Header graphic for print
Mortgage Crisis Watch Business and legal issues affecting: loan repurchases | mortgage-backed securities | mortgage insurance

Category Archives: Legislation/Regulation

Subscribe to Legislation/Regulation RSS Feed

Bank of America Settles Class Action Brought By Mortgage Investors

By Philip R. Stein and Sacha Boegem on Posted in Legislation/Regulation, Too Big to Fail

$40 Billion Settlement Bank of America  has agreed to settle a class-action lawsuit brought by investors who claimed they were misled by its Countrywide unit into buying risky mortgage securities. Bank of America acquired Countrywide Financial, a California-based lender, in July 2008 for $2.5 billion, but analysts have put the effective cost at more than… Continue Reading

Taking The Easy Way Out Again: Recent OCC/Big Banks Settlement

By Robert Siegel and Ruben S. Fogel on Posted in Legislation/Regulation, Too Big to Fail

Amidst Evidence both Old and New of Big Banks’ Wrongdoing, OCC Again Drops the Ball by Settling Instead of Regulating the Culprits Any follower of this blog or the mortgage crisis at large will — sadly — not be surprised by the seemingly never-ending news of foreclosure misdeeds by the nation’s biggest banks. Recent news… Continue Reading

President Obama Touts Refinancing Plan in State of the Union Address

By Sacha Boegem and Robert Siegel on Posted in Fannie Mae/Freddie Mac, Legislation/Regulation

The Responsible Homeowner Refinancing Act of 2013 In his State of the Union Address on February 12, 2013, President Obama called on Congress to make it easier for families to refinance their mortgages. Specifically, the President urged Congress to pass refinancing legislation being sponsored by Sen. Robert Menendez (D., N.J.) and Sen. Barbara Boxer (D.,… Continue Reading

DOJ Lawsuit Against S&P and McGraw Hill

By Russell Koonin and Philip R. Stein on Posted in Legislation/Regulation, Residential Mortgage-Backed Securities (RMBS)

Last week, the Department of Justice (DOJ) filed a civil suit in the Central District of California against Standard & Poor’s Financial Services (S&P) and its parent company McGraw-Hill. The suit alleges that S&P engaged in a scheme to defraud investors in Residential Mortgage-Backed Securities (RMBS) and Collateralized Debt Obligations(CDOs). As noted in the DOJ’s… Continue Reading

New Precedent that Holds Banks Responsible?

By Philip R. Stein on Posted in Legislation/Regulation, Residential Mortgage-Backed Securities (RMBS)

Judge Rakoff awards $90.1 million judgment to Assured Guaranty Corp The legal press is abuzz with reports of a New York federal judge’s award of a $90.1 million judgment to mortgage insurer Assured Guaranty Corp. after a lengthy trial in its suit against Flagstar Bank FSB. The lawsuit arose from Assured’s claims that Flagstar had… Continue Reading

Important Buyback Victory

By Philip R. Stein on Posted in Legislation/Regulation, Mortgage Repurchase, Too Big to Fail

Order Severing Claims and Requiring Supplemental Briefing There was a very favorable development recently in one of my buyback cases. The federal district court in Miami issued a final order that has great potential application to other buyback suits, whether already pending or merely threatened at this point. The ruling is not something that other courts… Continue Reading

FHFA Announces Representation and Warranty Framework

By Andrew Pompa and Philip R. Stein on Posted in Fannie Mae/Freddie Mac, Legislation/Regulation, Mortgage Repurchase, Too Big to Fail

Lack of Certainty Facing Lenders Last week, the Federal Housing Finance Agency (FHFA) announced a new “representation and warranty framework” for conventional loans sold or delivered to Fannie and Freddie after January 1, 2013. In a clear acknowledgment of the lack of certainty facing lenders in this era of rampant repurchase demands, the agency’s announcement… Continue Reading

Banks’ After-The-Fact Appraisals Fuel Buyback Demands

By Sacha Boegem and Philip R. Stein on Posted in Legislation/Regulation, Mortgage Repurchase

Justin T. Hilley  of HousingWire.com reports that audits done by Quality Mortgage Services (“QMS”) “indicate that many demands by financial institutions that lenders buy back mortgages are based on fraudulent appraisal schemes in an attempt to increase the success of repurchase claims.” According to Hilley’s report, QMS “believes some appraisers are systematically being pressured to use a… Continue Reading

SEC Investigating ResCap for Possible Mortgage Fraud

By Stacia A. Wells and Robert Siegel on Posted in Legislation/Regulation, Residential Mortgage-Backed Securities (RMBS)

The U.S. Securities and Exchange Commission is investigating bankrupt Ally Financial mortgage unit Residential Capital, LLC, for possible misconduct and misrepresentation in its mortgage lending and underwriting practices. The SEC disclosed in court documents on Monday that it formerly commenced an investigation in February of this year to probe possible fraud in the offer and… Continue Reading

Judge Rakoff v. SEC and Citigroup

By Russell Koonin and Robert Siegel on Posted in Legislation/Regulation, Residential Mortgage-Backed Securities (RMBS)

Judge Rakoff Not Going Out Quietly In a story we’ve been following since the outset, on Monday, Judge Rakoff filed his brief before the Second Circuit Court of Appeals. It is not every day that you see a federal judge litigating against two parties who were theoretically adverse before him. But that is precisely the… Continue Reading

Insurer Gets Early Win on Buy-Back Causation

By Stacia A. Wells and Philip R. Stein on Posted in Legislation/Regulation, Mortgage Repurchase, Too Big to Fail

Proof of Causation Not Required for Insurer to Trigger Repurchase Demands On June 19, 2012, Judge Paul Crotty of the Southern District of New York provided a boon to monoline insurance provider Syncora Guarantee Inc. in its protracted litigation with JPMorgan Chase & Co. unit EMC Mortgage Corp. The focus of the litigation is a… Continue Reading

New York Attorney General: Foreclosure Fraud and “Robosigning”

By Sacha Boegem and Philip R. Stein on Posted in Legislation/Regulation, Too Big to Fail

New York Attorney General Takes On Foreclosure Fraud, Including “Robosigning” New York Attorney General, Eric T. Schneiderman,  has announced the introduction of a bill that would protect New Yorkers from fraudulent business practices in the foreclosure process, including “robosigning.” The Foreclosure Fraud Prevention Act of 2012  imposes new criminal penalties for those who intentionally engage… Continue Reading

Federal Reserve Makes Morgan Stanley Pay For Some Foreclosures

By Sacha Boegem and Robert Siegel on Posted in Legislation/Regulation, Too Big to Fail

Consent Order Issued Morgan Stanley may have sold off its mortgage servicing unit, but that did not stop the Federal Reserve from holding the company accountable for robo-signing and other improper foreclosure proceedings which occurred during 2009 and 2010. The Federal Reserve announced on April 3rd that it had issued a consent order against Morgan Stanley,… Continue Reading

Strange Bedfellows – SEC v. CitiGroup Litigation

By Russell Koonin and Philip R. Stein on Posted in Legislation/Regulation, Too Big to Fail

SECOND CIRCUIT COURT OF APPEALS ISSUES STAY IN LITIGATION BETWEEN S.E.C. AND CITIGROUP In a sharply worded opinion, the Second Circuit Court of Appeals issued a stay to the district court proceedings in S.E.C. v. Citigroup, in the Southern District of New York. There, Judge Rakoff had previously refused to approve a proposed $285 million settlement… Continue Reading

The Soft Underbelly of the Federal and State Attorneys General $25 Billion “Robosigning” Mortgage Settlement with Big Banks

By Robert Siegel and Ruben S. Fogel on Posted in Legislation/Regulation, Too Big to Fail

It’s official: The federal government, 49 of the 50 States (all but Oklahoma, the lone hold-out) and the country’s five leading bank mortgage servicers (none other than household names Bank of America, JP Morgan Chase, Citigroup, Wells Fargo, and Ally Financial) announced a February 9, 2012 settlement with said banks regarding foreclosure misconduct and “robosigning”… Continue Reading

Would White House Proposed Refinancing Program Really Help Housing?

By Philip R. Stein and Sacha Boegem on Posted in Legislation/Regulation

The Obama Administration unveiled details today of a broad refinancing program affecting non- Government Sponsored Enterprise (GSE) residential mortgage loans, which program was first announced by the President in his State of the Union address last month. Under the refinancing program, which requires congressional approval, borrowers with qualifying non-GSE mortgages who are current on their… Continue Reading