The Supreme Court of the United States has delayed a decision to review a case that rests on the disparate impact theory of discrimination in housing and mortgage lending. The case, Township of Mount Holly, NJ, et al., Petitioners v. Mt. Holly Gardens Citizens in Action, Inc., et al., was listed on the court’s conference schedule at the end of last week, but the justices took no action. Mount Holly is now scheduled to be considered at the court’s next conference on Oct. 26. If certiorari is granted...
The number of major fair lending settlements brought by federal regulators over the last year highlights the increasing importance of mortgage lenders properly evaluating their risk of being out of compliance and responding appropriately and preemptively, according to top banking agency officials. Since November 2011, the Department of Justice has settled seven fair lending cases – against Bank of America, Countrywide Financial, GFI Mortgage Bankers, Luther Burbank Savings, Mortgage Guaranty Insurance Corp., SunTrust Mortgage, and Wells Fargo – mostly related to steering, pricing and underwriting. In the aggregate, these settlements have produced more than $550 million in monetary relief in compensation for more than 250,000 victims, according to Jon Seward, head of housing and civil enforcement for the Justice Department. “All seven cases resulted from referrals” as the regulators are...
PNC Bank has sued Republic Mortgage Insurance Co. for refusing to pay claims and attempting to rescind coverage on thousands of legacy mortgage loans that came with the bank’s acquisition of National City Corp. in 2008. In a complaint filed in federal district court in Pittsburgh last week, PNC Bank alleged that the North Carolina mortgage insurer refused to honor coverage it sold to National City under a “flow” policy and “pooling” policy between 1989 and 2005 by increasing its rescissions and cancellations. The flow policy provided...
Both supporters and opponents of the mortgage interest deduction are laying the groundwork in anticipation of a renewed post-election effort to significantly revise or even outright repeal a staple of middle-class homeownership as Washington is forced to grapple with tax reform and the looming “fiscal cliff.” A number of industry trade groups were reluctant to go on record but industry insiders say they are getting their facts and research together in anticipation of the first serious attempt to repeal the MID in two decades. The most critical factors that will dictate...
The mortgage lending industry is universally opposed to a Consumer Financial Protection Bureau proposal to establish a new, more comprehensive “all in” annual percentage rate formula that would include various additional fees and charges. The APR provision is one part of the CFPB’s extensive proposed rule intended to simplify and integrate the mortgage disclosures consumers are entitled to under the Truth in Lending Act and Real Estate Settlement Procedures Act. The overhaul was mandated by the Dodd-Frank Act. In the proposed rule, which came out in July, the bureau would replace...
Four borrowers from Alabama with adjustable-rate mortgages filed a class-action lawsuit this month against 12 banks that establish the London Interbank Offered Rate. The lawsuit suggests that more than 10,000 borrowers meet the class specifications, which cover loans originated from 2000 through 2009, and that the banks made millions of dollars or even billions due to alleged collusion. “This matter arises from a global conspiracy to fix or set LIBOR – the reference point for setting interest rates on ARMs and other loans – by a cabal of prominent financial institutions,” according to the lawsuit filed in the U.S. District Court for the Southern District of New York. The lawsuit is believed to be the first from borrowers regarding LIBOR manipulation. The plaintiffs claim...
Just two institutions – Fannie Mae and Freddie Mac – end up securitizing the vast majority of conventional home loans, but a large universe of lenders deliver a significantly diverse supply of loans to the government-sponsored enterprises. A new Inside Mortgage Finance special report based on loan-level securities disclosures reveals that 1,848 different institutions delivered single-family mortgages to the two GSEs during the third quarter. They ranged in size from Wells Fargo, which delivered nearly a quarter of mortgages securitized by Fannie and Freddie during the period, to Wisconsin-based Universal Mortgage Corp., which sold one small $39,000 loan to Fannie during the period. The report, GSE Seller Profile: 3Q12, shows...
GOP Candidate Opines on the Qualified Mortgage. Republican presidential candidate Mitt Romney briefly delved into one of the mortgage industry’s hottest issues during the first debate he had with President Obama, citing the CFPB’s pending ability-to-repay rule, asserting that banks have become reluctant to originate new mortgage loans because of delays and uncertainty surrounding the qualified mortgage definition. “You say we were giving mortgages to people who weren’t qualified. That’s exactly right. That’s one of the big reason for the great financial calamity we had,”...
The CFPB has made another call for public input on its Request for Information on Effective Financial Education initiative, which was first published in the Aug. 2, 2012, issue of the Federal Register.Specifically, the bureau’s Office of Financial Education “seeks public comment on effective financial education approaches that create opportunities for consumers to improve their financial decision-making capabilities,” the notice stated. The request “reflects the CFPB’s acceptance of a behavioral economics approach,” according to Barbara Mishkin, of counsel...
The bureau recently put out a safe]harbor list of countries that qualify for an exception to one of the requirements of the bureaufs remittance rule, which was published in February. The remittance rule generally requires remittance transfer providers to give specified disclosures to consumers sending remittance transfers. Among other requirements, a provider generally must disclose to a sender the total amount the recipient will receive, as well as the applicable exchange rate, fees and taxes. In certain circumstances, the rule permits providers to estimate these amounts...
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