The FHA has issued emergency guidance for handling loan applications in areas affected by the water contamination crisis in Flint, MI, while the VA called for special relief for affected Michigan borrowers. A spokesperson for the Department of Housing and Urban Development said FHA lenders have been seeking guidance on how to handle single-family housing properties with an FHA-insured mortgage that may be affected by the tainted water supply in Genesee County., MI. The FHA’s two-page guidance stated that a property in the affected areas must first meet the agency’s property acceptability standards. Lenders are required to ensure that each property has a continuing adequate supply of clean, safe and potable drinking water. In addition, they must make sure the property is safe to occupy and free of any health or environmental hazard. HUD’s Single Family Policy Handbook ...

The FHA will soon begin implementing system enhancements to the Electronic Appraisal Delivery (EAD) portal to improve its functionality further and to address user feedback. Use of the EAD portal becomes mandatory on June 27, 2016, when appraisers will begin to submit their appraisals electronically to FHA, reducing the time for processing and closing an FHA-insured loan. The FHA will implement the changes on March 14. First, reference to the six-digit alphanumeric “one-time key” used by a mortgagee’s designated EAD administrator to log into the EAD portal will be changed to “appraisal portal one-time key.” References to the key will be revised throughout the EAD portal screens and system-generated messages. The appraisal portal’s one-time key is generated in FHA Connection and is the last step in the initial EAD login process. In addition, users will be given a ...

The FHA’s Home Equity Reverse Mortgage Information Technology (HERMIT) system will shift to a new vendor-operated host data center beginning March 21, 2016. Reverse Market Insight (RMI), a provider of data, analysis and portfolio valuation services for the reverse mortgage industry, has been tapped to manage, maintain and operate HERMIT. Launched in October 2012, HERMIT is an online, web-based automated system that monitors and tracks the FHA’s Home Equity Conversion Mortgage portfolio and automates insurance claim payments. HERMIT will shut down temporarily from 7 p.m., March 16, to 8 a.m., March 21, in order to complete the transition. The FHA said there would be no changes to the system’s functionality during transition to the host data center. User IDs and passwords for accessing HERMIT will remain unchanged. Following HERMIT’s transition to the ...

A recent federal appeals court ruling that held Fannie Mae and Freddie Mac are private companies under the False Claims Act, and not government agencies, has stoked speculation about what it means for shareholder lawsuits challenging the Treasury Department’s net-worth sweep of capital from the two government-sponsored enterprises. On Feb. 22, the Ninth Circuit Court of Appeals ruled that claims cannot be brought against the GSEs under the False Claims Act because they are private companies. In United States ex rel. Adams v. Aurora Loan Services, Inc., et al., the government alleged FCA claims against a handful of lenders because of erroneous representations and warranties, similar to a number of FCA lawsuits successfully...

The CFPB took two separate actions against Citibank last week for alleged illegal debt sales and debt collection practices. In its first action, the CFPB ordered Citibank to cough up nearly $5 million in consumer relief and pay a $3 million penalty for allegedly selling credit card debt with inflated interest rates and for failing to forward consumer payments promptly to debt buyers. The second action was taken against both Citibank and two debt collection law firms it used that allegedly falsified court documents filed in debt collection cases in New Jersey state courts. The CFPB ordered Citibank and the law firms to comply with a court order that Citibank refund $11 million to consumers and forgo collecting about $34 million ...

he CFPB initiated its first data security enforcement action last week, ordering online payment platform Dwolla, based in Des Moines, IA, to pay a $100,000 penalty for allegedly deceiving consumers about its data security practices, to stop misrepresenting those practices and to fix them. According to the bureau, from December 2010 until 2014, Dwolla claimed to protect consumer data from unauthorized access with safe and secure transactions. The company also claimed that it encrypted all sensitive personal information and that its mobile applications were safe and secure. As a result of its investigation, the CFPB said that, among other issues, Dwolla misrepresented its data-security practices by falsely claiming they exceed or surpass industry security standards. “Contrary to its claims, Dwolla ...

Mass Defection of Top Financial Services Attorneys at K&L Gates. A total of 26 top attorneys – including Laurence Platt, Phillip Schulman, Steven Kaplan, Melanie Brody and Jonathan Jaffe – have jumped ship from the K&L Gates law firm in Washington, DC, to the rival Beltway law shop of Mayer Brown. Their new Consumer Financial Services Group will advise leading financial services companies – including banks, investment banks, private equity funds, hedge funds, mortgage companies, marketplace lenders, emerging payment companies and start-ups –as well as various types of participants in the consumer credit and real estate finance arenas. Their specialized focus will include counseling clients on federal and state laws governing the making, servicing, purchase and sale of residential mortgage loans and the ...

Fannie Mae and Freddie Mac are private companies, according to a recent Ninth Circuit Court of Appeals case that dismissed an argument stating that the mortgage giants are federal instrumentalities as it relates to them being liable under the False Claims Act. Now some say this ruling may influence and stir up reaction about a case in Delaware involving GSE shareholders who argue that the Treasury sweep of the GSEs’ profits was illegal. In the United States ex rel. Adams v. Aurora Loan Services, Inc., et al., a whistleblower case, James Adams, on behalf of the government, named 16 banks, lenders and servicers as defendants in a FCA breach of representations-and-warranties lawsuit. It was alleged...

FHFA Ramps Up HARP Social Media Efforts. The Federal Housing Finance Agency kicked off a new social media campaign in late February, #HARPNow, to let more than 367,600 homeowners across the country know about the Home Affordable Refinance Program before it expires on Dec. 31, 2016. FHFA will use Twitter, LinkedIn and YouTube to reach homeowners in the 10 states with the greatest concentration of HARP-eligible borrowers. Fannie Names Winner of Second NPL Community Impact Pool. Fannie Mae announced that New Jersey Community Capital is the winning bidder of the company’s second Community Impact Pool of non-performing loans. This pool of loans was structured to attract diverse participation from non-profits, smaller investors and minority- and women-owned businesses. The transaction...

The U.S. Department of Justice will reportedly decide within the next few months whether or not to bring the hammer down on Moody’s Corp. for allegedly overstating its ratings on MBS transactions in the run-up to the financial crisis, Bloomberg reported last week, citing “people familiar with the matter.” According to the news account, the Justice Department is scrutinizing credit ratings that Moody’s assigned during the housing boom and trying to determine if the firm massaged its criteria to earn business from Wall Street banks that were bundling residential mortgages into securities. A proposed settlement has apparently been...[Includes one data table]