Californias Attorney General has reportedly issued subpoenas to Fannie Mae and Freddie Mac seeking details of the government-sponsored enterprises mortgage lending and foreclosure practices, possibly as a way to cajole the Federal Housing Finance Agency to overcome its resistance to principal reductions for GSE loans. The subpoenas seek information about how Fannie and Freddie are handling thousands of foreclosed properties, as well as details about the GSEs mortgage-servicing and home-repossession practices. According to published reports, State AG Kamala Harris, a Democrat, also is looking into how...
The Department of Housing and Urban Development is pondering its next move after a federal district court judge in Houston reversed a suspension order against Allied Home Mortgage Corp., an authorized FHA lender, and its chief executive officer, last week. In a Nov. 15 ruling, U.S. District Court Judge Melinda Harmon granted a motion by the Houston-based mortgage banker and its CEO, James Hodge, to temporarily stop HUD from enforcing a suspension of the plaintiffs authority to underwrite and originate FHA loans until a related lawsuit is resolved. On Nov. 1, the government intervened in a False...
The U.S. Supreme Court has granted certiorari in Magner v. Gallagher, thrusting itself into the debate over whether the Fair Housing Act allows plaintiffs to bring disparate impact claims, in a case that could have wide-ranging implications for the mortgage industry, potentially extending to fair lending litigation and even regulatory enforcement. In Magner, some rental property owners in St. Paul, MN, sued the city and a group of city officials, arguing that enforcing the citys housing code raised their costs, thereby lowering the availability of affordable housing. They argued further that this had a disparate impact on...
The industry robo-signing foreclosure scandal took an historic turn this past week, with the first filing of criminal charges ever brought. Nevada Attorney General Catherine Cortez Masto brought 606 criminal charges against two Lender Processing Services employees who allegedly directed and supervised a robo-signing scheme which resulted in the filing of tens of thousands of fraudulent documents with the Clark County (NV) Recorders Office between 2005 and 2008. California resident Gary Trafford has been charged with 102 counts of offering false instruments for recording (a category C felony), false certification on certain...
The National Community Reinvestment Coalition improperly accepted approximately $2.4 million in donations from 10 of 38 lender organizations it tested under its Fair Housing Initiatives Program grant agreement with the Department of Housing and Urban Development, thereby creating conflict-of-interest situations in violation of the agreement, according to a new report from HUDs Office of Inspector General. The NCRC immediately challenged the report and maintained it was politically motivated. The OIG said NCRC generally completed administrative and program activities and tasks in accordance with its agreement, the OIG said. The audit also found nonprofit improperly accepted donations from organizations it tested, thereby creating conflict-of-interest situations involving $59,800 of $230,000 in the grant funds (26 percent).
The Consumer Financial Protection Bureau, in a conciliatory gesture to a wary industry, recently announced the existence of a formal Early Warning Notice process that will provide advance notice of potential enforcement actions to individuals and firms under investigation. The process is modeled on similar procedures that have been successful at other federal agencies, according to the CFPB. It starts with the bureaus Office of Enforcement explaining to individuals or firms that evidence gathered in a CFPB investigation indicates they have violated consumer financial protection laws. Recipients of an Early Warning Notice are then invited to submit a response in writing, within 14 days, including any relevant legal or policy arguments and facts. The Early Warning Notice process strikes a balance between the goal of fairness to those being investigated and our mission to protect consumers, said Raj Date, special advisor to the secretary of the Treasury for the CFPB. This process will help us fulfill our commitment to transparency in enforcing the law.
Maryland. A federal jury recently convicted Andrew Hamilton Williams, of Hollywood, FL, owner and founder of Metro Dream Homes, of fraud conspiracy, wire fraud and conspiracy to commit money laundering in connection with his alleged participation in a massive mortgage fraud scheme which promised to pay off homeowners mortgages on their Dream Homes, but left them to fend for themselves. ... Minnesota. In Taft v. Wells Fargo Bank, N.A., the U.S. District Court for the District of Minnesota has ruled that a national bank is not bound by state laws that would restrict the fees it can include in principal when making a reverse mortgage loan. In this case, the plaintiff accused the bank of violating Minnesota and South Dakota law by including origination fees, servicing fees, and mortgage insurance charges in the principal amount of her mothers reverse mortgage loan.
The National Credit Union Administration this week announced settlement agreements with Deutsche Bank Securities and Citigroup stemming from their roles as underwriters that sold non-agency MBS to credit unions that eventually failed. Deutsche Bank is paying the bigger amount, $145.0 million, while Citis payment will be $20.5 million. Neither firm admitted fault as part of the settlement. The proceeds from the settlements will be used to offset assessments that the NCUA has levied against credit unions to pay the cost of cleaning up the failures of...
The National Credit Union Administration this week reached settlements with two underwriters of non-agency mortgage-backed securities. The settlements also have implications for non-agency MBS issuers and underwriters facing lawsuits from the Federal Housing Finance Agency. Deutsche Bank Securities agreed to pay the NCUA $145.0 million to reduce losses associated with five failed credit unions. Citigroup also agreed to pay the NCUA $20.5 million to settle similar charges. The settlements included terms stating that the issuers did not admit fault. NCUA Board Chairman Debbie Matz warned that the settlements are...
A federal judge in Houston ruled that Allied Home Mortgage Corp. can continue to originate and underwrite FHA-insured loans, putting into question the validity of the Department of Housing and Urban Developments suspension of the lenders FHA privileges. U.S. District Court Judge Melinda Harmon, in a 22-page decision issued filed on Nov. 15, said the potential destruction of Allieds business outweighs any harm the government would suffer before the issues can be litigated.