The Obama administration this week proposed a new rule that would establish uniform procedures for the resolution of disparate impact allegations under the Fair Housing Act at a time when the whole legal underpinnings of disparate impact are slated for review by the U. S. Supreme Court. In a proposed rule that has been in preparation for months, the Department of Housing and Urban Development argued that it has the authority to apply the disparate impact theory of discrimination in the context of fair housing, including fair lending charges. The purpose of the proposed rule, HUD says, is to clear up uncertainty about...
The U.S. Supreme Court will determine whether disparate impact claims can be applied to the Fair Housing Act and lending discrimination cases by reviewing a Minnesota case involving rental housing. Although many fair lending cases based on disparate impact have been brought and settled over the years, the standard has not been universally interpreted by federal appeals courts. In Magner v. Gallagher, private landlords sued the city of St. Paul, MN, for enforcing its housing code, leading to claims by the landlords that shutting down their properties made it too difficult for minority renters to find...
Life isnt getting any easier for mortgage lending giant Wells Fargo when it comes to litigation. The top-ranked mortgage lender through the first nine months of the year took a couple of high-profile shots in just the last two weeks or so. Last week, Illinoiss Cook County Judge Carolyn Quinn gave the green light to a suit filed by state Attorney General Lisa Madigan against Wells, which accuses the lender of offering financial incentives to employees to put minority borrowers who qualified for prime mortgages into subprime loans during the 2005-2007 time frame. Illinois has a similar axe to grind against Countrywide Financial Corp., which was acquired by Bank of America Corp. three years ago.
Despite its fairly impressive success rate in fending off hostile litigation, MERSCorp and its Mortgage Electronic Registration Systems remain popular targets. This time around, its Delaware Attorney General Beau Biden filing suit in Delaware Chancery Court against them, alleging repeated violations of the states Deceptive Trade Practices Act. Since at least the 1600s, real property rights have been a cornerstone of our society, said AG Biden. MERS has raised serious questions about who owns what in America. A man or womans home is not just his or her largest investment, its their castle. Rules matter. A homeowner has the obligation to pay the mortgage on time, and lenders must follow the rules if they are seeking to take away someones house through foreclosure. The honor system wont work.
The nations five largest mortgage servicing companies now face a tab of $25 billion to bring to a conclusion the long-running negotiations with the state attorneys general over industry foreclosure practices, according to published reports of the latest behind-the-scenes developments. The deal with the big five servicers Ally Financial Inc., Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. is now said to include $5 billion in cash penalties, along with the requirement to produce $3 billion in mortgage refinances. Other aspects of the settlement are said to include principal reductions and other forms of aids to struggling homeowners. The top servicers would be released from certain claims having to do with loan servicing and origination, according to the reports but to what extent exactly remains unclear. And there would be no release from claims related to mortgage securitization.
The servicing settlement being negotiated between state attorneys general and major banks will likely require principal reduction via loan modifications and possibly refinances. Principal reduction, however, will likely only be required for certain mortgages held in bank portfolios. The Federal Housing Finance Agency has refused to allow principal reduction on mortgages serviced for the government-sponsored enterprises. Non-agency mortgage-backed security investors, meanwhile, have been more accepting of principal reduction of late but the vast majority of such mod activity is already concentrated on portfolio loans. ...
Federal prosecutors this week sued an FHA lender to recover hundreds of millions of dollars in paid claims in connection with mortgage loans originated through branches that were not approved by the Department of Housing and Urban Development. A lawsuit filed by the U.S. Attorney in Manhattan district court this week alleged that Allied Home Mortgage Corp., President and CEO Jim Hodge and Executive Vice President Jeanne Stell engaged in reckless mortgage lending, flouted FHA mortgage insurance requirements and repeatedly lied about compliance. Such actions, the suit alleged, subsequently led to...
The Supreme Court of the United States will settle a multi-district circuit court conflict that will likely determine the ability of the mortgage lending industry to determine on its own what to charge borrowers at the point of origination. In deciding earlier this month to accept Freeman v. Quicken Loans Inc., the high court will confront the question of whether a plaintiff must demonstrate an unearned fee for a real estate settlement service was divided between two or more persons in order to establish that a violation of Section 8(b) of the Real Estate Settlement Procedures Act occurred.
Rep. Jeff Miller, R-FL, chairman of the House Veterans Affairs Committee, reportedly has instructed his staff to start looking into allegations that a number of mortgage lending institutions charged illegal fees to veterans who refinanced their homes. Committee staff members reportedly met with Department of Veterans Affairs officials to discuss the allegations, which were made public earlier this month by a federal court in Atlanta. I will reserve judgment on the appropriate next course of action, to include the potential for a full Committee hearing, after having the opportunity to review the results of the staff investigation, Miller said in a letter to Rep. Bruce Braley of Iowa, the ranking Democrat on the committees subcommittee on economic opportunity.
Alabama. Last week, in Reed v. Chase Home Finance LLC, the U.S. District Court for the Southern District of Alabama rejected a mortgage lender defendant's motion to dismiss or amend a putative class action alleging a violation of the Truth in Lending Act. Plaintiff Reed alleged defendant Chase Home Finance failed to provide the borrower with notice that it was a new creditor as required by TILA Section 1641(g) when it was assigned an ownership interest in plaintiff's mortgage and note. The defendant argued that plaintiffs position that the note was assigned to defendant, explicitly pled in the complaint, has to be supported by factual material rendering the assertion plausible.