Tennessee Lender Agrees to $70 million Settlement to Resolve Alleged FHA Violations. Franklin American Mortgage of Franklin, TN, has agreed to pay the federal government $70 million to resolve allegations of failing to comply with FHA requirements. Specifically, the direct endorsement lender allegedly engaged in improper underwriting of FHA loans between Jan. 1, 2006, and Dec. 31, 2012, which later resulted in submission of claims and substantial losses to the FHA insurance fund. Franklin entered into a settlement agreement with the Department of Justice and the Department of Housing and Urban Development’s Inspector General. As part of the settlement, Franklin acknowledged “it engaged in certain conduct in connection with its origination, underwriting, and quality control of certain single-family residential mortgage loans insured by FHA.” The settlement was neither an admission of ...

The National Credit Union Administration gets another chance to recover MBS losses incurred by a now-defunct federal credit union, while The Royal Bank of Scotland and Massachusetts Mutual Life Insurance announce a confidential settlement agreement to resolve the latter’s MBS claims. The U.S. Court of Appeals for the Ninth Circuit has vacated a 2015 order by the Central District of California dismissing NCUA’s claims on behalf of failed Western Corporate FCU, which the agency placed in conservatorship in March 2009 and later in liquidation. The agency is acting as liquidating agent for Wescorp against Nomura Home Equity Loan, Inc. The NCUA filed...

Ginnie Mae issued $46.5 billion of single-family mortgage-backed securities in August, up slightly from July, according to an analysis of Ginnie data. Single-family MBS monthly issuance in August was the highest monthly volume so far this year. Total issuance also was up 12.3 percent from the same month last year., Strong purchase and refinance originations in the second quarter helped push production in the third quarter. Although purchase loans with private mortgage insurance outpaced gains in FHA and VA loans in the second quarter, deliveries to Ginnie so far appear to indicate a strong third quarter. Meanwhile, VA volume has been fueled largely by refinance activity over the past few years and does not appear to be letting up. PennyMac and Freedom Mortgage battled for first place with $4.35 billion and $4.34 billion, respectively, in MBS issuance in August. Despite cutting back on its ... [1 chart]

A federal court in Texas has dismissed a disparate-impact lawsuit against the Texas Department of Housing and Community Affairs, finding, after years of litigation, that the plaintiff had failed to show sufficient reason for a charge of unlawful discrimination under the Fair Housing Act. The recent decision in The Inclusive Communities Project, Inc. v. The Texas Department of Housing and Community Affairs, et al., is the latest in a series of decisions applying the landmark U.S. Supreme Court decision that found disparate impact is a cognizable claim under the FHAct. The court’s Aug. 26 decision basically reaffirms...

Fair housing groups continue to press allegations that Bank of America has neglected foreclosed homes and created eyesores in African-American and Latino communities in more than 200 cities. The National Fair Housing Alliance, along with nine local fair housing organizations, filed an amended federal complaint against BofA last week. In the complaint they added a number of neighborhoods in six additional cities where investigations revealed foreclosed homes that have not been properly maintained. This brings...

The CFPB recently brought a $32.25 million enforcement action against First National Bank of Omaha, alleging deceptive marketing and illegal billing of add-on credit card products that it claimed harmed hundreds of thousands of borrowers. According to the CFPB, from 2002 until at least 2012, First National Bank of Omaha offered add-on debt cancellation products with its credit card, including products dubbed “Secure Credit” and “Payment Protection.” The bureau said the bank promoted these products as providing a monthly payment to the cardholder’s account in the event of certain hardships, such as involuntary unemployment, hospitalization or disability. Cardholders were charged a monthly fee for the products. First National Bank of Omaha also offered credit monitoring products, including “Privacy Guard” and ...

The CFPB recently brought a $4 million enforcement action against Wells Fargo, alleging the bank engaged in illegal private student loan servicing practices that increased costs and unfairly penalized certain student loan borrowers. “Wells Fargo hit borrowers with illegal fees and deprived others of critical information needed to effectively manage their student loan accounts,” said CFPB Director Richard Cordray. The bureau said it identified breakdowns throughout Wells Fargo’s servicing process, such as failing to provide important payment information to consumers, charging consumers illegal fees, and failing to update inaccurate credit report information. One of the CFPB’s charges against the company was that it processed payments in a way that maximized fees for many consumers. “Specifically, if a borrower made a ...

The American Bankers Association, the Consumer Bankers Association and The Financial Services Roundtable told the CFPB its controversial arbitration proposed rule “is not in the public interest, is not for the protection of consumers, and is not consistent with the CFPB’s March 2015 empirical study of arbitration,” as their attorneys at Ballard Spahr succinctly summarized their joint comment letter. Further, the groups urged the bureau to withdraw its proposal and to refrain from re-issuing another unless it is consistent with the statutory requirements of Section 1028 of the Dodd-Frank Act. “First, the proposed rule is not ‘in the public interest,’ nor does it meet the requirement to provide for consumer protection, because it would inflict serious financial harm on consumers ...

CFPB Proposes Changes to FOIA Procedures, Treatment of Information; Would Expand Disclosure of Confidential Supervisory Information to State AGs. The CFPB has proposed amendments to the procedures used by the public to obtain information from the bureau under the Freedom of Information Act, the Privacy Act of 1974, and in legal proceedings.... Bank of America Close to Fulfilling Settlement Obligations. Bank of America has conditionally fulfilled more than 91 percent of its obligation to provide $7 billion worth of consumer relief under the terms of its historic mortgage settlement agreement with the U.S. Department of Justice and six states, according to Eric Green, the independent monitor of the agreement...

A high profile shareholder’s request to access Freddie Mac’s corporate records was shot down in a case dismissal last week as a federal court ruled that all shareholder rights were transferred to the Federal Housing Finance Agency during the conservatorship. In Timothy J. Pagliara v. Federal Home Loan Mortgage Corporation, plaintiff Tim Pagliara, chief executive of CapWealth Advisors and the executive director of Investors Unite, a GSE shareholders group, filed a lawsuit in court in March to gain access to Freddie’s records, as an individual stockholder. He owns approximately 346,000 shares of Freddie’s junior preferred stock, according to court documents.