Fifth Third Bancorp became the latest mortgagee to fall victim to the federal False Claims Act after it agreed recently to an $85 million settlement with the government over alleged failures to self-report defective mortgages to the FHA. The settlement between the Department of Justice and FTB and its banking subsidiary resolves civil fraud claims arising from the bank’s origination of FHA-insured residential mortgages. According to the DOJ, the Ohio-based direct endorsement lender admitted to originating approximately 1,400 home loans it previously certified as FHA-eligible but which later turned out to be materially defective. FTB, however, did not report its discovery to the Department of Housing and Urban Development as required, resulting in millions of dollars in losses to the FHA Mutual Mortgage Insurance Fund. Under the settlement terms approved by ...
The Department of Housing and Urban Development has proposed a rule that would conform its property disposition practices and regulations to industry standards and make the program more effective and efficient. The proposed changes would allow HUD to obtain the best value for its real estate-owned properties, minimize losses to the Mutual Mortgage Insurance Fund, and expand homeownership opportunities. In addition, the proposed rule would prepare the agency for future changes to the FHA single-family property disposition program for REO properties. The proposed rule would clarify HUD’s authority to receive REO properties as well as possess, hold and maintain them throughout the disposition process. A provision in the proposed rule would clarify that various evaluation tools may be used to establish the list price for REO properties but only an approved appraiser in good standing may ...
The FHA has issued guidance on acceptable timetables in every state for completing the foreclosure process as well as for other procedural changes for forward and reverse mortgages. FHA regulations require that, when foreclosure of a defaulted loan becomes necessary, mortgage servicers “must exercise due diligence” in carrying out the foreclosure and in acquiring title to and possession of the property. The updated reasonable-diligence time frames will take effect for all cases in which foreclosure is initiated on or after Jan. 1, 2016. The reasonable diligence period begins with the first legal action required by the jurisdiction to start foreclosure and ends upon the acquisition of a good marketable title and possession of the property. The FHA expects servicers to comply with all federal, state and local laws when prosecuting foreclosures and possessing properties backing ...
The VA loan is a great option for veterans and servicemembers looking to purchase a new home. However, did you know it could also be paired with other home-financing programs to give the borrower a bigger bang for the buck? For instance, many real estate brokers and mortgage lenders are unaware that the VA loan can be used with certain products offered through state housing finance agencies to provide greater benefits to veterans and members of the military. The Colorado Housing and Finance Authority (CHFA) offers a tax credit program that allows VA borrowers to claim a percentage of the annual mortgage interest paid each year as a federal tax credit on their federal income tax returns. “It is not a tax deduction,” said Chad Patterson, a real estate agent with RE/MAX Traditions in Longmont, CO. “This can be a huge asset to the ...
The Department of Housing and Urban Development’s Inspector General has slammed Ginnie Mae for understating the severity of misstatements in prior year financials. In a memorandum, the HUD IG said Ginnie Mae’s inadequate disclosures in a restatement notification did not help users of financial statements understand the full impact of the material misstatements. The reporting errors were identified in an IG audit of Ginnie’s fiscal year 2014 financial statements. According to the IG, the misstatements in the 2014 audit were due to improper accounting for FHA’s reimbursable costs and the flawed accounting treatment and inadequate disclosure of borrowers’ mortgage escrow funds held in trust by Ginnie in its defaulted issuers’ portfolio. These errors may have affected Ginnie Mae’s prior year financial statements as far back as FY 2011, the IG concluded. In its audit report, the IG ...
Michaelson, Connor & Boul has reached the end of its term as mortgage compliance manager (MCM) of the Department of Housing and Urban Development. Sept. 30, 2015, was MCB’s last day as mortgage compliance manager, in charge of processing millions of pre- and post-conveyance transactions for HUD. MCB won the contract as HUD’s first national MCM in 2010, when the department reorganized its management and marketing(M&M) programs under a new M&M III. However, even before that, since 1999, MCB had been performing real estate acquisition and disposition services for HUD under the previous M&M programs. As mortgage compliance manager, MCB had a bird’s eye view of every lender’s (and their service provider’s) business practices when performing pre- and post-conveyance activities. As of Aug. 31, 2015, MCB had processed 4,162,550 pre- and post-conveyances. As MCB makes ...
Government Files False Claims Act Suit Against FHA Lenders, “Counseling Fund.” Three federal agencies filed a civil lawsuit against a purported charitable “counseling fund” and five FHA-approved mortgage lenders and their principals for running a mortgage scam that resulted in a huge loss for the FHA. The suit alleges that Rainy Day Foundation, a tax-exempt charitable institution in the District of Columbia, and five New York-based banks defrauded several federally insured banks resulting in millions of dollars of mortgage losses and costing the FHA $5.6 million in paid false claims. According to the complaint, the lenders originated FHA loans, which they later sold to the victimized banks. The loans went into early-payment default (EPD) at twice the average default rate of other lenders. The lenders allegedly conspired with the Rainy Day foundation to conceal their ...
GSE high-LTV mortgage programs gained traction during 3Q with the two securitizing $2.23 billion of insured purchase loans with LTV ratios of 96 or 97 percent...
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