Legal Issues

Browse articles from all of our Newsletters related to Legal Issues.

December 14, 2018 - Inside FHA/VA Lending

CFPB Hammers VA Lender for Deceiving Borrowers on IRRRLs

The Consumer Financial Protection Bureau has filed a complaint and a proposed settlement against a Nevada lender for misleading borrowers on the benefits of VA streamline refinancing.

December 14, 2018 - Inside FHA/VA Lending

FoA Agrees to FCA Settlement; DOJ, IGs Resolve Billing Fraud Case

Finance of America – a Blackstone Group portfolio company – has agreed to pay $14.5 million to the government to resolve allegations that its operating subsidiary, Gateway Funding Diversified Mortgage Services, knowingly endorsed ineligible loans, resulting in losses to the FHA insurance fund.

December 14, 2018 - Inside MBS & ABS

Deutsche Bank, Investors Agree to Settle RMBS Cases in NY and CA; Wells Fargo Settles Dispute with Illinois

Deutsche Bank, asset managers and investors have agreed to settle their long-running dispute over the bank’s alleged failure to fulfill its obligations as trustee to more than 500 trusts backed by legacy residential MBS valued at more than $570 billion.

December 13, 2018 - Inside Mortgage Finance

California Judge Tosses Class-Action Lawsuit Against Caliber Home Loans over Data Breach

A California court last month dismissed a borrower’s attempt to bring a class-action lawsuit against Caliber Home Loans over a security breach at the nonbank lender in early 2017.

December 13, 2018 - Inside Mortgage Finance

An Adverse Court Ruling in Closely Watched Case Could Increase Servicer Liability Under FDCPA

Mortgage servicers are waiting anxiously for a U.S. Supreme Court ruling on whether the Fair Debt Collection Practices Act applies to non-judicial foreclosures.

December 10, 2018 - Inside the CFPB

VA Lender Sued for Deceiving Veterans Regarding IRRRLs

The CFPB last week sued Village Capital & Investment for deceiving veterans regarding the Interest Rate Reduction Refinance Loans program.

December 7, 2018 - Inside The GSEs

NY Law Firm to Pay $6.1 Million to Settle Fannie, VA Fraud Charges

Law firm Rosicki, Rosicki & Associates, along with two affiliates, has agreed to settle a civil lawsuit alleging the companies systematically defrauded Fannie Mae and the Veterans Administration by routinely overcharging them and submitting false bills for foreclosure and eviction-related expenses.

December 7, 2018 - Inside MBS & ABS

Court Delays Fee Action Against U.S. Bank Until After Primary RMBS Case is Resolved

A federal district court in Manhattan agreed to halt legal proceedings in an investment compa-ny’s challenge of U.S. Bank’s billing practices until the primary residential MBS case involving the two parties is resolved.

December 6, 2018 - Inside Mortgage Finance

Lenders Face Uncertainty After Supreme Court Refuses Case Involving Interest Payments on Escrow Accounts

The U.S. Supreme Court’s refusal to hear a case relating to interest payments on mortgage escrow accounts and preemption of state laws has created uncertainty for lenders and servicers, according to lawyers for Bank of America, which sought a review of the case by the top court.

November 26, 2018 - Inside the CFPB

Santander Consumer to Pay $12 Million for Misleading Marketing

Santander Consumer USA, a Dallas-based subprime auto lender, agreed to pay nearly $12 million to settle allegations that it misled consumers about its add-on products to auto loans. This is the 10th enforcement action brought by the CFPB under Acting Director Mick Mulvaney.

November 21, 2018 - Inside Mortgage Trends

Study: Bias at Fintech and Face-to-Face Lenders

Mortgage lenders that rely on cutting-edge financial technology – or fintech – may be just as guilty as traditional face-to-face lenders of pricing discrimination, according to a new study by economists at the University of California at Berkeley. The researchers found that both traditional and online lenders charge Latino and African-American borrowers 6 to 9 basis points higher interest rates than their white counterparts for purchase-mortgage loans, and 1 to 3 bps more for refinancing ...

November 16, 2018 - Inside FHA/VA Lending

GNMA’s Liquidity Concerns Prompt Demand for Contingency Plans

Increasingly worried about the financial condition of its largest nonbank issuers amid declining market conditions, Ginnie Mae in late October shot off a liquidity letter to 14 companies, asking them to develop contingency plans. The identity of the firms was not revealed to Inside FHA/VA Lending, but it’s no secret which companies rank among the top echelon of issuer/servicers. The five largest nonbank Ginnie MBS servicers as of Sept. 30 are PennyMac Financial Services, Lakeview Loan Servicing, Freedom Mortgage, Quicken Loans and Mr. Cooper. According to the letter, a copy of which was obtained by this publication, Ginnie wants the companies to develop strategies to right-size their operations. One of the agency’s goals is to lay the groundwork for financial stress tests that all issuer/servicers eventually must meet. Ginnie expects to sit down with the executive management teams of the ...

November 16, 2018 - Inside FHA/VA Lending

Ginnie Mae Continues to Tighten Issuer Standards, Accountability

This week, Ginnie Mae issued an all-participants memo dictating new standards for firms seeking to become issuers, including the stipulation that applicants submit to a corporate credit evaluation. Ginnie said the financial exercise will be “similar to those employed by credit rating agencies.” The evaluation will determine whether an applicant is qualified to be an issuer or whether additional criteria should be imposed even if the basic standards are met. Applicants that rely on a subservicer arrangement will be scrutinized even more. The bulletin also notes that, effective immediately, the agency is implementing new notification requirements for MBS issuers engaged in “certain subservicer advance or servicing income agreements, which do not require prior Ginnie Mae approval, but can impact an issuer’s ongoing liquidity position and financial obligations.” While Ginnie currently permits subservicers to advance ...

November 16, 2018 - Inside FHA/VA Lending

FHA Seeks to Strengthen MRB Authority to Ensure Compliance

The FHA is recommending a statutory change to strengthen the Mortgagee Review Board’s authority in lender enforcement. The agency discussed the merits of enhancing MRB’s powers in a 2018 audit report on the health of the Mutual Mortgage Insurance Fund. While the goal of a stronger MRB is not new, it has taken on a new urgency in discussions between the Department of Housing and Urban Development and the Department of Justice regarding the use of the False Claims Act in FHA enforcement. The DOJ and HUD have used the statute to pursue lenders that have inflicted millions of dollars in losses on FHA due to misrepresentation, carelessness and generally sloppy underwriting. Lenders, on the other hand, have complained about the agencies’ indiscriminate use of the FCA against even the slightest technical error. The FCA and its treble-damages provisions have squeezed billions of dollars ...

November 16, 2018 - Inside FHA/VA Lending

HUD Works on Deal with DOJ to Limit FCA Use to Serious Violations

A memorandum of understanding is in the works at the Department of Housing and Urban Development to clarify the use of the False Claims Act in FHA enforcement. At the same time, the department is considering seeking statutory authority for the Mortgagee Review Board to impose stiffer penalties on lenders for violations that do not require a False Claims Act response. (See following story.) During a public policy luncheon hosted by the Washington-based Women in Housing and Finance this week, HUD Assistant Secretary and FHA Commissioner Brian Montgomery said the draft MOU would provide a “level of fairness” in terms of whether the FCA or some other mechanism would be appropriate. Montgomery did not discuss specifics but said the memo would ensure that HUD has a say in what type of offense would qualify for a false claim. Montgomery gave no timeframe for when the ...

November 16, 2018 - Inside FHA/VA Lending

MMIF is Sound, Latest Audit Finds; Forwards Cover More HECM Losses

The FHA’s Mutual Mortgage Insurance Fund is generally healthy but for its Home Equity Conversion Mortgage program, according to the latest FHA audit of the MMIF. In its 2018 report to Congress this week, the Department of Housing and Urban Development had good and bad news regarding the financial condition of the insurance fund. The good news is that the economic value of the MMIF, which backs the FHA’s single-family loan programs, increased to $34.7 billion in fiscal 2018 from $26.7 billion a year ago. Total capital resources rose to $49.2 billion from $40.9 billion during the same period. For the fourth consecutive year, the fund exceeded its statutory capital reserve ratio of 2.00 percent. The ratio rose to 2.76 percent in 2018 from 2.18 percent last year. Premium reductions, had they been in effect, would have reduced the fund’s economic net worth and dropped its capital ratio, industry ...

November 16, 2018 - Inside MBS & ABS

Wells Fargo Settles MBS Trustee Suits; Jury Awards $27.8 Million to ResCap; NY Court Affirms Ruling

Wells Fargo Bank last week agreed to a $43 million settlement with a group of institutional investors to resolve two class-action lawsuits related to certain legacy residential MBS that resulted in huge investor losses.

November 16, 2018 - Inside MBS & ABS

Wall Street Pleased by Dismissal of Controversial CDO Bankruptcy Case Prompted by Senior Investors

An involuntary bankruptcy of a $630.2 million collateralized debt obligation was dismissed late last week, prompting praise from the Structured Finance Industry Group. Investors in senior tranches of the CDO had sought the bankruptcy, which SFIG warned would have yielded negative consequences for the securitization industry.

November 15, 2018 - Inside Mortgage Finance

Large Judgement Against Waterstone Mortgage in Limbo After Ruling by Appeals Court on Arbitration Issue

Waterstone Mortgage has won temporary relief on the $10.6 million in damages it had been directed to pay to 175 loan originators as part of a class-action lawsuit involving employee compensation.

November 9, 2018 - Inside The GSEs

GSE Shareholders Urge Judge to Reject FHFA’s Request

Fannie Mae and Freddie Mac shareholders in a class action suit are urging U.S. District Judge Royce Lamberth to reject the government’s request to reconsider his opinion. On Sept. 28, Royce ruled that the Treasury sweep breached an implied covenant of good faith. That ruling paved the way for shareholders to continue their case against the government. But the Federal Housing Finance Agency and the GSEs are challenging that ruling. They filed a motion on Oct. 15 asking for ...

November 8, 2018 - Inside MBS & ABS

Goldman Nears Settlement Goal, DOJ to File MBS Suit Against UBS, BofA Settles, MBIA Chalks Up Win

Goldman Sachs has forgiven a total of $78.7 million in principal on 746 first-lien mortgages since Aug. 1, 2018, as it neared fulfillment of a $1.8 billion consumer-relief obligation under two mortgage-related settlement agreements, according to independent monitor Eric Green.


With loan volumes declining, does your shop have plans to enter the non-QM lending market in 2019?

Yes, definitely. A solid move forward.


Yes, but only incrementally.


We’re pondering a move into non-QM, but haven’t made up our mind.


No, definitely not. We view it has too risky.