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

Category Archives: Mortgage Repurchase

Subscribe to Mortgage Repurchase RSS Feed

Loan Modification and the Failure to Mitigate Damages

By Anthony Narula and Philip R. Stein on Posted in Fannie Mae/Freddie Mac, Mortgage Repurchase

Freddie Mac Streamlined Modification Freddie Mac has announced the immediate implementation of its Streamlined Modification program, a no-document modification program offered to severely delinquent borrowers.  The implementation of the program, originally set to begin July 1, came six weeks earlier than expected in an effort to expedite financial relief for potentially thousands of distressed families. Under… Continue Reading

TBTF Servicing: Another Issue for Originators to Consider

By Robert Siegel and Russell Koonin on Posted in Mortgage Repurchase, Too Big to Fail

Shocking Statistics from Foreclosure Review As widely reported recently, close to 1.2 million borrowers (about 30% of the more than 3.9 million households that faced foreclosure proceedings by the 11 leading financial institutions in 2009 and 2010), had to battle purported wrongful seizures of these properties. These battles were frequently waged despite the borrowers not… Continue Reading

Bank of America Settlement in Jeopardy?

By Enza G. Boderone and Robert Siegel on Posted in Mortgage Repurchase, Too Big to Fail

Bank of America’s $8.5 billion settlement in 2011 to resolve claims over Countrywide’s mortgage abuses may be in jeopardy. Last week, a group of investors, the Triaxx funds and the Federal Home Loan Banks of Boston, Indianapolis and Chicago, all of which hold certificates of mortgage-backed securities issued by the trusts covered by the settlement,… 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

ZOMBIE TITLE

By Russell Koonin and Robert Siegel on Posted in Mortgage Repurchase, Too Big to Fail

Think your house has been foreclosed? Think again… As reported by Michelle Conlin at Reuters, when banks fail to follow through on foreclosure of homes, this has serious, often dramatic ramifications for the homeowner. A person subject to “zombie title” is an individual, who, unbeknownst to him or her, is still the actual homeowner, despite the fact… Continue Reading

Mortgage Foreclosure Settlement

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

Skepticism We have long been skeptical of most loan “repurchase” or “indemnification” demands made by big banks against the third-party originators (i.e., correspondent lenders) who sold those loans to the big banks many years ago. Our skepticism arises not just from a loan-by-loan analysis of the demands being made against our clients (the correspondent lenders)…. Continue Reading

Gotcha! Originators Beware of Baseless Claims

By Robert Siegel on Posted in Mortgage Repurchase, Too Big to Fail

Baseless Claims Just about every time I think that the demands being asserted on residential mortgage loan originators for mortgage loan “repurchases” or indemnification payments (on account of loans that were originated years ago during the height of the mortgage crisis) could not possibly be any more baseless, yet another claim comes along that proves… Continue Reading

Loan Originators Be Warned: Not All Errors Justify Buyback Demands

By Philip R. Stein on Posted in Mortgage Repurchase

At last week’s Mortgage Bankers Association (MBA) annual conference in Chicago, Bob Siegel and I attended a panel discussion on “preventing buybacks.” Virtually the sole focus of that session was on steps that loan originators can take to reduce the likelihood of errors in the origination process. Accuracy, and elimination of errors, should of course be… Continue Reading

Are Mortgage Repurchase Demands a Case of Revisionist History?

By Robert Siegel and Philip R. Stein on Posted in Mortgage Repurchase, Too Big to Fail

As we noted in a previous blog post, we believe that big aggregators of residential mortgage loans are attempting to revise history when they claim that they believed all along that all risk of borrower misrepresentations fell on correspondents. We expand on this idea, and comment further on repurchase claims generally, in the article that… Continue Reading

New Fannie Mae Guidelines

By Russell Koonin and Robert Siegel on Posted in Fannie Mae/Freddie Mac, Mortgage Repurchase

Verification Of Income Not Required For Refinancing Fannie Mae recently released a program offering an alternative to documenting income for Refi Plus loans where the change in the amount of the monthly loan payments will not exceed 20 percent. Fannie Mae will now accept verification of liquid financial reserves equal to at least 12 months… 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

HUD Selling Troubled Mortgages

By Russell Koonin and Robert Siegel on Posted in Mortgage Insurance, Mortgage Repurchase

The U.S. Department of Housing and Urban Development recently announced that it is accepting applications for investors interested in buying distressed residential mortgage loans formerly insured by the FHA, focusing on mortgages in Chicago, IL, Newark, NJ, Phoenix, AZ, and Tampa, FL. The Distressed Asset Stabilization Program is an expansion of an FHA disposition program… 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

The FHFA’s New Buy-Back Statement

By Philip R. Stein and Robert Siegel on Posted in Fannie Mae/Freddie Mac, Mortgage Repurchase, Residential Mortgage-Backed Securities (RMBS)

Higher Degree of Certainty and Clarity? The Federal Housing Finance Agency, the regulator of Fannie Mae and Freddie Mac, released a statement yesterday saying it was working with those two entities, which are the nation’s major government-backed mortgage securities investors, to “provide lenders a higher degree of certainty and clarity around repurchase exposure and liability… Continue Reading

Residential Capital Files Bankruptcy: Part 2 of 2

By Julia Kim and Robert Siegel on Posted in Mortgage Repurchase, Too Big to Fail

ResCap and Ally Will Not Challenge Repurchase Claims In Part 1 of this series, we discussed the circumstances leading to the bankruptcy filing of Residential Capital (ResCap) , a residential mortgage loan originator and a subsidiary of Ally Financial Inc. (formerly GMAC.) In anticipation of the bankruptcy filing, ResCap’s board had approved the bankruptcy filing… Continue Reading

Residential Capital Files Bankruptcy: Part 1 of 2

By Julia Kim and Robert Siegel on Posted in Mortgage Repurchase, Too Big to Fail

Subsidiary of Ally Financial Inc. Files Chapter 11 Bankruptcy Residential Capital, a residential mortgage loan originator and a subsidiary of Ally Financial Inc. (formerly GMAC), filed for Chapter 11 bankruptcy protection in New York on May 14, 2012. Ally Financial was the financial arm of General Motors and, while taxpayers currently own only approximately 25%… Continue Reading

Mortgage Delinquency Rate Falls To 2008 Levels, And Other Good Housing News

By Sacha Boegem and Philip R. Stein on Posted in Mortgage Insurance, Mortgage Repurchase

Declining Delinquency Rates According to a report, released May 16th from the Mortgage Bankers Association (“MBA“), the U.S. mortgage delinquency rate declined in the first quarter of 2012 to the lowest level since 2008. Specifically, the delinquency rate for residential mortgage loans decreased to a seasonally adjusted rate of 7.40 percent as of the end… Continue Reading

Bank of America Lowers Reserves in Response to Buy-Back Demands

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

Hard Stance? Bank of America has lowered its reserves established for payments in response to mortgage buy-back demands. The announcement, coming in the banking giant’s quarterly earnings report, indicates BofA set aside less money in the first quarter of 2012 to cover the cost of “repurchase” demands than it had at any time since the… Continue Reading

Future With Fannie and Freddie Lesser Evil Than With Wall Street?

By Russell Koonin and Robert Siegel on Posted in Fannie Mae/Freddie Mac, Mortgage Repurchase, Residential Mortgage-Backed Securities (RMBS), Too Big to Fail

A Rare Point of Agreement Margaret Chadbourn of Reuters recently reported {April 23} that both Republicans and Democrats have “found a rare point of agreement.” They want to phase out or at least substantially reduce the role of the Federal National Mortgage Association (Fannie Mae ) and the Federal Home Loan Mortgage Corporation (Freddie Mac… Continue Reading

Wells Fargo’s Shameful List

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

No Wrongdoing Required for Inclusion on Wells Fargo’s Exclusionary List Loose Underwriting Standards Imagine that you work at a company that has originated residential mortgage loans for years, following the documentation and verification requirements and guidelines established by the major banks to which your company typically sells those loans. Imagine that Wells Fargo is one… Continue Reading

Mortgage Fraud Suspicious Activity Reports Up 31 Percent in 2011

By Philip R. Stein and Sacha Boegem on Posted in Mortgage Repurchase

The Financial Crimes Enforcement Network (“FinCEN”), a bureau of the U.S. Department of the Treasury, released its full-year 2011 update of mortgage loan fraud suspicious activity reports (MLF SARs) on April 23rd, 2012. The update shows that financial institutions submitted 92,028 MLF SARs last year, a 31 percent increase over the 70,472 submitted in 2010.  SARs… Continue Reading

Inaccurate Appraisals: Weakest Buy-Back Demand

By Philip R. Stein on Posted in Mortgage Repurchase, Too Big to Fail, Uncategorized

Misrepresentation? We have long held the view that investors’ buy-back demands based on allegedly inaccurate appraisals are about the weakest type of buy-back demand imaginable. Think about it: the two fundamental components of such a demand are that the loan originator made a “misrepresentation,” and that the misrepresentation concerned the appraised value of the property… Continue Reading

Mortgage Loan Repurchase Claims: Not That Different from Other Contract Claims

By Philip R. Stein and Robert Siegel on Posted in Fannie Mae/Freddie Mac, Mortgage Repurchase, Too Big to Fail

Aggregator Banks and Repurchase or Make Whole Claims As most correspondents/originators are now painfully aware, aggregator banks are unleashing a barrage of “repurchase” or “make whole” claims related to loans sold by the correspondent years ago. The aggregators cite supposed loan level breaches of representations and warranties in the applicable mortgage purchase and sale agreement or… Continue Reading