The Mortgage Bankers Association last week wrote the CFPB and other government regulators and agencies to warn that a rule adopted by the Federal Communications Commission last year could harm mortgage servicers when they try to provide early intervention with homeowners who are delinquent on their mortgages. The FCC’s order aims to bolster consumer protections against unwanted telephone calls and texts by, in part, restricting the ability of mortgage servicers, debt collectors and others to make autodialed or prerecorded phone calls without prior express consent of the person called. Violators can be subject to fines of $500 per phone call. But according to the MBA, the rule “threatens to expose mortgage servicers to significant and possibly unavoidable liability when they ...

Last week, Toyota Motor Credit Corp. reached a $21.9 million deal with the CFPB and Department of Justice to settle allegations that the auto lender charged African-American, Asian and Pacific Islander borrowers higher interest rates than white borrowers for their auto loans, without regard to their creditworthiness. In addition to the pay-out to affected minority borrowers, TMCC agreed to change its pricing and compensation system to substantially reduce dealer discretion and accompanying financial incentives to mark up interest rates.As the bureau explained it, TMCC, as an indirect auto lender, sets interest rates, or “buy rates,” for consumers based on credit scores and other risk criteria. Those rates are then conveyed to auto dealers. Auto dealers are then allowed to charge a higher interest rate when they ...

Wells Fargo Settles with FHA for a Record $1.2 Billion. Wells Fargo, the largest player in the Ginnie Mae market, last week agreed to pay the Department of Justice and Department of Housing and Urban Development $1.2 billion to settle FHA underwriting claims. In a filing with the Securities and Exchange Commission, Wells noted that the agreement “resolves certain civil claims that the federal government had pending” against the lender tied to FHA lending from 2001 to 2010. But it also covers “other potential civil claims relating” to the megabank’s government production in other time periods as well. The megabank, which also is the nation’s largest overall home lender and servicer, saw the settlement coming and booked an additional “legal ...

Legacy RMBS-related legal action continued this week in both Washington, DC, and in New York City as the fallout from the financial crisis continues. In the nation’s capital, Morgan Stanley agreed to a second settlement with the Federal Deposit Insurance Corp., this time for $62.95 million, to resolve RMBS-related claims stemming from the failure of three financial institutions in the wake of the collapse of the mortgage market. The institutions are...

A federal appeals court in Denver unanimously affirmed a lower court ruling that a claim of damage related to an originator/seller’s misrepresentation accrues when the loan is sold. Ruling in six cases involving plaintiffs Lehman Brothers Holdings and Aurora Commercial Corp. versus Universal American Mortgage Co. and Standard Pacific Mortgage, the Tenth Circuit Court of Appeals rejected plaintiffs’ contentions that their claims were really “indemnification” claims that did not accrue until they bought the loans from Fannie Mae and Freddie Mac. The overarching issue in this complicated case is...

The case of Fairholme Fund v. The United States will continue to linger in the courts as the battle for getting the government to release the bulk of the documents pertaining to the preferred stock purchase agreements between the Federal Housing Finance Agency and the Treasury plays out with a motion filed this week. “We are now in a struggle with the defendants, both the Department of Treasury and FHFA, over claims of the deliberative process privilege they sought to keep from having to produce thousands and thousands of documents, even in redacted form,” Charles Cooper, attorney with Cooper & Kirk, the law firm representing the shareholder plaintiffs, told Inside The GSEs.

Fannie Mae won an appeal in which an apartment building that filed for bankruptcy to reduce payments it owed to Fannie did not act in good faith. According to a recent court ruling, the judge reversed the decision and said the bankruptcy court erred in allowing the plan in the first place. After missing one monthly payment of approximately $55,000 in December 2009, four months later the Memphis-based apartment company filed for bankruptcy under Chapter 11. The bankruptcy prevented Fannie from being able to foreclose on the apartment building. The apartment, Village Green, argued against the ruling, but the...

A U.S. Court of Appeals for the Federal Circuit recently upheld rulings that went against Mortgage Grader, a loan shopping website that has filed a number of patent-related lawsuits. The court upheld a ruling by a lower court that found that Mortgage Grader’s claims related to the “abstract idea” of anonymous loan shopping and that the patents obtained by the firm didn’t include an “inventive concept.” Mortgage Grader filed a lawsuit in January 2013 against Costco Wholesale and ...

The ongoing decline in interest rates is wreaking havoc on the sale of “bulk” mortgage servicing portfolios, causing investors to pull back on pricing, and sending some bidders to the exits, at least for a little while. Servicing advisors who play in the space confirmed to Inside Mortgage Finance that pricing isn’t what it used to be, and is off peaks seen a year ago when bids – in retrospect – were too aggressive and later resulted in write-downs. Mark Garland, president of MountainView Servicing Group, Denver, admitted...

Wells Fargo has agreed in principle to a $1.2 billion settlement to resolve FHA-related civil claims brought by the federal government while First Tennessee Bank has agreed to subsidize interest-rate reductions on home mortgages as part of a $1.9 million settlement agreement with the Department of Housing and Urban Development. The Wells Fargo settlement was disclosed in a recent filing with the Securities and Exchange Commission. If finalized, the settlement would be the largest for FHA. So far, the FHA has collected...