A new report from the House Financial Services Committee staff accuses CFPB Director Richard Cordray of misleading Congress about the bureau’s probe of the unauthorized account creation scandal at Wells Fargo, rushing into a settlement without doing the requisite leg work, and agreeing to a paltry settlement when he could have slammed the company for at least $10 billion in fines. As a part of its investigation into the Wells Fargo fraudulent account scandal, the committee said it has obtained a crucial new document – the “Recommendation Memorandum” – that was presented to and approved by Cordray.“The Memorandum shows that the CFPB estimated that the bank was potentially liable for a statutory monetary penalty exceeding $10 billion,” said the committee. “This ...

In remarks that “sure sounded like a campaign speech,” according to one long-time industry compliance attorney, CFPB Director Richard Cordray threw the mortgage industry under the bus, accusing it of causing the financial crisis and the Great Recession that followed. Two weeks ago, Cordray delivered the keynote address at the Ohio Land Bank Conference in Cleveland, the same day the Democrat Party primary debate for the Ohio gubernatorial race was held. Some political observers were watching to see if the director would give his speech, resign and then appear in the debate. They were disappointed.But that doesn’t mean Cordray won’t resign before his term ends in July to pursue a run for the governor’s mansion. He has until 4 p.m. ...

The CFPB got a split verdict in a recent ruling from the U.S. District Court for the Northern District of California in its legal tussle with Nationwide Biweekly Administration, of Greene County, OH, which stood accused of engaging in deceptive practices by misleading consumers through its Interest Minimizer mortgage payment program. The bureau won a $7.9 million civil penalty from the defendants, but lost on $74 million in sought-after restitution. “After carefully considering the sufficiency, weight and credibility of the testimony of the witnesses, their demeanor on the stand, the documentary evidence admitted at trial, and the post-trial submissions of the parties, the court finds that CFPB has adequately shown that some, but not all, of defendants’ challenged marketing statements ...

The CFPB’s much-criticized arbitration rule issued earlier this year took effect last week, as a successful vote in the Republican-controlled House of Representatives to overturn it failed to generate enough interest and support for a comparable move in the Senate. It’s likely that the massive Equifax data breach and the company’s seeming attempt to manipulate affected individuals to waive their rights to arbitration in order to sign up for free credit-monitoring services effectively killed what little interest senators may have had in following up on the House’s success. The failure is another blow to a political party that ostensibly controls the Senate, the House and the White House but is struggling to accomplish much legislatively, thanks in part to the ...

A former Deutsche Bank employee is at the center of a lawsuit brought by the government over the sale of more than $1 billion of non-agency MBS. It’s rare when the government focuses on an individual for mortgage fraud, but the Department of Justice said the bank’s former head of subprime trading allegedly defrauded investors out of hundreds of millions of dollars. The civil complaint was filed in Brooklyn’s federal court against Paul Mangione for knowingly selling bad subprime mortgages financed during the crisis and misleading investors about loan quality. The complaint alleges that he engaged in fraudulent schemes involving the origination practices of Deutsche Bank’s subsidiary, DB Home Lending LLC, which originated the bulk of the loans. The securities were sold...

A dispute involving the liquidation of a vintage collateralized-debt obligation has the potential to upend standard practices and confidence in the securitization industry, according to the Structured Finance Industry Group. Senior investors in Taberna Preferred Funding IV – a $673.3 million CDO issued in 2005 – are seeking to force a liquidation of the deal via bankruptcy. The bankruptcy is being pursued by a group of investors identified as Opportunities II Ltd., HH HoldCo Co-Investment Fund, L.P., and Real Estate Opps Ltd. The investors appear to have purchased senior tranches of the CDO only in recent years. SFIG filed...

Rapid, aggressive refinancing of VA loans has made a comeback with some issuers using strategies to mask the practice and avoid possible penalties, including expulsion from the Ginnie Mae program, according to a top agency official. Responding to concerns raised by Sen. Elizabeth Warren, D-MA, Michael Bright, acting Ginnie Mae president and chief operations officer, said a joint Ginnie Mae/VA lender-abuse task force is analyzing monthly data and developing additional policy measures to deal with the problem. Bright confirmed the resurgence of inappropriate streamline refinancing in Ginnie securitization pools in recent weeks and has promised to crack down on the questionable practice. The problem surfaced last year when Ginnie Mae noticed unusually fast prepayment speeds in its mortgage-backed securities, particularly MBS backed by VA loans. Ginnie found that certain lenders and ...

The White House this week officially nominated industry veteran Brian Montgomery to be the next FHA commissioner and assistant secretary for the Department of Housing and Urban Development. In a related development, the Senate on Thursday confirmed the nomination of Pamela Pantenaude as HUD deputy secretary, three months to the day the Senate Committee on Banking, Housing and Urban Affairs approved her nomination. Montgomery, currently vice chairman of the Washington-based business-consulting firm The Collingwood Group, is no stranger to the job. He previously served as FHA commissioner/HUD assistant secretary during the second Bush administration and as acting HUD secretary in January 2009. As FHA commissioner, Montgomery lead legislative efforts to preserve the nation’s affordable rental housing stock while reducing rental-assistance costs and the cost of ...

Compliance attorneys are calling for legislative changes to prevent possible misuse of the False Claims Act that could result in settlements that could be financially devastating to mortgage lenders. Concerns about possible government misuse of FCA provisions are evident in the statutory qualifiers that are already embedded in the existing statute, according to a recent analysis by Krista Cooley and Laurence Platt, attorneys and partners in the Washington, DC, office of Mayer Brown. The qualifiers are in the main provision of the FCA that the Department of Justice has used against mortgage lenders and servicers, the attorneys said. The provision imposes liability on any person who “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval” or “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or ...

The FHA will provide lenders that originate Home Equity Conversion Mortgage loans the option to view and print unsigned HECM counseling certificates in FHA Connection starting Sept. 18, 2017. While the lender may still take the initial loan application, the lender can only begin to process it once the counseling is complete, as evidenced by a completed HECM counseling certificate that contains signatures of both the counselor and borrower. Lenders that chose to use this option will be required to establish procedures to obtain and document authorization from the HECM borrower to access the counseling certificate in FHA Connection. In addition, lenders must certify that a borrower authorization to view the counseling certificate was obtained. Lenders must follow the guidance on processing HECM loans contained in the HUD Handbook, the FHA said. To access HECM counseling certificates, lenders will ...