HUD Nominee Picks Up Support from Grassroot Activists, Home Builders. San Antonio Mayor Julian Castro, President Obama’s pick to replace Secretary Shaun Donovan at the Department of Housing and Urban Development, has won support from the National Community Reinvestment Coalition and the Center for Responsible Lending and the National Association of Home Builders. “Mayor Castro’s experience and strong commitment to neighborhood revitalization and community development will be critical to the recovery of communities still reeling from the housing crisis,” said NCRC President and CEO John Taylor. “We welcome his leadership and look forward to working in partnership with him to increase access to affordable housing and create vibrant, healthy communities.” CRL President Mike Calhoun noted Castro’s long record of ...

When it comes to the legal theory of disparate impact and the Supreme Court of the United States, perhaps the third time around will be the charm. Recently, the Texas Department of Housing and Community Affairs requested the nation’s highest court to agree once again to take on the issue of disparate impact under the Fair Housing Act. The questions presented to the high court in Texas Department of Housing and Community Affairs, et al., Petitioners v. The Inclusive Communities Project, Inc. are...

There has been a resurgence of city lawsuits lately against major banks seeking to recover lost property tax revenues, which city officials say were needed to pay for expensive foreclosure-related city services. The latest in these lawsuits was filed by the City of Los Angeles against JPMorgan Chase alleging discriminatory mortgage lending led to a wave of foreclosures that continues to diminish revenue for basic city services. The new litigation against Chase comes...

Aurora Loan Services, once a huge player in the non-agency subprime and Alt A market, has agreed to resolve a class-action lawsuit alleging it duped distressed borrowers into paying monthly fees on nonperforming loans that were already destined for foreclosure. The $5.3 million settlement will be split among 15,000 California borrowers who signed bogus loan-workout agreements with the false hope of curing their deficiencies and keeping their homes. Borrowers claimed that Aurora had misled them into thinking that their foreclosures were on hold while they were being considered for loan modification. In reality, however, Aurora’s policy was...

Expect it to take years for the courts to resolve lawsuits filed by private investors in Fannie Mae and Freddie Mac stock, with the odds heavily stacked in the government’s favor, note industry observers. Speaking during a recent Bloomberg Industries webinar on Fannie Mae and Freddie Mac litigation, Brooklyn Law School Professor David Reiss noted it could take the courts up to a year simply to resolve the introductory motions.

Look for the various lawsuits filed by private owners of Fannie Mae and Freddie Mac stock against the federal government to take a “very long time to be decided,” as the courts may take up to a year to resolve just the introductory motions, according to a legal expert. Beyond that, the litigation over shares in the two government-sponsored enterprises could stretch out to the U.S. Supreme Court. Brooklyn Law School Professor David Reiss, speaking during a Bloomberg Industries webinar last week, noted that lawsuits stemming from the savings and loan debacle of 20 years ago give a sense of the possible timeframe, but litigation brought by disenfranchised Fannie and Freddie investors against the government offers an entirely different and deeper set of legal complexities. “These are...

ResCap Liquidating Trust filed lawsuits last week against a number of Residential Funding’s correspondent lenders regarding alleged breaches of representations and warranties on mortgages included in non-agency MBS. The lawsuits relate to business completed before RFC’s parent company Residential Capital entered bankruptcy. RLT, which was established to liquidate and distribute the assets of the debtors in the ResCap bankruptcy case, filed 12 similar lawsuits last week seeking buybacks from Bank of America and First Republic Bank (as successors of Old First Republic), PHH Mortgage, RBC Mortgage and a number of smaller lenders. The correspondent lenders sold more than $1.52 billion in mortgages to RFC, according to the lawsuits. RLT claims...

A New York state appeals court last week shut down Morgan Stanley’s attempt to undo a lower court finding that Allstate Insurance Co.’s lawsuit over $100 million in allegedly overrated MBS had been timely filed. A five-judge panel of the New York Supreme Court Appellate Division, First Department, was not swayed by Morgan Stanley’s argument that the trial judge had erred in holding that Allstate must have had actual notice of its claims of misrepresentation by the investment bank in order for the suit to be time-barred. Allstate sued...

In a noteworthy reversal of partisan roles, Democrats on the House Financial Services Subcommittee on Oversight and Investigations last week found themselves uncomfortably backing away from an opportunity to take up the cause of female, minority and older employees at the CFPB, out of fear they might undermine what is arguably their favorite regulatory agency. Ranking Member Al Green, D-TX, succinctly summed up the anxiety felt by his side of the aisle when he said, “I am concerned that some people might use the information in this hearing that would weaken, emasculate or eviscerate the CFPB.” Meanwhile, the bureau-bashing Republicans, who have studiously tried to re-brand themselves as friends of “the little guy” ever since the CFPB opened for business...

In a pre-emptive strike against Republican critics on Capitol Hill, the CFPB announced last week that it was scrapping its performance-management system that produced some disparate-impact blowback, and was instituting a plan to compensate agency staff estimated to cost upwards of $5 million. The new report digs deeper than the bureau’s 2013 internal report that was released after allegations of discrimination and allegation at the bureau came to light back in March. “[W]e have determined that there were broad-based disparities in the way performance ratings were assigned across our employee base in both 2012 and 2013,” CFPB Director Richard Cordray said in an email to bureau staff. “These differences indicate a systemic disadvantage to various categories of employees that persisted...