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THE LATEST SERVICING Richard Cordray Talks Mortgage Lending Reform Countrywide Concludes a Pair of Legal Battles With Walnut Place dropping its suit against the entity and Syncora's decision to accept a settlement, Countrywide closes the door on two more legal issues. dropped its suit against the defunct mortgage unit, while another com- pany has accepted a $375 million settlement from the entity. According to Reuters, Walnut A Place, otherwise known as Baupost Group, withdrew objections to a proposed $8.5 billion settlement cur- rently under way with Bank of America (BofA), who bought Countrywide in 2008. Meanwhile, Syncora, subsidiary of Syncora Holdings Ltd., received $375 million from Countrywide to conclude its litigation against the company. The news service said that a tentative deal had been reached by institutional investors last year to settle Walnut Place's allegations that the mortgage unit systemati- cally misrepresented junk mortgage- backed securities in the lead-up to the financial crisis. Walnut Place reportedly sought buyback claims from the lender for roughly $1 billion in soured mortgage bonds. According to Bloomberg News, the New York Supreme Court threw out the suit, a move that an ap- peals court upheld in March. Speaking with MReport, a spokes- person with Bank of America declined to comment on the story. Reuters quoted Dan Reilly, an attorney representative of American International Group Inc., as remarking that Walnut Place will stay with the case despite dropping claims. "We're still going forward," he told the news service. "We've got a 52 | THE M REPORT major player in the ongoing Countrywide settlement has hearing next week and all the issues that have been raised are still in play." Barclays researchers responded to the withdrawal by saying they ex- pect the Countrywide settlement will wrap up in early 2013. As for Syncora's legal problems with the entity, the company agreed to release all claims against Country- wide and Bank of America Corpora- tion in exchange for the $375 million settlement. An official release about the lawsuit noted that Syncora's filing originally stemmed from the "provi- sion of insurance in relation to five second-lien transactions," as well as "claims in relation to nine other first- and second-lien transactions." The statement went on to say that in wrapping up the case, Syncora transferred assets to subsidiaries of BofA, and accordingly, BofA "trans- ferred or agreed to transfer" certain preferred shares, surplus notes, and other securities held by Syncora and its parent company. Since posting its first-quarter financials, Syncora has reportedly "remediated several credits with total cash disbursements . . . of approxi- mately $96 million." Comments from Syncora following the release of first- quarter data expressed the compa- ny's expectation that the "materially positive effect" of the surplus would be reflected in its second-quarter financial statements. In closing, however, Syncora admit- ted that it continues to face "significant risks and uncertainties," as per the company's latest financial analysis. Focusing on the need for greater communication, the bureau director's congressional appearance addressed the organization's ongoing controversy, R laid out the agency's aims to reform mortgage lending standards before a congressional subcommittee in July. Speaking before House law- ichard Cordray, director of the Consumer Financial Protection Bureau (CFPB), rules would also require servicers to contact troubled bor- rowers with information about their options as early as possible. Additionally, he said CFPB makers, Cordray acknowledged that although the Dodd-Frank Act has had a hand in improving most consumer lending markets, tight mortgage lending standards have kept creditworthy borrow- ers out of homes. In an effort to fix these issues, Cordray said that CFPB is pro- posing "clear rules of the road" to address each stage of the mortgage process and to rebuild consumer and investor confidence. The first step to clearing up the mortgage market, Cordray said, is to improve disclosures and help consumers better un- derstand mortgage terms. He asserted that better disclo- implementing such a statute, CFPB would ensure that custom- ers are not sold mortgages they cannot afford, while those who can afford to repay loans are able to find them in the market. While Cordray acknowledged is finalizing rules later this year to implement a new statutory requirement that would charge lenders with making a reason- able assessment of a borrower's ability to repay a loan before providing one. Cordray explained that in that implementing a number of reforms may be difficult for the industry, he reaffirmed CFPB's commitment to working with lenders and lawmakers to make a smoother transition. He also announced that CFPB sure will not burden lenders or undermine credit availability and that integration of federal disclo- sures may reduce the long-term cost of mortgage origination. These savings could be passed has reopened the comment period on its proposals so that consumers or lenders can voice their own feedback. "We believe that consumers on to the consumer, thus making credit more affordable. Cordray also mentioned proposed rules designed to address the issue of fairness in mortgage servicing. He called for better commu- nication between servicers and borrowers with rules requiring servicers to respond to allega- tions of error. CFPB's proposed will have more confidence after more robust rules are in place. And we are keenly aware that potential investors are waiting to see the precise shape our rules take," said Cordray. "That is why we are working to put in place rules by the deadlines that Congress set. We are committed to helping provide the mortgage market with the clarity it is seeking." SECONDARY MARKET ANALYTICS SERVICING ORIGINATION