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Rules and Regulations

Sunday, April 1, 2012

What the Changes to the Home Affordability Refinance Program Mean for Lenders

Among the most significant of the recent changes to the Home Affordable Refinance Program (HARP) are the elimination of risk-based fees for borrowers who finance into shorter-term mortgages; removal of the loan-to-value ceiling for some fixed-rate mortgages backed by GSEs (government-sponsored enterprises); and a program extension. Read more in the latest issue of Bridges.

New Fed Guidance Addresses Rating Upgrades Standards

The Federal Reserve Board issued guidance in March to ensure that supervisors apply consistent standards as they evaluate whether banking organizations with $10 billion or less in assets are eligible for upgrades of supervisory ratings.

The guidance is being issued to ensure that upgrades occur in a timely manner when the banking organizations have made the requisite progress in addressing any supervisory concerns that had prompted lower ratings. To be eligible for an upgrade, banks are expected to demonstrate, among other things, improvement in financial condition and risk management, as well as show that such improvement is likely to continue.

Comment by April 30 on Enhanced Prudential Standards, Early Remediation Requirements

Interested persons now have until April 30 to comment on a proposed rule to implement the enhanced prudential standards and early remediation requirements in the Dodd-Frank Act for bank holding companies with consolidated assets of $50 billion or more and nonbank financial companies supervised by the Federal Reserve Board.

The proposal includes a wide range of measures addressing issues such as capital, liquidity, single counterparty credit limits, stress testing, risk management, and early remediation requirements. They are designed to reduce the probability of failure of systemically important companies and minimize damage in the event that such a company fails. The Board extended the comment period (originally ending March 21) to allow interested persons more time to analyze the issues and prepare their comments.

Certain Consumers Can Submit Foreclosure Review Requests by July 31

People seeking a review of their mortgage foreclosures under the Federal banking agencies’ Independent Foreclosure Review now have until July 31, 2012, to submit their requests.

The new deadline provides an additional three months for borrowers to request a review if they believe they suffered financial injury as a result of errors in foreclosure actions on their homes in 2009 or 2010 by one of the servicers covered by enforcement actions issued in April 2011.

The actions required 14 large mortgage servicers to retain independent consultants to conduct a comprehensive review of foreclosure activity in 2009 and 2010 to identify borrowers who may have been financially injured due to errors, misrepresentations, or other deficiencies in the foreclosure process. If the review finds that financial injury occurred, the borrower may receive compensation or other remedy.

Borrowers are eligible for an Independent Foreclosure Review if they meet the following basic criteria:

  1. The mortgage loan was active in the foreclosure process between Jan. 1, 2009, and Dec. 31, 2010.
  2. The property securing the mortgage loan was the borrower's primary residence.
  3. The mortgage loan was serviced by one of the participating mortgage servicers. Those include: America’s Servicing Company, Aurora Loan Services, BAC Home Loans Servicing, Bank of America, Beneficial, Chase, Citibank, CitiFinancial, CitiMortgage, Countrywide, EMC, Everbank/Everhome Mortgage Company, Financial Freedom, GMAC Mortgage, HFC, HSBC, IndyMac Mortgage Services, MetLife Bank, National City Mortgage, PNC Mortgage, Sovereign Bank, U.S. Bank, Wachovia Mortgage, Washington Mutual, Wells Fargo, and Wilshire Credit Corporation.