Decoding Compliance

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The latest s e c on da r y m a r k e t a na ly t ic s Se r v ic i ng Or ig i nat ion SERVICING HARP 2.0 Is Nice, Study Hall Group Advocates Companies join to prepare servicers for CFPB examinations and adjust to new procedures. for HARP 3.0 The revamped HARP has helped consumers, but it could do more after slight revision. W hile the revised Home Affordable Refinance Program (HARP), commonly referred to as HARP 2.0, has allowed far more homeowners to refinance than the original version, there remains a large group of eligible homeowners who have yet to take advantage of the program. 360 Mortgage Group, a privately owned mortgage bank based in Austin, Texas, is calling for the implementation of HARP 3.0 based on this large proportion of homeowners who continue to pay interest rates far higher than today's historically low rates. While admitting, "HARP 2.0 has been very successful in enabling a large number of homeowners to refinance at historically low interest rates," Mark Greco, president and founder of 360 Mortgage Group, sees room for improvement as "less than one in four eligible borrowers under the HARP 2.0 guidelines has taken advantage of this important program." About 2.6 million GSE-backed loans might be eligible for HARP 2.0, according to Lender Processing Services (LPS). Of these, half have prime credit scores and about 670,000 continue to harbor interest rates above 6 percent, according to LPS. Many Alt-A and subprime borrowers have been unable to take advantage of HARP 2.0, according to Greco. "Consequently, HARP 3.0 is in order," he said. "HARP 3.0 would be an opportunity to not only expand refinances to include these borrowers who have been diligent on their payments, but also to continue to rebuild our nation's economic strength," Greco said. The Right to Rule An appeals court agrees with MERS' right and authority to assign mortgages after reviewing questionable claims surrounding the company. A three-judge panel of the U.S. Court of Appeals for the Ninth Circuit has affirmed, without hearing, an order dismissing claims against Mortgage Electronic Registration Systems, Inc. (MERS), according to a release from MERSCORP Holdings. 50 | The M Report The appellate ruling affirmed a decision issued by District Judge David Alan Ezra of the District Court for Hawaii. The complaint against MERS was dismissed with prejudice. According to the release, the plaintiff's second amended A s the industry readies itself to meet new regulatory requirements from the Consumer Financial Protection Bureau (CFPB), two industry service providers team to help servicers prepare for CFPB examinations and adjust procedures to comply with new regulations. Clayton Holdings LLC, a Shelton, Connecticut-based company that offers due diligence, consulting services, and surveillance, joins with Maddin, Hauser, Wartell, Roth & Heller, P.C., a Detroit-based real estate and mortgage banking law firm, to provide a new range of services in preparation for new industry regulations. "Due to the rapidly changing mortgage servicing environment, including the CFPB's release of its final rules for mortgage servicers in mid-January, mortgage servicers are confronting, and will continue to face, growing legal and operational challenges," according to a press release from Clayton Holdings. "A Clayton/Maddin Hauser relationship provides a unique value proposition for our servicer clients—combining extensive mortgage servicing expertise with a pragmatic and cost-effective approach to assisting those clients in controlling their risk in an uncertain regulatory environment," said Martin Frenkel, co-chair of Maddin Hauser's mortgage litigation and compliance group. The two companies will offer compliance reviews, including loan-level file assessments and inspections of servicers' policies. They will then help servicers rectify any shortcomings in order to avoid later repercussions from regulatory agencies. Clayton and Maddin Hauser will offer constant advisement as industry rules continue to develop and change. "We're excited to be able to combine Clayton's deep operational knowledge of residential loan servicing with Maddin Hauser's consumer law expertise to provide a top-tier offering to residential mortgage servicers in advance of a CFPB examination," said Bruce Legan, president of Clayton Consulting Services. complaint against MERS contained four allegations related to its assignment of a mortgage to a foreclosing lender. The ruling found that MERS, as nominee for the lender and the lender's successors and assigns, had authority to assign the mortgage to a third party. "[T]he court has grave doubts about the validity of the factual predicate underlying most, if not all, of plaintiffs' claims," Judge Ezra wrote. He also held that "the Ninth Circuit concluded that MERS was a legitimate organization and that the mortgage which plaintiffs signed put them on notice of the role MERS was to play in their home loans." "Judge Ezra could have simply dismissed these allegations when noting that the plaintiffs were not a party to the assignment and, therefore, could not challenge its validity, but he further analyzed the merits—or lack thereof—of the complaint," said Jason Lobo, MERSCORP Holdings' director for corporate communications. "We are pleased that Judge Ezra found no merit to these charges and that the appellate panel agreed with his methodical rejection of these frequently used and always failing legal arguments."

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