An attorney representing the Federal Housing Finance Agency called on a federal judge in Iowa to dismiss a third federal suit brought by affiliated entities challenging the terms of the 2012 Fannie Mae and Freddie Mac net worth sweep. “There is gamesmanship going on here, your honor,” said Howard Cayne, an attorney with Arnold & Porter who is representing the FHFA in its motion for summary judgment. Investors say the net worth sweep, authorizing the Treasury to ...

The Federal Housing Finance Agency is fighting state-level court actions that threaten the first-lien status of loans backed by Fannie Mae and Freddie Mac, including a recent ruling in Nevada granting a homeowners association priority in collecting unpaid HOA fees ahead of the mortgage lender in a foreclosure. The regulator has filed separate actions in federal court in Nevada seeking to overturn recent state court rulings allowing HOAs to jump to the front of the creditor list with ...

The CFPB sued Sprint Corp. last week for allegedly billing wireless customers tens of millions of dollars in unauthorized third-party charges from 2004 to 2013. The issue here involves charges for what are known as “premium text messages” or “premium short messaging services” because they are frequently delivered by text messages. Examples of such products and services include ringtones, wallpaper images, and text messaging providing flirting tips, horoscopes, and other digital content. Some third-party goods were sold with one-time charges, costing about $0.99 to $4.99, according to the bureau’s complaint. Often, they were monthly subscriptions that cost about $9.99 a month. Most consumers were targeted online, according to the CFPB. Consumers clicked on ads that brought them to websites asking ...

The CFPB and the attorneys general of North Carolina and Virginia brought an enforcement action against three related firms last week, alleging they used illegal debt collection practices against U.S. military service members. Freedom Stores (also known as Freedom Furniture and Electronics) is a Virginia-based retailer that caters to U.S. military members with stores located near military bases nationwide. Freedom Stores offers credit to consumers purchasing its merchandise and transfers the contracts to an affiliated company, Freedom Acceptance Corp. Owners and top executives John Melley and Leonard Melley Jr. also own Military Credit Services, which provides financing for purchases made at over 300 independent consumer-goods retailers, primarily catering to service members. The CFPB and the states filed a proposed consent ...

In another example of multi-agency, multi-jurisdictional legal action, the CFPB and Florida’s Attorney General Office brought an enforcement against two student debt-relief companies accused of tricking borrowers into paying upfront fees for federal loan benefits. “We allege that both companies exploited vulnerable student loan borrowers, made false promises about their debt-relief services, and charged illegal upfront fees,” said CFPB Student Loan Ombudsman Rohit Chopra. The bureau and the Florida AG shut down Tampa-based student loan debt-relief company College Education Services, and its owners, Marcia Elena Vargas and Frank Liz, for allegedly scamming students into paying upfront fees for student loan debt consolidation, loan forgiveness, and relief from garnishments, services that were never provided or not performed as promised, according to ...

The CFPB sued a Dallas-based company, Union Workers Credit Services, for allegedly deceiving consumers into paying fees to sign up for what it advertises to be a general-use credit card that actually can only be used to buy products from the company. “The business model for Union Workers Credit Services is built on duping consumers into signing up for a sham credit card,” said CFPB Director Richard Cordray. “Hundreds of thousands of people, including a great many union members who were specially targeted, have been tricked into spending millions of dollars for a so-called credit card that can really only be used to buy the company’s own products, ” he added. “From the misleading photos of nurses and firemen on ...

Different segments of the financial services industry are split on the CFPB’s proposal to implement a limited “no-action letter” policy to reduce the regulatory uncertainty that may exist for certain emerging products or services which stand to benefit consumers. The proposed policy would allow bureau staff to send a no-action letter to a company informing it that the CFPB isn’t planning to recommend initiation of supervisory or enforcement action in connection with a firm’s offering or provision of a new product. As innocuous as that sounds, at least one firm, International Bancshares Corp. of Laredo, TX, said it had serious concerns with the bureau’s proposal, which the company characterized as very narrow.Among the company’s complaints is that the bureau’s ...

Many mortgage lenders are going to feel they are “damned if they do, damned if they don’t,” when they learn about the fair lending pitfalls inadvertently lurking in the weeds of compliance with the CFPB’s Truth in Lending Act and Real Estate Settlement Procedures Act integrated disclosure rule and the forthcoming Home Mortgage Disclosure Act rule. “Looking ahead to next year and beyond, the TILA-RESPA integrated disclosure rule could bring additional new risk,” said Colgate Selden, counsel with the Alston & Bird law firm, during a recent webinar on fair lending risk sponsored by Inside Mortgage Finance, an affiliated newsletter. “Some of these are old risks that may have gone away, but are back in some ways,” Selden told attendees. ...

A federal bankruptcy judge last week ruled against increasing Lehman Brothers’ reserves for residential MBS claims. The ruling by Judge Shelley Chapman of the U.S. Bankruptcy Court for the Southern District of New York was a setback for investors and trustees who asked the court in August to increase Lehman’s current reserves of $5 billion to $12.1 billion in a bid to force the defunct investment bank to repurchase legacy MBS., according to a Barclay’s Research report. The lawsuit against Lehman alleges...

Congress denied funding for an enhanced FHA housing counseling initiative for first-time homebuyers and rejected a request for authority to collect a new FHA fee to enhance quality-assurance reviews. President Obama this week signed the FY 2015 Consolidated and Further Continuing Appropriations Act, a comprehensive package of 11 funding bills for federal agencies. The bill does not include the provisions the FHA had sought to toughen enforcement and help lower costs for first-home purchases. The House passed the $1.1 trillion omnibus spending bill, H.R. 83, by a vote of 219-to-206 on Dec. 11, narrowly avoiding a government shutdown. The Senate approved the bill on Dec. 13. The bill allocates $47 million to the Department of Housing and Urban Development’s housing counseling program and $50 million for foreclosure mitigation counseling. It also provides $400 billion in ...