The CFPB and 13 state attorneys general obtained approximately $92 million in debt relief from Colfax Capital Corp. and Culver Capital LLC, also collectively known as “Rome Finance,” for about 17,000 U.S. service members and other consumers said to be harmed by the company’s alleged predatory lending scheme. According to the government agencies, Rome Finance lured consumers with the promise of no money down and instant financing. Rome Finance then masked expensive finance charges by artificially inflating the disclosed price of the consumer goods being sold. Rome Finance also allegedly withheld information on billing statements and illegally collected on loans that were void. The CFPB said the companies offered credit to consumers purchasing computers, videogame consoles, televisions, or other products. ...

The CFPB and 25 states filed amicus briefs in a case pending before the Supreme Court of the United States, Jesinoski v. Countrywide Home Loans Inc., that could resolve a circuit split over the recession of a mortgage under the Truth in Lending Act. The Truth in Lending Act provides that a borrower “shall have the right to rescind the transaction until midnight of the third business day following ... the delivery of the information and rescission forms required under this section ... by notifying the creditor ... of his intention to do so.” TILA further creates a time limit for the exercise of this right, providing that the borrower’s “right of rescission shall expire three years after the date ...

In what is likely the first such case of its kind, a law firm headed up by former Ohio Attorney General Marc Dann, D, brought suit last month in the Eastern Division of the U.S. Northern District Court of Ohio against JPMorgan Chase, alleging the lender violated the new mortgage servicing regulation promulgated by the CFPB. According to court documents, homeowner Bethanne Wasko, of Poland, OH, was always current on her mortgage until she sought a loan modification and was told by Chase that she would need to stop making payments in order to be eligible. Wasko did as she was told, her attorney’s filing said, but instead of offering her the modification she sought, the bank filed for foreclosure. ...

The Government Accountability Office will put the CFPB’s organizational culture and management practices under its microscope in response to a request from Rep. Patrick McHenry, R-NC, chairman of the House Financial Services Subcommittee on Oversight and Investigations, and two other members of the full committee’s GOP leadership. McHenry and his Republican allies on the subcommittee have been trying to hold the CFPB’s feet to the fire for months over allegations that bureau managers are discriminating against employees based on race and gender and retaliating against employees who complain. McHenry announced the GAO probe during a hearing last week, at which he also provided an updated total of the number of CFPB employees who have alleged discrimination and/or retaliation at the ...

House Financial Services Committee Chairman Jeb Hensarling, R-TX, has written CFPB Director Richard Cordray to assert that the recent Supreme Court decision in National Labor Relations Board vs. Noel Canning raises questions about the validity of the actions Cordray took prior to his July 16, 2013, confirmation by the Senate. The congressman also said he is seeking “a complete and proper accounting of the CFPB’s exposure to legal challenges.” The correspondence to Cordray was also signed by Senate Banking, Housing and Urban Affairs Ranking Member Mike Crapo, R-ID. In the Canning case, the Supreme Court of the United States held that President Barack Obama’s appointment of directors to the NLRB violated the Recess Appointment Clause of the U.S. Constitution. Although ...

A Manhattan federal judge on Wednesday ordered Bank of America to pay a $1.27 billion penalty over mortgage fraud related to Countrywide Financial’s “Hustle” program, a little more than half of what the government had said the bank should pay, while the bank and Department of Justice discuss a potential MBS fraud settlement. Last October, the DOJ and the Securities and Exchange Commission successfully proved in court that Fannie Mae and Freddie Mac lost some $850 million from thousands of loans acquired through Countrywide’s “high-speed swim lane” program – known as HSSL or “Hustle.” The loan program ran...

Close compliance with the mortgage servicing rules promulgated by the Consumer Financial Protection Bureau will continue to be a critical concern for servicers this year. Analysts at DBRS anticipate intensified scrutiny from the CFPB and a higher likelihood of fines and lawsuits from noncompliance and even technical errors. “DBRS believes that the issuance of the mortgage servicing rules has brought much-needed reform to the servicing industry,” the analysts said in a new report. It was...

For FHA lenders, the idea of a large lender exiting the FHA market and creating opportunities for market share has been overshadowed by concerns regarding liability in the wake of recent fraud-related settlements between lenders and the federal government. Compliance experts said many of their FHA clients are quietly reassessing their FHA business after JPMorgan CEO Jamie Dimon, during a recent earnings call, spoke out loudly against the government’s stringent enforcement actions aimed at recovering “wrongfully” claimed funds. Lenders fear that FHA enforcement actions have taken a turn for the worse in recent years, and that even errors that have nothing to do with loan default are construed as fraud by government prosecutors, resulting in billion-dollar penalties against FHA lenders. Seven major banks, so far, have paid ...

Twenty-five lenders either settled or lost their FHA approval for a full year because they failed to complete their annual recertification requirement, while 21 others were subjected to enforcement actions because their origination or servicing files did not meet FHA requirements. Results from cases heard by the Department of Housing and Urban Development’s Mortgagee Review Board in 2012 and 2013 showed that the board used all enforcement tools at its disposal. Specifically, the board took the following actions: Assessed money penalties of more than $1.5 million; imposed fees, refunds and principal buydowns totaling $1.2 million; required indemnification on 163 FHA-insured loans; withdrew FHA approval of four lenders; suspended the FHA approval of one lender; and placed one lender’s approval on probation. Violations were related to ...

The FHA’s widespread reduction in loan limits for 2014 has had a mixed impact on production levels so far this year, according to a new Inside FHA Lending analysis of FHA endorsement data. Through the first four months of 2014, FHA endorsements were down 55.6 percent from the same period last year. But in counties where loan limits were lowered, FHA production was down 57.5 percent from early 2013. In the relatively few counties where loan limits actually increased in 2014, FHA endorsements were also down from a year ago, but by a less severe 47.4 percent. The biggest decline in endorsements has been in refinances, especially FHA-to-FHA refinances. In areas with lowered loan limits, production of these loans has plummeted 87.0 percent, and even areas with raised loan limits saw an 81.1 percent drop in streamlined refis. Purchase-mortgage originations have taken less of a ...