A California federal district court’s recent decision to reject fair housing claims related to FHA loans brought by the City of Los Angeles against Wells Fargo relied heavily on the U.S. Supreme Court’s recent decision on disparate impact, according to legal experts. Specifically, the U.S. District Court for the Central District of California granted summary judgment for Wells Fargo in a Fair Housing Act case brought by the City of L.A. The suit alleged that the bank’s mortgage lending practices had a disparate impact on minority borrowers, which resulted in a disparate number of foreclosures in minority areas. Wells Fargo was accused of reverse redlining since at least 2004 by imposing different terms or conditions on minority borrowers. The suit further alleged that Wells Fargo originated eight types of “predatory” home loans targeted to minorities. These loans include “high-cost” loans, subprime loans, interest-only loans, ...
Starting in June 2016, FHA lenders will find delivering origination appraisals will be faster when the agency’s Electronic Appraisal Delivery (EAD) portal becomes fully operational. The FHA will soon begin registration of EAD portal users so that lenders can select their implementation schedule. By using the portal, FHA lenders will find it less cumbersome to do business with the FHA, minimize appraisal errors and reduce post-endorsement corrections of appraisals, the agency said. The EAD portal is a web-based platform that will allow FHA lenders and their third-party service providers to transmit single-family appraisal data and deliver appraisal reports prior to endorsement of a loan for mortgage insurance. Delivery of appraisals via the EAD portal becomes mandatory for all case numbers assigned on or after June 27, 2016. Lenders may use the phase-in implementation period to familiarize themselves and train in the ...
The U.S. Department of Agriculture’s Rural Housing Service has delayed the implementation of the revised document upload process for guaranteed single-family home loans. The changes to the document-uploading component in the RHS Guaranteed Underwriting System (GUS) will be implemented on Aug. 26, not Aug. 12 as initially planned, to ease current restrictions on RHS’ document upload. However, an application must first be established before uploading any document into GUS. This can be done by completing the first three pages of a GUS application. Previously, users were not allowed to upload documents into GUS until a final submission had successfully processed. In addition, before the changes to the document uploading process, only users with a security designation that included “final submit authority” were allowed to upload documents. The revised system now allows users with a security designation of ...
A Miami FHA lender and two of his associates plead guilty to a mortgage fraud scheme that cost the FHA approximately $64 million in losses. Hector Hernandez, owner of Great Country Mortgage Bankers and a real estate developer, and his business partner Aleida Fontao each pleaded guilty to conspiracy to commit wire fraud. Olga Hernandez, an underwriter for Great Country, confessed to falsifying information in borrowers’ loan applications to make them appear qualified. According to the DOJ, Great Country was a direct endorsement lender that made loans to first-time homebuyers and borrowers with imperfect credit and low credit cores. Hernandez and Fontao admitted to pressuring their loan officers to approve and close loans based on fraudulent income and employment information. Borrower credit histories were altered to make them look good. The senior underwriter admitted to providing false information to her co-workers and endorsing borrowers’ applications despite knowing that they did not qualify for the loans.
HUD Proposes to Clarify Participation of Religious Organizations in Agency Programs. The Department of Housing and Urban Development has proposed a rule that would amend current rules regarding equal participation of faith-based organizations in HUD programs. The amendments implement a 2010 presidential directive, which clarified that religious providers may compete for federal funding without losing their religious identity. The directive also provided protections for program beneficiaries, including a referral process for those opposed to religious groups that operate federally funded programs. The public has 60 days from the date of publication in the Federal Register to comment on the proposed changes. NMI Holdings Turn Profitable. NMI Holdings, parent company of National Mortgage Insurance, appears to be turning the corner toward profitability as the changes implemented by ...
The fastest-growing sectors of the mortgage market during the second quarter of 2015 were jumbo loans and government-insured production, according to a new Inside Mortgage Finance ranking and analysis. The conventional-conforming segment remains the biggest piece of the mortgage market, accounting for 52.8 percent of originations during the second quarter. Back in early 2013, when refinance activity accounted for three of every four new home loans, the conventional-conforming share was 68.1 percent. Lenders generated...[Includes two data charts]
The Consumer Financial Protection Bureau appears to have declared war on several decades’ worth of business practices as it encourages lenders and real estate service providers to end their “marketing service agreements” with each other. Moreover, according to industry officials, the CFPB is just getting started on its crackdown as it tries to eliminate both legal and under-the-table business arrangements where a lender – in theory – provides something of value to vendors that it’s conducting business with. The first sign that the mortgage industry is concerned...
Fannie Mae and Freddie Mac both reported significant increases in net income during the second quarter based largely on hefty gains on their hedging activities. The two government-sponsored enterprises earned a combined $8.81 billion during the second quarter, up from just $2.41 billion for the first three months of 2015. As a result, the Treasury Department will sweep a combined $8.26 billion from Fannie and Freddie into its coffers. Rising interest rates played...
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