Reverse mortgages would be included in Home Mortgage Disclosure Act reports under a proposed rule published recently by the Consumer Financial Protection Bureau. The proposed rule would expand the definition of a “covered loan” under HMDA to include reverse mortgages and home-equity lines of credit (HELOCs), which include reverse mortgages structured as open-end HELOCs. Currently, HMDA regulations do not require reporting of HELOCs, although lenders may do so if they choose. Currently, financial institutions only have to report information on a closed-end reverse mortgage if the transaction involves a home purchase, home improvement or refinancing. Among other things, the CFPB has proposed to require that all reverse mortgages and HELOCs be identified by loan type to distinguish them from other categories of ...

In its first case regarding deceptive mortgage advertising, the CFPB has ordered Atlanta-based Amerisave Mortgage Corp., an online mortgage lender, and its affiliate, Novo Appraisal Management Co., to pay $19.3 million in damages and a fine. The consent order settles charges the firms engaged in a deceptive bait-and-switch mortgage-lending scheme said to have harmed tens of thousands of consumers. Of the total payout, $14.8 million will be in the form of refunds to harmed consumers. The companies also agreed to pay a $4.5 million fine. Patrick Markert, the owner of both companies, as an individual, will pay an additional $1.5 million penalty. According to the CFPB, between mid-2011 and 2014, Amerisave advertised its interest rates and terms using online banner ...

The CFPB late last week said it shut down what it called a service member fee scam allegedly run by USA Discounters, Ltd., a consumer finance company that operates a chain of retail stores, most of which are near military bases, and offers in-store and online financing for purchases. USA Discounters tricked thousands of American military personnel into paying fees for legal protections they already had under the Servicemembers Civil Relief Act, and for certain services that the company failed to provide, the bureau alleged. The CFPB said it obtained more than $350,000 in refunds for military personnel harmed by the practices in question, and the company will pay an additional $50,000 civil penalty. The company cannot deduct the penalty ...

The U.S. Fourth Circuit Court of Appeals has ruled in favor of Wells Fargo and co-defendant Long & Foster in a class-action dispute involving an affiliated business arrangement. In Minter v. Wells Fargo Bank, NA et al, plaintiffs/appellants Denise Minter, Jason and Rachel Alborough, and Lizbeth Binks brought suit on behalf of a group of consumers alleging that Wells Fargo and Long & Foster Real Estate violated the Real Estate Settlement Procedures Act. Specifically, the plaintiffs alleged that defendants created a joint venture, Prosperity Mortgage Co., to skirt RESPA’s prohibition on kickbacks in exchange for the referrals of settlement service business while failing to disclose this business arrangement to its customers. Here’s...

The Federal Reserve Bank of New York is rolling out a one-year pilot program for a limited number of firms that do not meet the minimum capital requirement for primary dealers to function as counterparties in agency MBS operations it runs for the System Open Market Account portfolio. The FRBNY said its intent is to explore ways to broaden access to open market operations, and to determine the extent to which firms beyond the primary dealer community can augment the FRBNY’s operational capacity and resiliency in its monetary policy operations. “This pilot will allow...

Mortgage trustees are still awaiting state court approval of a $4.5 billion settlement with JPMorgan Chase in relation to faulty residential MBS issued by the bank and the now-defunct Bear Stearns between 2005 and 2008. If approved by the New York State Supreme Court, the agreement would resolve representation and warranty claims as well as servicing claims related to loans in 330 mortgage securitization trusts, as well as claims over document delivery. In addition, the bank agreed to change its servicing procedures with respect to mortgage loans in the trusts. The proposed settlement does not resolve...

A federal judge in Manhattan last week ordered Bank of America to pay a $1.27 billion penalty for losses suffered by Fannie Mae and Freddie Mac from Countrywide Financial’s “Hustle” program for pumping dubious Alt A loans to the GSEs. The bank also is reportedly nearing a settlement with the Justice Department over other charges. Last October, the DOJ and the Securities and Exchange Commission successfully proved in court that Fannie Mae and Freddie Mac lost some $850 million from thousands of loans acquired through Countrywide’s “high-speed swim lane” program – known as HSSL or “Hustle.”

It could cost Goldman Sachs between $800 million and $1.25 billion to resolve government claims that it sold faulty mortgage-backed securities to Fannie Mae and Freddie Mac leading up to the financial crisis, according to recent reports. Goldman Sachs is currently negotiating with the Federal Housing Finance Agency, which has recovered approximately $16.1 billion in agreements with other banks with respect to legacy MBS sold to the GSEs.In September 2011, the FHFA filed 18 separate lawsuits against some of the nation’s biggest banks, accusing them of misrepresenting some $180 billion in toxic subprime MBS.

The CFPB, the Federal Trade Commission and 15 state attorneys general, as well as other state agencies, announced a number of legal actions last month against alleged foreclosure relief scammers they accused of using deceptive marketing tactics to rip off distressed homeowners across the country. The CFPB filed three lawsuits against companies and individuals it asserted collected more than $25 million in illegal advance fees for services that falsely promised to prevent foreclosures or renegotiate troubled mortgages. The bureau is seeking compensation for victims, civil fines and injunctions against the companies and individuals it identified. One of the lawsuits was filed against Clausen & Cobb Management Company, Inc., its owners, Alfred Clausen and Joshua Cobb, and their business associate, attorney ...

The CFPB and 13 state attorneys general obtained approximately $92 million in debt relief from Colfax Capital Corp. and Culver Capital LLC, also collectively known as “Rome Finance,” for about 17,000 U.S. service members and other consumers said to be harmed by the company’s alleged predatory lending scheme. According to the government agencies, Rome Finance lured consumers with the promise of no money down and instant financing. Rome Finance then masked expensive finance charges by artificially inflating the disclosed price of the consumer goods being sold. Rome Finance also allegedly withheld information on billing statements and illegally collected on loans that were void. The CFPB said the companies offered credit to consumers purchasing computers, videogame consoles, televisions, or other products. ...