Mortgage Law Blog, LLC

Today, the Federal Housing Finance Agency published formal announcement of its establishment in the Federal Register.

The FHFA is an independent Federal agency established July 30, 2008, which will integrate certain functions of the Office of Federal Housing Enterprise Oversight and Federal Housing Finance Board.

Meanwhile, the firestorm of discussions surrounding the Department of Treasury’s conservatorship of Fannie Mae and Freddie Mac continue.  The popular press continues to issue in-depth articles on a variety of details of that conservatorship, and the events leading up to and after the conservatorship.

Mortgage Law Blog notes for readers that various agencies also have issued statements regarding the conservatorship.  Links to a number of these releases appears below.

For a copy of the FHFA announcement, click here.

For FHFA press releases on the conservatorship, click here.

For an FHFA Fact Sheet on the conservatorship, click here.

For a press release from the Department of Treasury, click here.

The following releases are also of interest, in some ways due to their reserved nature:

• Board of Governors of the Federal Reserve System.
• Department of Housing and Urban Development.
• House Committee on Financial Services; also here.
• Senate Committee on Banking, Housing and Urban Affairs; also, here.

Tags: Bailouts, Bankruptcy, FDIC, Fannie Mae/Freddie Mac, Federal Bank Regulators, Federal Reserve, HUD & FHA, Mortgage Banking - General, NCUA, OCC, OTS, U.S. Treasury by the Editor
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The Office of Thrift Supervision has announced a 90-minute teleconference entitled “Identity Theft Rules and Guidelines.”  The conference is part of the “Getting It Right” Compliance Series.

The announcement describes the teleconference as:

A live, ninety-minute, telephone briefing to provide savings associations with valuable information about federal Identity Theft rules and guidelines that go into effect on November 1, 2008.  Hear from compliance and information security experts at OTS and have an opportunity to ask questions and get answers.

The teleconference is scheduled for August 11, 2008 from 2:00 to 3:30 p.m.  (Advance registration required.)

For a full copy of the press release, click here.

Tags: Conferences & Events, Consumer Protection, Federal Bank Regulators, Fraud, Identity Theft, Mortgage Banking - General, OTS by the Editor
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The Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Board of Governors of the Federal Reserve, Office of Thrift Supervision, and National Credit Union Administration have jointly published Illustrations of Consumer Information for Hybrid Adjustable Rate Mortgage Products.

The agencies’ joint summary states:

The Agencies are publishing four documents that set forth Illustrations of Consumer Information for Hybrid Adjustable Rate Mortgage Products. The illustrations are intended to assist institutions in implementing the consumer protection portion of the Interagency Statement on Subprime Mortgage Lending adopted on July 10, 2007, and in providing information to consumers on hybrid adjustable rate mortgage (ARM) products as recommended by that interagency statement. The illustrations are not model forms and institutions may choose not to use them.

The Illustrations are effective May 29, 2008.

For a full copy of the Federal Register notice, please click here.

Tags: Consumer Protection, FDIC, Federal Bank Regulators, Federal Reserve, Financial Literacy, Mortgage Banking - General, NCUA, OCC, OTS, Regulations, Unfair or Deceptive Acts by the Editor
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The Federal Financial Institutions Examination Council yesterday issued updated guidance for examiners, financial institutions, and technology service providers to identify business continuity risks and evaluate controls and risk management practices for effective business continuity planning.  The guidance is an update to the “Business Continuity Planning Booklet.”

Many in the industry view this agency’s guidance as useful for mortgage companies generally. 

This is true even though FFIEC is actually structured to assist institutions regulated by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

The FFIEC’s press release states in part: 

The revised booklet includes enhancements to the business impact analysis and testing discussions and addresses emerging threats and lessons learned in recent years. The booklet also stresses the responsibilities of each institution’s board and management to address business continuity planning with an enterprise-wide perspective by considering technology, business operations, communications, and testing strategies for the entire institution.

Key elements of the FFIEC’s December 2007 Interagency Statement on Pandemic Planning have been added to the booklet. A pandemic outbreak would present unique business continuity challenges. The methodologies detailed in the booklet provide a framework for financial institutions to develop or update their pandemic preparedness plans. All financial institutions should have plans that address how the institution will function during a pandemic event.

Other changes in the booklet highlight the importance of business continuity planning for all financial institutions, regardless of whether their systems are provided in-house or through third-party service providers, as well as the lessons learned from financial institutions that suffered damage from hurricanes Katrina and Rita. Electronic versions of the Business Continuity Planning Booklet and other IT Examination Handbook booklets are available at http://www.ffiec.gov/ffiecinfobase/html_pages/it_01.html.

The FFIEC IT Examination Handbook is a collaborative effort of the FFIEC’s Information Technology Subcommittee of the Task Force on Supervision. The Information Technology Subcommittee promotes uniform and effective information technology policies and supervisory programs for financial institutions and their service providers.

A copy of the full press release can be found here.

Tags: Business Continuity Planning, FDIC, Federal Bank Regulators, Federal Reserve, Mortgage Banking - General, NCUA, OCC, OTS, Regulations by the Editor
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The Director of the Office of Thrift Supervision, John M. Reich, yesterday spoke to the Independent Community Bankers Association at the Association’s annual convention.

The Director’s talk focused in large part on his recent proposal on foreclosures, discussed in a previous posting here on Mortgage Law Blog, which he says prevents foreclosures while preventing a taxpayer funded bailout to lenders, borrowers or investors.

The Director’s proposal is specifically targeted at preventing “avoidable” foreclosures” against homeowners who cannot refinance because their mortgages are “underwater” (i.e., they owe more than their properties are currently worth).  The Director stated that the proposal benefits all stakeholders without letting any party off the hook, without any bailout, without creation of a new government entity or assistance program, and without transferring undue risk to the balance sheets of thrifts and other lenders.

The Director noted that details still must be worked out, but generally the proposal works as follows:

• Buyer bought a home two years ago at $240,000 with $20,000 down.
• Buyer borrowed $220,000 for the purchase.
• Today, the home is worth only $200,000.
• Buyer refinances today, getting a new FHA loan for $196,000 at the current market rate. 
• The old lender receives the $196,000 as partial payoff of the prior $220,000 loan. 
• The old lender also receives a certificate for the remaining $24,000 that it did not receive on the $220,000 loan.
• If the home is later sold, and the home value has increased, the old lender would have the ability to receive up to the value of the $24,000 certificate.
• These negative equity certificates could also be sold to investors in the secondary market so lenders would not be forced to hold certificates if they did not want to do so.

Questions about such a proposal abound, but Mortgage Law Blog looks forward to additional details.

For a copy of the speech, please click here.

Tags: Consumer Protection, Federal Bank Regulators, Foreclosure, HUD & FHA, Mortgage Banking - General, OTS, Regulations by the Editor
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