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The FHA, which sells insurance that repays lenders if a borrower defaults, proposed a number of changes to its compliance requirements yesterday to give financial firms more confidence that they can issue loans backed by the agency without running afoul of its rules, Bloomberg News Reported. “It has become clear that our lending partners are seeking clarity and greater certainty when documenting compliance with FHA requirements,” Montgomery, said FHA Commissioner, Brian D. Montgomery. “We anticipate that this will encourage more lender participation in FHA business.” The move follows complaints from JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon and other bankers that it didn’t make sense to participate in FHA loan programs because of alleged violations. After the 2008 financial crisis, the Justice Department aggressively pursued banks for underwriting mistakes, levying billions of dollars in sanctions, prompting major lenders to pull out. Most of the biggest issuers of FHA mortgages are now non-bank lenders. One consultant who helped banks navigate the post-crisis legal challenges: Montgomery. After an earlier stint as FHA commissioner during the Bush administration, he helped found the Collingwood Group, a Washington, D.C.-based firm that specializes in FHA-related penalties and lawsuits. Collingwood Group’s clients included Wells Fargo & Co. and US Bancorp.

A handful of homeowners who may be affected by mortgage servicer Ditech Holding Corp.’s bankruptcy have been named to a Justice Department-appointed committee, giving them a platform to amplify their concerns, WSJ Pro Bankruptcy reported. The Justice Department division that monitors corporate bankruptcy cases told Judge James L. Garrity Jr. in court papers filed on Thursday that it has created a committee for Ditech customers who have raised questions about how the company’s chapter 11 case will affect them. The Fort Washington, Pa., company, which collects mortgage-loan payments on about 1.4 million residential loans through Ditech Financial LLC, Green Tree Servicing Corp. and other associated companies, filed for bankruptcy on Feb. 11. It blamed its financial troubles on rising interest rates and its own heavy debt payments. The company faces thousands of litigation claims from homeowners who have notified the company of mistakes related to their mortgage accounts, according to documents filed in U.S. Bankruptcy Court in New York.

Ginnie Mae is taking steps to curb repeated mortgage refinancings that it says are hurting both borrowers and investors, the Wall Street Journal reported. The government-backed firm, which promotes homeownership by guaranteeing government mortgage bonds, is considering barring some loans backed by the Department of Veterans Affairs from inclusion in its flagship bonds. Its proposal, to be released today, is aimed at stopping so-called “churning,” a practice in which lenders push borrowers to refinance their home loans over and over in a bid to boost fees to the lenders. Ginnie Mae has made churning a priority in recent years. It started taking action against individual lenders last year when their activity suggested they were pushing refis on borrowers, even when the borrowers wouldn’t benefit from it. Ginnie Mae’s backing of government mortgage bonds gives investors certainty they will be paid, which in turn allows lenders to make mortgages at lower rates, often to first-time home buyers and veterans. Its portfolio of outstanding bonds has ballooned in recent years and now makes up nearly a third of all agency-backed mortgage debt. That has put the firm in the position of having to more carefully police the actions of its lenders, many of which are independent firms, to preserve the flow of capital into the mortgage market. Now, Ginnie Mae is focusing on mortgages where a borrower pulls cash out of their home during a refinancing, resulting in a loan that is more than 90 percent of the value of the property. The firm is seeking input from investors and others before completing the policy.

Last year, the Consumer Financial Protection Bureau relaxed some of the requirements for the data collection and reporting stipulated by the Home Mortgage Disclosure Act, HousingWire.com reported. The policy exempted insured depository institutions and credit unions that originated less than 500 closed-end mortgages or 500 open-end lines of credit in each of the two preceding years from certain HMDA reporting requirements. Now, the CFPB is proposing to ease the HMDA reporting requirements even more: The CFPB announced yesterday that it is proposing new HMDA rules that would increase the HMDA reporting threshold for mortgages, meaning some smaller lenders and credit unions may not have to report their lending activities, at all. Under the current rules, lenders that originate 25 mortgages or more in a two-year period are required to report to their HMDA data to the CFPB. The new proposal establishes two new reporting thresholds that are under consideration. According to the CFPB, the new rules would raise the HMDA reporting requirement to either 50 or 100 mortgages during a two-year period.

A remnant of the subprime mortgage lending boom, WMC Mortgage LLC, filed for bankruptcy yesterday to wrap up its final affairs a dozen years after shutting down operations and facing an onslaught of legal trouble, WSJ Pro Bankruptcy reported. A home lender for decades, WMC made subprime home loans on a wholesale basis as a subsidiary of GE Capital Corp. between 2004 and 2007, helping to fuel the mortgage-industry meltdown that unsettled the global economy, court papers said. The loans WMC produced in part backed the packaged securities that were sold to Wall Street and whose value plummeted during the subprime mortgage crisis. Chapter 11 bankruptcy will allow WMC to end remaining legal threats, court papers say. Despite billions of dollars worth of settlements, WMC is still being hit with legal fallout, such as claims for indemnification by others involved in the risky home loan debacle, according to court filings. WMC recently was part of a $1.5 billion settlement between the U.S. Department of Justice and General Electric Co. that ended a long-running probe into alleged subprime mortgage accounting violations. WMC was accused of misrepresenting the quality of the loans it produced. The Justice Department settlement contained no admission of wrongdoing. The case is In re WMC Mortgage LLC, U.S. Bankruptcy Court, District of Delaware, No. 19-bk-10879.

Homeowners in Chicago cheated by a mortgage fraud scheme are seeking to form a committee to protect their interests in the bankruptcy of Ditech Holding Corp., the company that owns their loans, Bloomberg News reported. The Investor Protection Center at the Northwestern Pritzker School of Law filed a request for the creation of a committee of consumer creditors to represent borrowers who were victims of the scheme. The fraud targeted elderly African-American homeowners and coerced them into reverse mortgages with no benefits that left some in foreclosure, the filing states. Ditech, the mortgage lender and servicer led by Tom Marano, filed for bankruptcy in February and has proposed a plan to restructure its debt that would release it from liabilities such as lawsuits filed by consumer borrowers. J. Samuel Tenenbaum, a professor of law at Northwestern, said the homeowners he helps represent will be harmed by such a release of liabilities. The center’s clients “are elderly, disabled, and lack the financial means to obtain representation, are the most vulnerable and at risk of harm in Ditech bankruptcy matters," Tenenbaum, who is the director of the Northwestern’s Complex Civil Litigation and Investor Protection Center, wrote in the filing on Friday.

Gay couples are a lot less likely to be approved for a home loan, and they pay more for the mortgages they do get, according to a new analysis of more than 30 million U.S. home loans from 1990 to 2015, Bloomberg News reported. Same-sex partners were 73 percent more likely to be denied a loan than male-female couples with the same financial profile, according to the study by Iowa State University’s Ivy College of Business. The higher fees, an average of 0.2 percentage points, are small for individual borrowers but add up to as much as $86 million a year, according to the research, published by the Proceedings of the National Academy of Sciences. The penalties aren’t limited to LGBTQ borrowers. As more same-sex couples seek loans in a neighborhood, rejection rates and fees rise for other borrowers as well. Although the U.S. has become far more accepting in recent decades, LGBTQ people are not explicitly protected from discrimination in federal lending laws, and a majority of states don’t prohibit housing and accommodation discrimination against LGBTQ residents.

Senior Trump administration officials are discussing how to jump-start an overhaul of mortgage finance, with the new federal overseer of Fannie Mae and Freddie Mac pledging to act with “a great sense of urgency” over the coming months, the Wall Street Journal reported. “The foundations of our mortgage finance system remain vulnerable, and we must not let this opportunity for reform pass,” Mark Calabria, the new head of the Federal Housing Finance Agency, said yesterday. His agency regulates Fannie and Freddie, the two mortgage-finance companies that back about half of the U.S. mortgage market. As the FHFA’s new chief, Calabria is set to play a critical role in the Trump administration’s efforts to address a remnant of the financial crisis: Washington’s control over Fannie and Freddie, which have been under government conservatorship since the 2008 financial crisis. The Senate confirmed Calabria along party lines this month. Calabria’s comments come after Treasury Secretary Steven Mnuchin said in an interview last week that he wants to develop a plan to overhaul Fannie and Freddie over the next six months. Doing it through legislation would be the administration’s first choice, he said, but it would look for “things we could do on an administrative basis” absent action from Congress, he said.