A regulatory scare from the Securities and Exchange Commission may end up being much less of a challenge for real estate investment trusts than the stiff competition they face from bank portfolios, according to experts at the ABS East conference sponsored by Information Management Network this week in Miami Beach, FL. In September, the SEC rattled the mortgage REIT sector which has struggled to gain a foothold in the nonconforming mortgage market by launching a formal fact-finding mission on maintaining the exemption REITs enjoy from the Investment Company Act. ...
Several large banks and mortgage companies are accused of cheating military veterans and taxpayers out of millions of dollars by hiding illegal fees in VA refinance transactions and of deliberately misleading the government to obtain guarantees for the refinanced loans. Three law firms Butler Wooten & Fryhofer and Wilbanks & Bridges in Atlanta and Phillips & Cohen in Washington, D.C. have teamed up to pursue the qui tam or whistleblower lawsuit on behalf of two mortgage brokers and the U.S. government. The brokers, Victor Bibby and Brian Donnelly, brought the lawsuit under the False Claims Act, a federal law that goes back to the Civil War when it was used to ...
The Department of Housing and Urban Development has suspended a former president of Lend America from doing any business with the agency following his admission that he engaged in a mortgage fraud scheme against the FHA in 2009. Michael Primeau, the former executive, had pled guilty to charges he directed employees of Lend America, a former FHA-approved lender, to divert mortgage funds intended to pay off borrowers first mortgages at refinance closings in order to pay company-operating expenses. Two years ago, HUD and the U.S. Attorney for the Eastern District of New York filed a civil complaint against Ideal Mortgage Bankers, doing business as Lend America, in federal district court. The complaint sought ...
The U.S. Supreme Court recently agreed to review a dispute over closing fees in a move that may resolve a potentially entrenched circuit court conflict over the scope of the Real Estate Settlement Practices Act prohibition against unearned fees. At issue is RESPA Section 8(b), which provides that [n]o person shall give and no person shall accept any portion, split or percentage of any charge made or received for the rendering of a real estate settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed. As the U.S. government...
The head of the Federal Housing Finance Agency says his agency expects to complete a review of potential improvements to the Home Affordable Refinance Program by the end of this month but based on what they heard during a private meeting last week, dissatisfied House Democrats say they expect the results wont nearly be good enough. FHFA Acting Director Edward DeMarco met last week with a group of 17 congressmen, led by Reps. Dennis Cardoza, D-CA, and Elijah Cummings, D-MD, to discuss ways to reinvigorate the underwhelming Fannie Mae and Freddie Mac refinance program. In whats been described as a...
A scathing criticism of the way the Federal Housing Finance Agency and Freddie Mac handled a $1.35 billion settlement with Bank of America could cause the regulator and the government-sponsored enterprises to tighten repurchase enforcement and consequently inflate the buyback problem, according to litigation experts. Speaking on a recent webinar hosted by Inside Mortgage Finance, experts said a report by the FHFAs Office of the Inspector General which found flaws in the BofA settlement approval process, could push the GSEs and their regulator to lean harder on major lenders to repurchase bad loans. This, in turn, could...
Mortgage Electronic Registration Systems has been at the center of two significant developments recently that bring more legal clarity to the mortgage industrys foreclosure practices and could portend a quicker resolution of an enormous number of cases currently tied up in foreclosure. Early this week, the U.S. Supreme Court denied certiorari in Gomes v. Countrywide, declining to reconsider lower court rulings in the case, essentially affirming MERS authority to foreclose in California in the process. The petition for a writ of certiorari is denied, the high court said in its certiorari summary dispositions. The chief justice [John Roberts] took...
A ruling by a federal district court in Richmond awarding more than $40 million to a mortgage lender for covered losses should compel private mortgage insurers to be more circumspect about their MI agreements, according to industry attorneys. American International Group, parent company of United Guaranty Residential Insurance Co. of North Carolina, is appealing the courts ruling that it pay SunTrust Mortgage more than $34.0 million for covered losses, $6.0 million in stipulated interest and about $5.4 million in legal fees and costs. Joseph Norton, AIG spokesman, said the insurer has appealed the decision to the...
Negotiations among major banks and state attorneys general to settle problems in foreclosure servicing practices reached a one-year anniversary this week with little apparent progress over the key issue of how much litigation relief the lenders will gain from the deal. We worked out a tremendous amount of the settlement and gotten a lot done, said a spokesman for Iowa Attorney General Tom Miller, who has been spearheading the negotiation on behalf of the states. However, he disputed applying the word imminent, which some bankers had used, to describe when the settlement might be finalized. Lets not jump...
The chairman of the House Committee on Oversight and Government Reform wants the Federal Housing Finance Agency to explain why it hired two outside law firms in a massive legal action to recover losses suffered by Fannie Mae and Freddie Mac on their investments in non-agency MBS. Rep. Darrell Issa, R-CA, wrote FHFA Acting Director Edward DeMarco on Sept. 29 asking why the agency hired outside counsel from Quinn Emanuel & Sullivan and from Kasowitz Benson Torres & Freidman to initiate lawsuits against financial institutions and how much the agency is paying them. Issa posed detailed questions and requested documents regarding...