mortgages

Fannie Mae and Freddie Mac are issuing new mortgage bonds this year, which would transfer the risk of default to private investors on all but the safest mortgages, The Wall Street Journal's Joe Light reports. The hope is the new bonds will expand the market for home mortgages as well as prevent taxpayers from being on the hook if another mortgage crisis develops.

Light notes that almost all of the U.S. housing market currently depends upon guarantees from government-backed entities. But the Federal Housing Finance Agency, which regulates Fannie and Freddie, has set a goal for the companies to transfer most of the risk on new mortgages to private investors.

The federal government is trying to coax banks into making more mortgage loans to risky borrowers by assuring them that minor mistakes on mortgages won't result in penalties, The Wall Street Journal's Joe Light reports. The Justice Department has been claiming in several lawsuits that there have been mistakes by banks in loans backed by the Federal Housing Administration, resulting in billions of dollars of penalties and lenders making fewer loans througy the FHA program. The FHA has now proposed new documents for certifying loans, which FHA leader Edward Golding said would leave "room for minor errors while still letting the government pursue damages in the event of significant mistakes."

The Washington Post's Kenneth R. Harney reports that mortgage problems make up 28 percent of the 600,000 complaints posted on the Consumer Financial Protection Bureau's website. Complaints about mortgage lenders, debt collectors, credit-card companies and credit bureaus are logged on the site.

The CFPB started posting narratives for those complaints June 25, but lenders can't post their own narratives. David Stevens, president and chief executive of the Mortgage Bankers Association, told Harney the process is one-sided and uses '“unsubstantiated and unverified'” information that can be submitted by anyone, and the bureau does not “'validate the authenticity of the complaint or the individuals making the complaint.”'

JPMorgan Chase, Wells Fargo, HSBC, US Bank, Santander and EverBank are facing new restrictions on their mortgage-lending businesses for failing to clean up their foreclosure practices, The Washington Post's Danielle Douglas-Gabriel reports. The restrictions were announced this week by the Office of the Comptroller of the Currency.

The banks are being barred from servicing loans for which they handle payments on behalf of other financial institutions that hold those mortgages on their books.

Wells Fargo failed to comply with 15 of 98 items banks have been asked to fix by regulators, while HSBC failed to comply with 45 of 98 items, Douglas-Gabriel reports..

The Federal Housing Finance Agency, which oversees mortgage giants Fannie Mae and Freddie Mac, won't allow homeowners to get forgiveness on their mortgages even if they owe substantially more on their homes than they are worth, The Huffington Post's Ben Hallman reports. Leaders of FHFA think that giving debt forgiveness to some homeowners would encourage other people to stop paying their mortgages in order to get debt forgiveness too. But the Congressional Budget Office has found that principal reduction plan could help 1.2 million borrowers save their homes and also save Fannie and Freddie, as well as taxpayers, $2.8 billion, Hallman reports.

Financial Services Superintendent Benjamin Lawsky said New York's foreclosure system is "'broken and badly in need of change"' because of delays in the settlement conferences that must be held before houses can be foreclosed, New York Law Journal's Joel Stashenko reports.

The Department of Financial Services found that it takes nine months, on average, from when a foreclosure is filed in New York to when the settlement conferences conclude. The study also found that the biggest reason for delays is the lack of a definition for what it means that homeowners and banks are required to negotiate in good faith. Lawsky called for legislation to more clearly define what negotiation in good faith means.

Banks may be running out of time to get their money back in New York foreclosure cases because some cases could become time-barred by a six-year statute of limitations, The New York Law Journal's Andrew Keshner reports. One Long Island judge ruled that the statute of limitations starts when the entire mortgage balance was declared due in full but a bank failed to file its second mortgage complaint within six years.

Elizabeth Lynch, supervising attorney for MFY Legal Services' foreclosure project, told Keshner that it is rare that homeowners have not made some post-acceleration mortgage payments, which can start the statute of limitations clock again.

There are approximately 92,000 foreclosure cases pending in New York.

Homeowners who lost their properties to foreclosures are starting to bounce back and are qualifying for new mortgages, The Wall Street Journal's Annamaria Andriotis, Laura Kusisto and Joe Light report. More than 5 million families lost their homes to foreclosure between 2007 and 2014, but foreclosures and other negative credit events come off credit reports after about seven years. “'The dark shadow of the foreclosure crisis is finally beginning to fade,”' Mark Zandi, chief economist at Moody’s Analytics, a unit of Moody’s Corp, told the WSJ. '“That should be a positive for single-family housing and, by extension, for the broader economy.”'

Florida's 17th judicial circuit wanted to charge $132,000 to search for records pertinent to the Center for Public Integrity 's request to access procedures and policies regarding foreclosure cases. "Charging high fees for access to public information can undermine public records laws and serve as a back-door way for government agencies to avoid releasing information they want kept private," the center notes. The center is seeking reconsideration of the bill, which it says are excessive.

The Wall Street Journal reports that Bank of America is going to pay a record settlement of $17 billion over its mortgage lending: "The deal will resolve a government investigation that stems largely from the bank's purchases of Merrill Lynch & Co. and Countrywide Financial Corp. as they teetered in the housing crisis." More than $9 billion is expected to be in cash, WSJ further reports.