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Financial Services Law Insights and Observations

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  • FHFA: No Increase on Multifamily Loan Caps for GSEs

    Federal Issues

    On November 22, FHFA announced that Fannie Mae and Freddie Mac’s caps for multifamily lending will remain at $36.5 billion for 2017. The determination was based on the agency’s projection that the overall size of the multifamily finance market will remain roughly the same as it was in 2016. Multifamily loans in designated affordable and underserved segments will remain excluded from the caps.

    Federal Issues Mortgages Freddie Mac Fannie Mae Mortgage Origination Mortgage Servicing HUD FHFA

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  • CFPB Releases 2017 Lists of Rural, Underserved Counties

    Federal Issues

    On November 20, the CFPB released the 2017 iteration of its annual lists of rural counties and rural or underserved counties for use in conjunction with the several CFPB rules that refer to “rural or underserved” and “rural” counties, including the balloon-payment qualified mortgage definition and the exemption from the escrow requirements for higher-priced mortgage loans. Rural counties were generally defined by using a U.S. Department of Agriculture classification system and under-served counties were defined by data collected under the Home Mortgage Disclosure Act. In addition to these lists, the bureau also directs lenders to use its Rural or Underserved Areas Tool to provide a safe harbor determination that a property is located in a rural or underserved area for purposes of Regulation Z.

    Federal Issues Mortgages CFPB HMDA Regulation Z

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  • Dept. of Energy Releases Updated PACE Loan Guidelines

    State Issues

    On November 18, the Department of Energy released new best practices guidelines for residential Property-Assessed Clean Energy (PACE) mortgages, which provide homeowners a way to finance energy-efficient home improvements through property tax assessments. The new guidelines are intended to help state and local governments as they expand their PACE programs, and address the various problems that have emerged in the market since the PACE framework was first established in 2009. Among other things, the guidelines suggest that PACE programs confirm property owners’ ability to repay their assessments, and that state and local governments work with program administrators to establish underwriting guidelines and criteria for PACE programs.

    State Issues Mortgages Mortgage Servicing PACE Programs

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  • FHA MMI Fund Shows Gains in Fiscal 2016

    Lending

    On November 15, HUD released its 2016 Annual Report to Congress Regarding the Financial Status of the Mutual Mortgage Insurance (MMI) Fund (the MMI Report). The MMI Report reflected the Fund’s improved financial condition for the fourth year in a row amid rising home prices, fewer defaults and a surge of new borrowers. The capital cushion of the Fund grew to 2.32 percent in fiscal 2016, up from 2.07 percent. It was only the second year since 2008 that the capital ratio, a proxy for the fund's health, exceeded the 2 percent minimum required by law. The net worth of the Fund, which stands behind $1 trillion in U.S. home loans and serves as a sort of savings account to pay lender claims if borrowers default, grew by $3.8 billion to $27.6 billion.

    Mortgages HUD Insurance FHA Miscellany

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  • FDIC Releases Second Volume in its Affordable Mortgage Lending Guide

    Federal Issues

    On November 3, the FDIC released the second volume of its recently-introduced Affordable Mortgage Lending Guide (Guide). The Guide is designed to help bankers learn about, and make comparisons of, available affordable mortgage-related programs, as well as their Community Reinvestment Act implications. This second installment of the Guide focuses on programs offered by and/or through state housing-related finance agencies across the country including, for instance, down payment and closing assistance, mortgage tax credit certificates, and homeownership education or counseling. The first volume in the series, released earlier this year, covered federal and GSE programs, and a third installment is expected to cover programs available through Federal Home Loan Banks.

    Federal Issues FDIC Mortgages Affordable Housing

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  • Florida Supreme Court Holds That Each Default Resets Foreclosure Suit Clock

    Courts

    In an opinion issued Thursday in Bartram v. U.S. Bank Nat'l Ass'n, Nos. SC14-1265, SC14-1266, SC14-1305, 2016 Fla. App. LEXIS 16236 (Dist. Ct. App. Nov. 3, 2016), the Florida Supreme Court ruled that a mortgagee is not precluded by the five-year statute of limitations for filing a subsequent foreclosure action based on payment defaults occurring subsequent to the dismissal of the first foreclosure action, as long as the alleged subsequent default occurred within five years of the subsequent foreclosure action. In so holding, the Court affirmed the lower appellate court's decision and reinstated litigation.

    The dispute in Bartram began with a 2006 foreclosure lawsuit against Bartram after he stopped making payments on his mortgage. In April 2011, with Bartram's suit still pending, his ex-wife filed a declaratory judgment action to quiet title to the property, naming her ex-husband, the bank and the homeowners’ association as defendants. When the original foreclosure suit against Bartram was dismissed on procedural grounds one month later, he sought declaratory judgment that the 5-year statute of limitations had passed. Specifically, he argued that the limitations period began to run when he defaulted in January 2006 and the bank accelerated the loan. Although the trial court sided with Bartram, the Florida Fifth District Court of Appeal reversed the ruling and certified the question to the Florida Supreme Court. Florida’s high court narrowly construed the question, framing the issue as: “Does acceleration of payments due under a residential note and mortgage with a reinstatement provision in a foreclosure action that was dismissed . . . trigger application of the statute of limitations to prevent a subsequent foreclosure action by the mortgage based on payment defaults occurring subsequent to dismissal of the first foreclosure suit?” As noted above, the Florida Supreme Court held it does not.

    Courts Mortgages Foreclosure Mortgagee Letters

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  • CFPB Issues Warning Letters to 44 Mortgage Lenders and Brokers for Potential HMDA Reporting Failures

    Federal Issues

    On October 27, the CFPB issued warning letters to 44 mortgage lenders and mortgage brokers informing them that they may not be in compliance with certain provisions of the Home Mortgage Disclosure Act (HMDA) and Regulation C. The warning letters state that the recipients may be required to collect, record, and report housing-related lending data, and that they may be violating those requirements. Under HMDA, financial institutions that meet certain criteria are required to collect and report data related to their housing-related activity, including home purchase loans, home improvement loans, and refinancings they originate or purchase, or for which the institutions receive applications. The letters recite HMDA’s coverage criteria for lenders who are not banks, credit unions, or savings associations, suggesting that the CFPB is particularly concerned about HMDA compliance for non-depository mortgage lenders. While the letters state that the CFPB has not made any determinations that the recipients are in violation of HMDA filing requirements, the letters urge recipients to review their practices to ensure compliance with the relevant laws, and encourage recipients to advise the CFPB if the institution has taken steps or will take steps to ensure compliance. The letters advise recipients of the CFPB’s authority to impose civil money penalties for noncompliance with HMDA. In October 2013, the CFPB fined a bank and a nonbank mortgage lender for filing inaccurate HMDA data. In October 2015, the CFPB finalized a rule amending the HMDA reporting requirements under Regulation C, with the majority of the provisions taking effect on January 1, 2018.

    Federal Issues Mortgages CFPB Nonbank Supervision HMDA

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  • CFPB Mortgage Servicing Rule Published in Federal Register

    Federal Issues

    Last week, the CFPB’s final rule amending the mortgage servicing provisions of Regulations X and Z was published in the Federal Register. The amendments were previously covered in BuckleySandler’s August 9 Special Alert. The majority of the final rule will take effect on October 19, 2017, exactly one year after its Federal Register publication date. Certain provisions related to successors in interest and bankruptcy periodic statements will become effective on April 19, 2018. The CFPB’s interpretive rule under the FDCPA addressing industry concerns and conflicts with the servicing rules in Regulations X and Z was simultaneously published in the Federal Register on October 19, 2016.

    Federal Issues Mortgages CFPB FDCPA Regulation Z TILA Regulation X RESPA

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  • FHA Eases Owner-Occupancy Requirement on Condominium Financing

    Federal Issues

    On October 26, the FHA released Mortgagee Letter 2016-15 announcing its decision to lower the owner-occupancy requirement on condominiums to as low as 35 percent. The letter follows a September announcement in which the FHA stated that, pursuant to the Housing Opportunity through Modernization Act of 2016, or H.R. 3700, it was required to “issue guidance regarding the percentage of units within an approved condominium development that must be owner occupied.” The guidance outlined in Mortgagee Letter 2016-15 is “effective immediately for all condominium project approval applications, recertification applications, annexation applications or reconsideration applications submitted for review.”

    Federal Issues Mortgages FHA Mortgagee Letters

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  • HUD OIG: Mortgage Servicing Issues Cost FHA $2.23 Billion

    Federal Issues

    On October 14, the HUD Office of Inspector General (HUD-OIG) published a report on HUD’s monitoring and payment of conveyance claims upon termination of FHA-insured mortgages. According to the report, mortgage servicers’ failure to foreclose on properties or meet conveyance deadlines may have cost the FHA an estimated $2.23 billion in unreasonable and unnecessary holding costs. HUD-OIG concluded that deficiencies in 24 CFR Part 203 did not “enable HUD to provide effective oversight and HUD monitored only a small percentage of servicers after the claim had been paid.” As a result of its findings, HUD-OIG recommended that HUD (i) amend 24 CFR Part 203 to include “a maximum period for filing insurance claims and disallowance of expenses incurred beyond established timelines”; (ii) develop an IT plan that that ensures significant operational changes to how HUD monitors single-family conveyance claims; and (iii) establish and implement controls to identify noncompliance with 24 CFR 203.402.

    Federal Issues Mortgages Foreclosure Mortgage Servicing HUD FHA OIG

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