InfoBytes, January 28, 2011 - Weekly In-depth review of news & developments in the financial services industry

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Topics In This Issue

• Federal Issues

• State Issues

• Courts

• Firm News

• Miscellany

• Mortgages

• Banking

• Consumer Finance

• Litigation

• Criminal Enforcement Action

Excerpt from "Federal Issues"

HUD Provides Additional Guidance Regarding Claims Process under FHA Refinance Program. Recently, the U.S. Department of Housing and Urban Development (HUD) provided additional guidance on claim filing requirements for FHA’s refinance program for underwater borrowers. The program taps funds from the Emergency Economic Stabilization Act (EESA), administered by the Department of the Treasury, for partial payment of a mortgagee’s unpaid principal balance. The EESA funding is one enhancement of the FHA’s refinance program announced in August 2010, which was created to support borrowers who owe more than the current value of their home (as reported in InfoBytes, August 13, 2010). Mortgagees must first contact the government’s designated claims processor, Wells Fargo, at ctsclaimsprocessor@wellsfargo.com to register and receive directions on how to submit claims. In the event of a default, a mortgagee may file a type01/Conveyance Claim for Insurance Benefits either in paper form or electronically. FHA will review claims and authorize payment for its portion of the unpaid principal balance for claims found to be eligible for payment and will direct the mortgagee to request the remainder from Treasury’s claims processor. In addition, FHA is responsible for full payment of expenses related to the conveyance. In the event the property is reconveyed to the mortgagee, the mortgagee will be required to repay all claim funds to FHA, including the claim funds paid under EESA.

Please see full newsletter below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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