LPS Settles Federal Mortgage Fraud Inquiry for $35M

LPS Settles Federal Mortgage Fraud Inquiry for $35M

02/15/2013 BY: ESTHER CHO

Lender Processing Services Inc. (LPS) agreed to pay $35 million to resolve criminal fraud violations involving fraudulently signed and notarized mortgage documents, the Justice Department announced Friday.

LPS entered into a non-prosecution agreement with the department and the U.S. Attorney’s Office for the Middle District of Florida. Through the settlement, LPS announced it will pay $20 million to the United States Marshals Service and $15 million to Treasury.

The agreement also requires the company to meet a series of other conditions.

The department stated LPS has already taken a number of remedial actions to address the misconduct at DocX, a wholly owned subsidiary of LPS, and has wound down all the subsidiary’s operations and re-executed and re-filed mortgage assignments as necessary.

The settlement follows guilty pleas from Lorraine Brown, the former CEO/president of DocX. In November, Brown pled guilty to conspiracy to commit mail and wire fraud in federal court in Florida and entered a plea deal in Missouri. Michigan attorney general Bill Schuette also brought charges against Brown and recently announced the former CEO pled guilty to racketeering.

The Justice Department statement explained that over a 6-year period ending in 2009, employees of DocX falsified signatures on mortgage-related documents. Brown and others at DocX were accused of directing authorized signers to allow unauthorized staff to sign and have documents notarized in order to increase profits.

The announcement follows a $127 million multistate settlement in January to resolve “robo-signing” allegations.

In a statement, Hugh Harris, LPS president and CEO, said, “[t]he conclusion of the Justice Department’s inquiry is another positive step for LPS.”

“Coupled with recent settlements with multiple state attorneys general, as well as other litigation, LPS has effectively dealt with its legacy issues related to past business practices and is squarely focused on delivering leading technology-driven solutions to enable the mortgage industry to meet its new requirements,” Harris added.

 

2013
12/16
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FHFA Calls Eminent Domain ‘Threat’ to GSEs, May Consider Legal Action

FHFA Calls Eminent Domain ‘Threat’ to GSEs, May Consider Legal Action

08/08/2013BY: ESTHER CHO

As local governments consider the use of eminent domain to seize underwater mortgages, they may have to deal with the Federal Housing Finance Agency (FHFA) before moving forward with the plan.

In a statement Thursday, FHFA stated it may “initiate legal challenges” to local or state actions that authorize the use of eminent domain to restructure mortgage contracts impacting Fannie Mae and Freddie Mac.

Another action the GSEs’ regulator might take is limit or stop business activity in jurisdictions that authorize the use of eminent domain to restructure mortgages.

According to the statement, the conclusion was based on the law and input received. In an analysis of the input, Alfred M. Pollard, FHFA general counsel, wrote “there is rational basis to conclude that the use of eminent domain by localities to restructure loans for borrowers that are ‘underwater’ on their mortgages presents a clear threat to the safe and sound operations of Fannie Mae, Freddie Mac and the Federal Home Loan Banks.”

Pollard also stated the use of eminent domain “would run contrary to the goals set forth by Congress for the operation of conservatorships by FHFA.”

The statement follows reports that Freddie Mac might take legal action to stop Richmond, California, from using eminent domain to seize underwater mortgages. Recently, officials in the city approved adoption of the controversial approach, but the city was hit with a lawsuit Wednesday from an institutional investor group, according to a report from Reuters.

Mortgage Resolution Partners is the firm that has been actively approaching different cities to propose the use of eminent domain as a solution to address underwater mortgages. As part of the plan, MRP would provide the funds to refinance the mortgages, then take a government-approved flat fee per mortgage, according to the firm’s website.

2013
12/12
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GSEs Announce New Mortgage Insurance Requirements

GSEs Announce New Mortgage Insurance Requirements

12/02/2013 BY: TORY BARRINGER

Moving forward on another of its performance goals for 2013, the Federal Housing Finance Agency (FHFA) announced Monday that Fannie Mae and Freddie Mac have completed a major overhaul of mortgage insurance master policy requirements.

Earlier in the year, FHFA laid out its 2013 Conservatorship Scorecard, which—among other things—calls for the GSEs to develop aligned requirements for master policies. Through an ongoing effort, FHFA says both enterprises have worked with the mortgage insurance industry “to address and update gaps in the existing master policy framework.”

“Updating the mortgage insurance master policy requirements is a significant accomplishment for Fannie Mae and Freddie Mac,” said FHFA acting director Ed DeMarco. “The new standards update and clarify the responsibilities of insurers, originators, and servicers, and they enhance the insurance protection provided to Fannie Mae and Freddie Mac, which ultimately benefits taxpayers.”

The new requirements include a number of provisions intended to facilitate faster and more consistent claims processing, establishing specific timeframes, and creating standards for the circumstances under which coverage must be maintained and when it may be revoked.

Also included are requirements for master policies to support recently developed loss mitigation strategies and guidelines to promote information sharing among mortgage insurers, servicers, and the GSEs.

FHFA anticipates the master policies will go into effect in 2014 pending review and approval by state insurance regulators. Both enterprises will provide guidance to lenders and servicers in the coming weeks regarding specific effective dates.

For their parts, Fannie Mae and Freddie Mac both put their support behind the new master policies.

“The updated master policy for mortgage insurance announced today builds on the market reforms of the past five years, and we were happy to work with FHFA to bring about this latest step toward greater operational efficiency and transparency in the mortgage market,” said Paige Wisdom, EVP and chief enterprise risk officer at Freddie Mac. “We look forward to working with our servicers and the nation’s mortgage insurers as they adopt the new master policy.”

“Mortgage insurers are an important part of the mortgage finance system and these changes help lay the foundation for a stronger system going forward,” added Andrew Bon Salle, EVP of single-family underwriting, pricing, and capital markets at Fannie Mae. “These updates will help us better manage our credit risk, which we believe will ultimately benefit Fannie Mae, mortgage insurers, homeowners and taxpayers.”

2013
12/04
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Home Prices Continue to Climb as Year Winds Down

Home Prices Continue to Climb as Year Winds Down

BY: KRISTA FRANKS BROCK AND ASHLEY R. HARRIS

Despite the cooling temperatures, home prices continue to heat up across the country. The Federal Housing Finance Agency’s (FHFA’s) recently released Home Price Index posted an increase over the third quarter, a trend that has continued over the past nine quarters. The index, which incorporates sales data from Fannie Mae and Freddie Mac, rose 2 percent over the third quarter and 8.4 percent over the year.

LPS reported similar findings. National home prices rose 0.2 percent over the month in September, reaching $232,000 for the month, according to Lender Processing Services’ Home Price Index, which was released Monday. Year-over-year prices rose 9 percent in September, according to LPS.

At their current level, prices are about 14 percent below their peak reached in June 2006.

“Overall, the housing market experienced another strong quarter, but price appreciation in the latter part of the quarter was relatively subdued,” said Andrew Leventis, principal economist at FHFA.

FHFA’s calculations are somewhat lower than those calculated by Case Shiller. Released Tuesday—the same day as the FHFA HPI—Case Shiller reported a 3.2 percent quarterly increase and an 11.2 percent annual increase for the third quarter.

FHFA also measured prices on a seasonally-adjusted basis over the month, detecting a 0.3 percent increase over the month of September.

While the yearly price increase stands at 8.4 percent, when accounting for inflation, prices rose about 7.2 percent over the year, according to FHFA.

All 50 states and the District of Columbia experienced rising prices over the year in September, according toFHFA.

Nevada posted the steepest price increase over the year in September, according to FHFA—a 25 percent rise.

California (23 percent), Arizona (15 percent), Florida (12 percent), and Washington (12 percent) followed.

At the other end of the spectrum, Mississippi posted the smallest increase at 1 percent.

Wyoming, New Mexico, Connecticut, and Delaware all followed with price gains hovering just above 2 percent.

Of the nine Census divisions, prices rose most over the year in the Pacific division—19.2 percent.

No price decreases were reported over the year, but the smallest gain took place in the Middle Atlantic division—2.9 percent.

Over the month of September, the East South Central division posted the greatest price increase—a 1.9 percent gain.

The Middle Atlantic and Mountain divisions both posted 0.1 percent declines—the only declines over the month.

Two divisions reported no price change—the New England and the West North Central divisions.

Nevada and Connecticut posted the greatest price changes over the month—though in opposite directions.

Home prices in Nevada jumped 0.8 percent over the month, while prices in Connecticut fell 0.9 percent.

Two Southern states followed Nevada, tying for the second-greatest price increases over the month according to LPS—Georgia and South Carolina. Both states posted price gains of 0.7 percent in September.

Illinois and Florida both experienced 0.5 percent price increases, and Washington D.C. and Wisconsin both experienced 0.4 percent gains.

Rounding out the top 10, Arizona, Texas, and Indiana all posted 0.3 percent increases in home prices over the month, according to LPS.

Several Northeaster states joined Connecticut on the list of top 10 price declines in September. New Hampshire (-0.6 percent), Massachusetts (-0.5 percent), Pennsylvania (-0.4 percent), Vermont (-0.3 percent), and New Jersey (-0.2 percent) all fell in the ranks.

Colorado (-0.4 percent), Alaska (-0.3 percent), and Iowa (-0.2 percent) were the exceptions.

 

2013
12/02
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Yellen’s Likely Confirmation Puts the Brakes on Rising Interest Rates

Yellen’s Likely Confirmation Puts the Brakes on Rising Interest Rates

BY: TORY BARRINGER

Mortgage rates shifted down this week, according to reports from Freddie Mac and finance website Bankrate.com.

Freddie Mac’s Primary Mortgage Market Survey shows the 30-year fixed-rate mortgage (FRM) averaging 4.22 percent (0.7 point) for the week ending November 21, a decrease from 4.35 percent last week. A year ago at this time, the 30-year FRM averaged 3.31 percent.

The 15-year FRM averaged 3.27 percent (0.7 point) this week, down from 3.35 percent. The 5-year adjustable-rate mortgage (ARM) average also retreated, averaging 2.95 percent (0.5 point), while the 1-year ARM was unchanged at 2.61 percent (0.4 point).

The declines accompanied a week of lukewarm economic data.

“Fixed mortgage rates fell this week on reports of weaker manufacturing growth and declines in overall inflation rates,” said Frank Nothaft, VP and chief economist for Freddie Mac.

Manufacturing numbers show industrial production falling 0.1 percent in October, while the consumer price index dropped the same amount. Annually, consumer prices are up 1 percent, “the smallest increase since October 2009,” Nothaft said.

Meanwhile, Bankrate’s weekly national survey has the 30-year fixed average dropping to 4.39 percent, with the 15-year fixed falling to 3.42 percent. The 5/1 ARM was also down, falling a few points to 3.28 percent.

While Freddie Mac attributed this week’s movements to economic stats, Bankrate pointed to another cause.

“After two consecutive weeks moving to the upside, mortgage rates reversed course following Federal Reserve Chair nominee Janet Yellen’s comment that ‘there is more the Fed can do,’” Bankrate said in a release.

“Investors took this to mean that the Fed will not be in a hurry to rein in stimulus or boost interest rates,” Bankrate explained, “and that helped bring both bond yields and mortgage rates back down.”

2013
11/30
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JPMorgan Chase Reaches $13B RMBS Settlement with U.S. Government

JPMorgan Chase Reaches $13B RMBS Settlement with U.S. Government

BY: CARRIE BAY

JPMorgan Chase has struck a deal with the U.S. Department of Justice to resolve civil claims from both federal and state officials over residential mortgage-backed securities (RMBS) issued prior to January 1, 2009, by the bank and two financial institutions it acquired in 2008–-Bear Stearns and Washington Mutual.

The $13 billion settlement is the largest in American history between the U.S. government and a single entity.

Under the agreement reached, JPMorgan will pay $9 billion in restitution and provide an additional $4 billion in relief for homeowners at risk of foreclosure and communities impacted by the housing crisis. Federal officials say the relief funding could benefit more than 100,000 borrowers.

According to JPMorgan, the cash portion of the settlement payment consists of a $2 billion civil monetary penalty and $7 billion in compensatory payments, including a previously announced $4 billion payment to resolve litigation claims from the Federal Housing Finance Agency.

Borrower relief will be in the form of principal reduction, forbearance, and other direct benefits from various relief programs, the bank explained. JPMorgan Chase has committed to complete delivery of the promised relief to borrowers before the end of 2017.

The settlement was negotiated through the Residential Mortgage-Backed Securities Working Group, a joint state and federal unit formed in 2012 by President Obama to investigate wrongdoing within the mortgage-backed securities market that helped to trigger, contribute to, or exacerbate the U.S. financial crisis.

New York Attorney General Eric T. Schneiderman co-chairs the RMBS Working Group. Tuesday’s settlement comes 13 months after Schneiderman sued JPMorgan for fraudulent RMBS packaged and sold by Bear Stearns before it was acquired by JPMorgan at the behest of government officials at the Federal Reserve, FDIC, and U.S. Treasury.

In announcing the unprecedented settlement, Schneiderman said, “Since my first day in office, I have insisted that there must be accountability for the misconduct that led to the crash of the housing market and the collapse of the American economy. This historic deal … is exactly what our working group was created to do.”

He continued, “We refused to allow systemic frauds that harmed so many New York homeowners and investors to simply be forgotten, and as a result we’ve won a major victory today in the fight to hold those who caused the financial crisis accountable.”

Separately, the FDIC announced Tuesday that it also reached a settlement with JPMorgan Chase and its affiliates in relation to the failure of six banks. The FDIC, acting as receiver for the failed institutions, says misrepresentations where made in the offering documents for 40 RMBS purchased by the now-defunct banks.

JPMorgan agreed to pay $515.4 million, which will be distributed among the receiverships for the failed Citizens National Bank (failed May 22, 2009), Strategic Capital Bank (May 22, 2009), Colonial Bank (August 14, 2009), Guaranty Bank (August 21, 2009), Irwin Union Bank and Trust Company (September 18, 2009), and United Western Bank (January 21, 2011).

From May 2012 to September 2012, the FDIC as receiver for five of the failed banks filed 10 lawsuits against JPMorgan, its affiliates, and other defendants for violations of federal and state securities laws in connection with the sale of RMBS.

As part of the global settlement reached, JPMorgan acknowledged it made serious, material misrepresentations to the public—including the investing public—about numerous RMBS transactions, according to a statement on the New York attorney general’s website.

JPMorgan Chase says it is fully reserved for this settlement.

2013
11/29
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Bidding Wars Resume in Major Markets in October

Bidding Wars Resume in Major Markets in October

BY: TORY BARRINGER

Despite a softening market, competition among buyers remained fairly fierce in October, Redfin reported in its Real-Time Bidding Wars release for the month.

Last month, 55.9 percent of offers written by the Seattle-based brokerage’s agents faced competition from other buyers, a decline from 58.3 percent in September. Bidding wars have been on a downward slope since peaking at 79 percent in February.

October was also the third consecutive month to see a drop in competition compared to the same month last year, Redfin said.

Even with the decline, though, competition last month was higher than expected, given the effects of the government shutdown on consumer confidence.

“While many Americans paused their home-buying and selling plans during the shutdown, overall demand in October was more robust than expected, with home tours and offers rebounding once the government reopened,” said Redfin analyst Rachel Musiker. “This unexpectedly strong demand paired with dwindling inventory likely kept competition from falling even further in October.”

Out of the 22 markets reporting, Boston saw the biggest drop in competition, with 61.3 percent of offers facing bidding wars—down from 70.1 percent in September. San Diego, meanwhile, experienced the biggest increase in bidding wars, with 63.0 percent of offers competing against multiple bids compared to 56.1 percent the month prior.

For the most competitive areas, interested buyers still have to adopt aggressive tactics, including offering all cash. Mia Simon, a Redfin agent operating in Silicon Valley, tells a story of a bidder vying for a home priced just above $1.4 million:

“There were only three other offers, but they were all above $1.8 million. Although my client’s offer was not the highest overall, it was the highest of the all-cash offers,” Simon said.

“Today’s Silicon Valley home buyers realize that they long missed out on the bottom of the market, but many believe that home prices will rise even more in 2014, so they will do whatever it takes to get a home under contract before the spring,” she added.

At the same time, the less competitive markets are seeing a shift in the buyer/seller dynamic. For example, in Washington, D.C.—where 44.0 percent of Redfin offers went against other bids in October—sellers are working harder to gain attention.

“I’ve recently received a few phone calls from agents whose listings I have shown to my clients,” said agent Philip Gvinter, who works in the nation’s capital. “They’re trying to gauge my clients’ interest in the home, and some simply ask what it will take to get my client to write an offer. It’s been more than a year and a half since I’ve received a call like that.”

2013
11/29
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Consumers Remain Uncertain About Economy

Consumers Remain Uncertain About Economy

11/27/2013 BY: TORY BARRINGER

After taking a sharp dive in October, consumer confidence continued to decline at a more moderate pace in November, indicating the level of uncertainty that still grips the country.

The Conference Board’s Consumer Confidence Index dropped two points to 70.4 in the most recent reading, the company reported. The decline follows a more substantial decrease in October stemming from the partial federal government shutdown.

Both index subcomponents took a hit as consumers presented mixed responses on the economy. The Present Situation Index, a measure of Americans’ perceptions of current economic conditions, edged down to 72.0 from October’s 72.6. Meanwhile, the Expectations Index, a measure gauging projections six months from now, decreased more significantly to 69.3 from 72.2.

“Sentiment regarding current conditions was mixed, with consumers saying the job market had strengthened, while economic conditions had slowed,” explained Lynn Franco, director of economic indicators at the Conference Board. “However, these sentiments did not carry over into the short-term outlook. When looking ahead six months, consumers expressed greater concern about future job and earning prospects, but remain neutral about economic conditions.”

According to the Conference Board’s survey, the share of consumers claiming current business conditions are “good” increased slightly to 19.9 percent from October’s 19.5 percent, while those claiming conditions are “bad” increased to 25.2 percent from 23.0 percent.

Appraisals of the job market were little changed from October. Those saying jobs are “plentiful” ticked up to 11.8 percent from 11.6 percent, and those saying jobs are “hard to get” decreased to 34.0 percent from 34.9 percent.

For the next six months, those expecting business conditions to improve increased slightly to 16.6 percent, while those expecting conditions to worsen decreased to 16.8 percent.

The consumer outlook for the labor market was more pessimistic. The number of consumers anticipating more jobs in the coming months fell more than 3 percentage points to 12.7 percent, while those anticipating fewer jobs decreased slightly to 21.7 percent. At the same time, fewer consumers expect their incomes to increase (14.9 percent), while more anticipate a decline in income (15.9 percent)

2013
11/28
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Foreclosure Inventory Plunges Nearly 30%

Foreclosure Inventory Plunges Nearly 30%

BY: CARRIE BAY

The nation’s foreclosure inventory has contracted for 18 consecutive months and is now at its lowest point since the end of 2008, totaling 1.28 million loans, or just 2.54 percent of today’s active mortgages, according to Lender Processing Services (LPS).

The company’s latest report assessing loan-level data on the performance of mortgage assets through the end of October shows the industry’s foreclosure inventory rate is down 29.61 percent from last year. Through the first 10 months of 2013, the foreclosure inventory rate has plummeted 26 percent.

Delinquencies dropped 2.8 percent month-over-month in October to come in at a rate of 6.28 percent. LPS says while that’s not as low as the delinquency rates recorded

earlier this year—in August the rate was 6.20 percent and in May it settled in at 6.08 percent—it’s still headed in the right direction. Compared to last year, the rate of mortgages 30-plus days delinquent is down 10.69 percent.

Nationwide, there are 3,152,000 properties with mortgages 30 or more days past due; 1,283,000 of those are 90 or more days delinquent but not in foreclosure. Add to that the 1,276,000 loans that are part of the pre-sale foreclosure inventory, and there are 4,427,000 non-current home mortgages in the United States, by LPS’ assessment.

According to the company’s state-by-state breakdown, Mississippi has overtaken Florida as having the nation’s largest population of non-current loans, totaling 15.1 percent. Mississippi’s foreclosure inventory rate through October is just 2.1 percent, but it’s delinquency rate is 13 percent—the highest in the nation, by far.

Florida took the top spot on LPS’ list of states with the most non-current loans in 2008, displacing Mississippi. Since then, Florida held that spot, reining as the nation’s nonperformance leader for more than five years, up until last month.

Excluding the last five years, Mississippi has held the dubious distinction of having the highest non-current inventory as far back as LPS’ historical data goes. So, unfortunately for Mississippians, the company says, this is more indication that things are getting back to “normal.”

 

2013
11/28
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New Network Launches to Connect Secondary Market Traders

New Network Launches to Connect Secondary Market Traders

BY: TORY BARRINGER 

Secondary market professionals have a new way to connect with potential buyers and sellers: LendTrade, a recently launched community for trading professionals designed to cut out the middleman and save costs.

Upon joining LendTrade, new members set up a profile and indicate the types of deals they’re seeking. Once the process is complete, they are able to immediately start connecting with other members, receiving notifications whenever opportunities that meet their criteria are posted.

Steve Schipper, founder and CEO of the Des Moines, Iowa-based firm, describes the network as “Match.com meets LinkedIn for traders.”

“Some secondary market loan professionals need assistance negotiating and closing deals, and for that, advisors are valuable resources. However, many professionals know how to do their own deals, they just need the right buyer or seller,” he said. “That’s where LendTrade comes in.”

2013
11/28
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