Complaints

Browse articles from all of our Newsletters related to Complaints.

July 21, 2017 - Inside FHA/VA Lending

VA Clarifies, Underscores Use of Tidewater Process in Appraisals

The Department of Veterans Affairs is ratcheting up enforcement of its so-called Tidewater process to prevent veterans from paying more than the appraised value of the property when using a VA loan. In recent guidance, the VA reaffirmed its 2003 Tidewater Appraisal Initiative to help reduce the number of cases where appraisers have been asked to reconsider their initial appraisal, which had come in below the sales price. The guidance emphasizes procedures for improving communication of new sales data to VA fee and staff appraisers for a reevaluation of the low initial appraisal. “These guidelines should help limit the number of cases that reach the reconsideration-of-value phase and also provide a more timely response to those cases that are submitted for reconsideration,” the VA explained. The Tidewater procedure provides a designated “point of contact” (POC) the opportunity to ...


July 21, 2017 - Inside FHA/VA Lending

MRB Suspends Lender’s Authority To Originate, Service FHA Loans

The Department of Housing and Urban Development’s lender disciplinary arm, the Mortgagee Review Board, has suspended a Pennsylvania FHA lender from originating or underwriting any new agency-insured loans. In addition, HUD’s enforcement center suspended owner John Seckel from doing business with the federal government. According to HUD, Seckle Capital of Newton, PA, and its owner submitted statements and certifications purporting to show the firm was properly audited by independent certified public accountants, when, in fact, it was not. The MRB said Seckel and his firm engaged in a “years-long pattern” of deceit and falsehoods. The action is the result of HUD’s ongoing effort to hold the mortgage industry accountable for the loans it originates, underwrites or services. According to HUD’s Neighborhood Watch website, Seckel Capital has a compare ratio of 164 percent. Of the 557 loans the ...


July 17, 2017 - Inside the CFPB

Most Mortgage Complaints Plunge, But Gripes About Servicing Jump

Based on plunging consumer gripes sent to the CFPB, the mortgage market looks like it’s in great shape – with one glaring exception: mortgage servicing. According to a new analysis by Inside the CFPB of second quarter data from the bureau’s consumer complaint database, mortgage servicing saw a 17.5 percent jump in borrower grousing during the second quarter, but a milder 1.4 percent uptick from the first half of 2016. That latter level would be barely perceptible were it not in such stark contrast to the double-digit drop-offs seen in all other mortgage-related areas tracked by this publication. For instance, kvetching about loan modifications plummeted 81.5 percent from the first quarter of this year to the second, and [With exclusive data charts]...


July 7, 2017 - Inside FHA/VA Lending

Around the Industry

Chicago HECM Lender Arraigned on Fraud Charges. Mark Steven Diamond, a mortgage loan originator with offices in Chicago and Calumet City, IL, was arraigned on fraud charges in connection with a $7 million reverse mortgage scheme that targeted elderly homeowners and FHA lenders. According to the Department of Justice, Diamond deceived lenders into making FHA-insured reverse mortgage loans to homeowners who did not apply for a loan or had been beguiled to do so by the smooth-talking suspect. Diamond allegedly pocketed title-company checks intended for the borrowers, with the help of an unindicted co-schemer. Cynthia Wallace, who posed as a representative of the Department of Housing and Urban Development, was indicted along with Diamond. Using at least three aliases, Wallace allegedly collected money from victims for home repairs, which she claimed Diamond would ...


July 7, 2017 - Inside FHA/VA Lending

FHA Lender Pays $4.2 Million to Resolve False Claims Allegations

Prospect Mortgage of Sherman Oaks, CA, this week joined a growing list of FHA lenders that have opted to settle federal false claims allegations arising from flawed underwriting and poor quality control. Prosecutors with the U.S. Attorneys Offices for the Northern Districts of Georgia and California announced a $4.16 million settlement with Prospect stemming from alleged fraudulent FHA lending practices at two of its Southeastern branches. An FHA direct endorsement lender, Prospect’s branches in Florida and North Carolina allegedly violated the False Claims Act by falsely certifying compliance with FHA underwriting and quality control requirements. Consequently, the FHA suffered substantial losses in claim payments when the loans defaulted. HUD’s Atlanta Home Ownership Center reported that Prospect had a 12.29 percent default rate, well in excess of the national average, between December 2007 and ...


July 7, 2017 - Inside FHA/VA Lending

DOJ, HUD Expand FCA Scrutiny to FHA Servicing, Reverse Mortgages

Mortgage compliance experts are cautioning FHA servicers to tread carefully around loss mitigation, annual certifications and reverse mortgages, which could be a potential minefield for False Claims Act lawsuits. While FHA lenders’ exposure to FCA risk remains, the Department of Justice and the Department of Housing and Urban Development have increased their scrutiny of FHA servicing practices for potential violations, according to Phil Schulman and Kristie Kully, both partners in Mayer Brown’s Washington office. In a recent podcast, Schulman warned of increasing DOJ and HUD scrutiny of FHA servicing practices in the last 18 months, a worrisome shift from the origination side, which has seen an estimated $5 billion in settlements and penalties since 2011 for violations of the FCA and the Financial Institutions Reform, Recovery and Enforcement Act. Since 2008, mortgagees participating in ...


June 23, 2017 - Inside FHA/VA Lending

Senate Chairman Seeks Data on ‘Slush Fund’ Payments to Groups

The chair of the Senate Judiciary Committee is looking into whether monies from mortgage-settlement funds were channeled to partisan advocacy and community organizations that Congress had previously defunded. In a recent letter to Attorney General Jeff Sessions, Chairman Chuck Grassley, R-IA, revived a long-standing request by the committee for a list of all settlement agreements reached during the Obama administration that involved alleged payments to community groups. Grassley’s request came in the wake of Session’s June 7 directive prohibiting the DOJ from entering into any settlement agreements that provide for payment to third parties that were not directly harmed by the alleged misconduct. Sessions said the directive ends the previous administration’s practice of requiring or encouraging defendants to make payments to third parties as a condition of settlement. The directive would ...


June 23, 2017 - Inside FHA/VA Lending

MBA Urges DOJ, HUD to Suspend Future FCA Enforcement Actions

The Mortgage Bankers Association is calling for a moratorium on future claims against FHA lenders under the False Claims Act to give the Department of Housing and Urban Development sufficient time to streamline its defect taxonomy and revise its loan-level certification requirements. In letters to HUD and the Department of Justice, the MBA said the FHA has yet to issue clear standards identifying specific errors that could trigger an FCA claim and those that do not. FCA enforcement actions can result in very significant damage to a lender’s reputation and bottom line, warned Dave Stevens, MBA president and chief executive officer. Although FHA lenders work hard to ensure compliance with strict underwriting and documentation standards, origination, insurance and servicing depend heavily on human efforts, which could easily result in technical errors, he added. While lenders process ...


June 19, 2017 - Inside the CFPB

The Latest in Compliance: CFPB’s Complaint Database Offers Important Clues for Compliance

The information the CFPB collects and reports on consumer complaints offers lenders a tremendous resource in terms of abiding by the letter and the spirit of the bureau’s numerous rules, according to some top compliance professionals. “The CFPB’s annual report on complaints really is an incredible source of information,” said Barbara Boccia, senior director at Wolters Kluwer, during a presentation early last week at the American Bankers Association’s annual regulatory compliance conference in Orlando. “First, it really is a lot of information. Also, the way they structure the information that they receive is instructive,” she said. “You really want to make sure you are structuring your [complaint] information the same way, in terms of what they are looking at – for ...


June 16, 2017 - Inside Mortgage Trends

Complaint Trends Have Much to Teach Lenders

There are three important trends in the consumer complaint space, each bearing important lessons for mortgage lenders, regardless of size or structure, according to top compliance experts. Speaking to an audience at the American Bankers Association’s annual regulatory compliance conference in Orlando earlier this week, Carol Hunley, deputy chief compliance officer at Ally Financial Services, detailed each of them and their significance for lender compliance. First, the lending environment is...


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