August is turning out to be an unfortunate month for WMC Mortgage and Deutsche Bank in terms of continuing legacy MBS litigation, but an auspicious one for Bank of New York Mellon, which won a favorable verdict in a residential MBS case. On Aug. 8, Judge Charles Haight of the U.S. District Court for the District of Connecticut denied defendant WMC Mortgage’s motion for partial summary judgment in Law Debenture Trust Co. of New York v. WMC Mortgage. The case involves a pool of 5,162 residential loans originated by WMC which were securitized in 2006 and sold to the trust for $1 billion, according to the law firm Orrick. The lender was...

Wells Fargo and PHH Mortgage have reached separate settlements with the Department of Justice and three other federal agencies to resolve alleged violations of the False Claims Act. The DOJ, Department of Housing and Urban Development, Department of Veterans Affairs and the Federal Housing Finance Agency will rake in $182 million from the settlement of lawsuits involving FHA and VA loans, as well as loans sold to Fannie Mae and Freddie Mac. Wells Fargo denied the allegations in the whistleblower lawsuit but agreed to pay $108 million to resolve the claims. It admitted to no fault or liability. Filed in 2006 and unsealed in 2011, the lawsuit alleged that the bank overcharged veteran borrowers by masking ineligible fees in order to obtain VA guarantees on certain Interest Rate Reduction Refinancing Loans, or streamlined refi mortgages. At the same time, Wells allegedly falsely certified to the VA that it ...

The Mortgage Research Center, which does business as Veterans United Home Loans and/or VA Mortgage Center, has agreed to pay $1.1 million to New York regulators to resolve allegations of overcharging veterans on loans guaranteed by the Department of Veterans Affairs. Veterans United was the second largest VA lender in the country in the second quarter, with a 5.4 percent share of the VA market, according to the Inside FHA/VA Lending database. The settlement agreement is part of a consent order entered into recently by Veterans United with the New York Department of Financial Services (NYDFS). The settlement stemmed from an investigation which found that the Columbia, MO-based company did not refund “surplus lender credits” on 322 VA loans originated from Jan. 1, 2011, to June 30, 2014. According to the consent order, borrowers obtained a credit from ...

The private mortgage insurance industry has called for harmonized qualified-mortgage standards to discourage potential arbitrage that might adversely affect consumers. In a comment letter, the U.S. Mortgage Insurers urged the Consumer Financial Protection Bureau to assess whether the various QM standards established under the Dodd-Frank Act have created arbitrage opportunities to the detriment of consumers. The CFPB is about to begin a reevaluation of its ability-to-repay rule/QM rule. QM standards are different for Fannie Mae, Freddie Mac and the Federal Home Loan Banks than for FHA, VA and the U.S. Department of Agriculture. The USMI said analysis should focus on the different treatment of points and fees and maximum borrower debt-to-income ratio among the various QM standards. The CFPB can address the calculation of points and fees under its ATR/QM rule by ...

Given the Trump administration’s expressed interest in scaling back federal regulation and giving corporate interests greater freedom to conduct their business as they see fit, political and legal observers expect the Department of Justice to respond in the affirmative to a recent judicial invitation to formally opine on Ocwen Financial’s dispute with the CFPB. The nonbank mortgage servicer recently asked Judge Kenneth Marra with the U.S. District Court for the Southern District of Florida to invite the U.S. attorney general to appear and to participate in the company’s challenge to the constitutionality of the bureau.“There are at least two clear reasons to invite the attorney general to participate here,” said the company. “First, inviting the views of the attorney ...

The CFPB has told Zillow, the online real estate database firm, to settle with the agency over alleged violations of the Real Estate Settlement Procedures Act or face an enforcement action, the company revealed last week in its 10-Q filing with the Securities and Exchange Commission. “Based on correspondence from the CFPB in August 2017, we understand that it has concluded its investigation,” the firm said in its SEC disclosure. “The CFPB has invited us to discuss a possible settlement and indicated that it intends to pursue further action if those discussions do not result in a settlement.”At issue are certain co-marketing activities, which Zillow defended. “We continue to believe that our acts and practices are lawful and that ...

Prior to lawmakers heading out of the nation’s capital for their annual summer recess, Republicans on the House Financial Services Committee released a second staff report that could lay the groundwork for contempt-of-Congress charges to be brought against CFPB Director Richard Cordray. The GOP legal analysis asserts that Cordray has failed to satisfy subpoenas the committee issued for records related to the bureau’s controversial rule banning mandatory arbitration in most consumer financial services contracts. The rule does not address the use of such provisions in residential mortgages, which were banned by Congress in 2004. “Staff believes there is ample basis to proceed against Director Cordray for contempt of Congress due to his default” on his obligations under the congressional subpoenas ...

Will He? Won’t He? Run for Governor of Ohio, That Is. The top consumer regulator in the land, Richard Cordray, head of the CFPB, has until 4 p.m. Feb. 7, 2018, to file the necessary paperwork to run in the Ohio gubernatorial primary in May of next year. Current Republican Gov. John Kasich is term-limited and will have to vacate the governor’s mansion at the end of 2018.... CFPB Fines JPMorgan Chase $4.6 Million for Alleged Failures Related to Checking Account Screening Information. The CFPB recently brought an enforcement action against JPMorgan Chase Bank, alleging that it violated the Fair Credit Reporting Act by not having adequate policies in place regarding the accuracy of information it provided to nationwide specialty consumer reporting companies about individuals’ checking account behavior....

  PHH Corp. announced a $75 million settlement with the Department of Justice and the Federal Housing Finance Agency to settle unspecified allegations tied to the underwriting of legacy loans. However, whether Fannie Mae and Freddie Mac loans can be targeted for False Claims Act purposes is still debatable. The DOJ portion of the settlement covers FHA and VA mortgages originated from January 2006 until the end of 2011. …

The surprise tactic by Wells Fargo to withhold millions of dollars from investors in vintage non-agency MBS spurred Redwood Trust officials to try to protect the reputation of jumbo MBS. “We’re frustrated, not just for us, but for other market participants,” Christopher Abate, Redwood’s president and CFO, said late last week during the real estate investment trust’s earnings call. “For now, we’ll just have to continue updating and educating new-issue investors, and I hope for a quick resolution to this legacy litigation issue.” As of the end of June, Wells Fargo had withheld...