A $95 million settlement with the nation’s four largest mortgage servicers – Bank of America, JP Morgan Chase, Wells Fargo and Citigroup – was announced last week by U.S. Attorney Bill Nettles of the District of South Carolina, the largest False Claims Act settlement in the history of the state, according to Justice Department officials. The settlement is part of the $25 billion global resolution announced in February between major banks and state attorneys general to settle claims of abusive mortgage practices, including robo-signing of foreclosures...

In Wigod v. Wells Fargo Bank, the U.S. Court of Appeals for the Seventh Circuit earlier this month gave a mortgage borrower the green light to move ahead with class action litigation against the servicer of her mortgage for its failure to provide a permanent loan modification under the Home Affordable Mortgage Program. In this case, the borrower, Lori Wigod, and the servicer, Wells Fargo, entered into a HAMP trial period plan with the understanding that if Wigod complied with the terms of the plan for four months, Wells would offer her a permanent loan modification...

Law firm K&L Gates and the National and Washington Lawyers’ Committees for Civil Rights launched a pro bono legal challenge to an allegedly discriminatory and otherwise unlawful foreclosure rescue scam targeting Hispanic homeowners in northern Virginia. Plaintiffs Jose and Margarita Viera allege they have been the victims of defendants Bella Homes LLC and a number of its management officials and agents in a scheme that zeroes in on Hispanic homeowners who were having difficulty making their mortgage payments. “The crux of the complaint is that ...

Even though approximately $10.0 billion in non-agency representation and warranty payouts have already been included in proposed or completed settlements, another $34.0 billion in payouts are probably waiting in the wings, with Bank of America and JPMorgan facing the largest exposure by far, according to analysts at Barclays Capital. “Total payouts to non-agency investors from rep and warranty related recoveries will be $26.0 billion to $52.0 billion, using the $8.5 billion Countrywide settlement deal as a template. This corresponds to an average of 3-6 points of recoveries on non-agency securities...

Many non-agency MBS investors are upset with the $25 billion servicing settlement involving 49 state attorneys general, eight federal agencies and the nation’s five largest servicers, the full terms of which were filed in U.S. District Court this week. Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial will receive some credit for modifying loans they service but do not own, although several of these firms have indicated that they plan to focus their efforts on portfolio loans. The Association of Mortgage Investors said the settlement establishes a precedent under which the bad debts of...

The Securities and Exchange Commission this week filed a lawsuit against three former executives of Thornburg Mortgage regarding disclosure and accounting issues in early 2008. The former executives of the now bankrupt jumbo lender denied the charges and vowed to prevail in court. “Thornburg’s executives schemed to drop a disingenuous annual report into the public realm at the most opportune moment possible while knowing it was merely the calm before the next storm,” said Donald Hoerl, director of the SEC’s Denver regional office. Larry Goldstone and Clay Simmons, the former CEO and chief financial officer of Thornburg, respectively, countered that ...

RPM Mortgage announced last week that it is offering jumbos with balances of up to $2.5 million for no-limit cash-out refinances or home purchase. Fully amortized and interest-only payment options are available. The lender said it will hold the loans in portfolio. “Between extremely low interest rates and smart prices for homes, either on the move-up market or creating liquidity for investment purposes, this product has the ability to serve both types of borrowers,” said Rob Hirt, CEO of RPM Mortgage. “This exclusive RPM product was eleven months in the making and is our contribution toward helping the real estate market to get back on its feet.” [Includes three briefs]

Industry experts digging through thousands of pages of legal documents associated with the $25 billion foreclosure settlement agreed to by five major servicers mostly found what they expected: a complex package of mixed forms of borrower support that the banks are expected to implement sooner rather than later. The settlements involving Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial and 49 state attorneys general will have to be approved by the U.S. District Court in Washington, DC. Although critics found grounds for complaint about the varying incentives for loan modification and...

Mortgage lenders have become so risk-averse and sensitive to potentially punitive judicial or regulatory overkill that they’re demanding near-pristine credit histories and imposing their own credit overlays on top of existing underwriting standards that are already considerably tougher than they were during the years of the mortgage boom. And that’s unlikely to change and may in fact get worse unless federal policymakers make dramatic changes to the legislative and regulatory landscape. That was the main take-away that Paul Miller, managing director and group head of financial services research at...

Bank of America may be prepared to pony up $8.5 billion to settle litigation with residential mortgage-backed securities investors, but it’s not conceding a point in the face of government accusations that it discriminated against mortgage borrowers with disabilities. Last week, the Department of Housing and Urban Development accused the bank of imposing unnecessary and burdensome requirements on borrowers who depended on disability income to qualify for their mortgages in violation of the Fair Lending Act. The bank also allegedly required some disabled borrowers to provide physician...