Lender and Servicer Held Liable for Making False Claim for Real Estate Taxes
Judge Rodriguez holds servicer and lender liable under Rule 3002.1 and the FDCPA for making a claim for unpaid real estate taxes that had been paid.
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Moody's: Looser Underwriting Will Lead to Higher Prime Jumbo Mortgage Defaults
Moody's said in a report that default rates for prime jumbo mortgages will increase, but a strong economy and rising home prices will bail most borrowers and lenders out, National Mortgage News reported. Higher home prices play a double-edged sword, reducing affordability and contributing to lenders' deciding to ease underwriting. However, they can also help delinquent borrowers become current or pay off their mortgage. "Originators' underwriting standards loosened after a period of negligible defaults, fueled by the strengthening macroeconomic environment and typical competitive pressures that occur late in the credit cycle," said the Moody's report from Siddharth Lal, Karandeep Bains and Joseph DiMiceli. "The debt-to-income ratio for mortgages in prime jumbo residential mortgage-backed securities that we rate has been on the rise since 2015 signaling decreasing affordability." While the 60 day or more late payment rate for older loans (issuances between 2012 and 2105) remained relatively flat at 0.05 percent, "in more recent vintages the delinquency rates have steadily climbed higher since issuance, inching up to 0.2 percent as of December 2019," Moody's said.
Houlihan Lokey Named as Adviser on U.S. Overhaul of Fannie, Freddie
The U.S. housing finance regulator has selected investment bank Houlihan Lokey Capital Inc as its financial adviser for a potential overhaul of Fannie Mae and Freddie Mac, Reuters reported. The Federal Housing Finance Agency said yesterday that Houlihan Lokey will advise on how the mortgage finance giants could be rebuilt into fully private companies. The firm will be paid up to $45 million in fees over 5.5 years. Houlihan Lokey will advise on “business and capital structures, market impacts and timing, and available capital raising alternatives,” the FHFA said. The selection of a financial adviser was seen as a critical step in any effort to return Fannie and Freddie to the private market, after operating under a government conservatorship since being bailed out in 2008. The FHFA’s director, Mark Calabria, previously had said he wanted the FHFA to hire an adviser before Fannie and Freddie hired their own to avoid a conflict.
American Securities’ Bet on Rising Mortgage Defaults Turns Sour
Near record lows in U.S. mortgage defaults last year spelled good news for homeowners but bad news for one private-equity firm, WSJ Pro Bankruptcy reported. Mortgage Contracting Services LLC, a Lewisville, Texas-based company backed by private-equity firm American Securities LLC, has seen its revenue decline in recent years and its roughly $435 million in debt is now trading at distressed levels. American Securities bought the company in 2017, betting on a business that profits when homeowners default on mortgage repayments and lenders foreclose on their property. MCS’s core business involves maintaining and managing properties left empty after foreclosure. The company’s services include changing locks, mowing and weeding lawns, as well as helping manage evictions, according to its website. Past clients include U.S. mortgage lenders Fannie Mae and Freddie Mac as well as the U.S. government, the website stated. But the private-equity firm’s bet on the company hasn’t gone as planned. The company’s $435 million term loan is trading at 48 cents on the dollar, according to IHS Markit Ltd., putting American Securities’ investment at risk. Loans trading below 70 cents on the dollar are typically associated with a high risk of default.
Waters Vows Subpoena on OCC Community Reinvestment Act Proposal
House Financial Services Committee Chairwoman Maxine Waters (D-Calif.) promised to subpoena the data used to develop the Office of the Comptroller of the Currency’s proposed rewrite of the Community Reinvestment Act, if the agency doesn’t provide it willingly, MorningConsult.com reported. In a contentious hearing yesterday morning, Waters clashed with Comptroller of the Currency Joseph Otting over the anti-redlining legislation. The OCC and the Federal Deposit Insurance Corp. last month released a proposal to revamp the law, which consumer groups worry will take away protections. Rep. Nydia Velázquez (D-N.Y.) asked Otting at the hearing if he would release the data used to craft the proposal, which Otting has argued is confidential information. Otting said that’s not something the agency would make available for public distribution. Waters, chiming in, said the committee would subpoena the information since she doesn’t expect cooperation from Otting and the OCC. Read more.
Click here for more information on the hearing.
