their homes are no longer their primary residences.  If they opt for delinquency, foreclosure, deed in lieu of foreclosure, short sale, or bankruptcy, their credit could be negatively affected and their security clearances could be suspended, rendering them unable to perform their assignments.  For example, the Treasury Department’s Home Affordable Modification Program requires homeowners to be in imminent default and covers only primary residences.  In addition, many home foreclosure prevention initiatives offered directly by mortgage servicers have similar requirements.  As a result, some servicemembers are opting to move alone to their new duty stations without their families.  This is particularly disheartening for servicemembers who have just returned from overseas deployments.

United States servicemembers should not have to choose between saving their homes and continuing to serve their country.  To address these concerns, we ask that you review these problems comprehensively and develop specific initiatives to address the unique needs of military servicemembers.  We would appreciate a response to this request by October 7, 2011, describing the joint efforts you are undertaking.  Thank you for your consideration.

Sincerely,

Elijah E. Cummings                                                   ……………Adam Smith   
Ranking Member                                                      …………… Ranking Member
Committee on Oversight and Government Reform       Committee on Armed Services

Rob Andrews                                                            Edolphus Towns
Member of Congress                                             Member of Congress

Eleanor Holmes Norton                                       John F. Tierney
Member of Congress                                             Member of Congress

William Lacy Clay                                                     Stephen F. Lynch
Member of Congress                                                 Member of Congress

Danny K. Davis                                                        Bruce Braley
Member of Congress                                            Member of Congress
Jackie Speier                                                           Peter Welch
Member of Congress                                            Member of Congress

cc:    Holly Petraeus
    Office of Servicemember Affairs
    Consumer Financial Protection Bureau

[source: http://democrats.oversight.house.gov]