Wells Fargo will reportedly appeal a federal judge’s decision that a $25 billion agreement Wells and four other banks made with federal agencies and 49 state attorneys general last year to settle allegations of servicing malpractices does not make the banks immune to future claims under the False Claims Act. The Feb. 12 decision by Judge Rosemary Collyer of the U.S. District Court for the District of Columbia said that the landmark settlement she had approved in April 2012 does not release the from future False Claims Act claims the government may bring. Dating back to the U.S. Civil War, the FCA provides for treble damages for fraud that results in ...

The Department of Housing and Urban Development this week issued more detailed guidance to changes in the FHA Lender Insurance Program based on a final rule published in the Federal Register in January 2012. Under the LI program, high-performing direct endorsement lenders have the authority to conduct pre-endorsement reviews and endorse loans. Mortgagee Letter 2013-12 supersedes guidance HUD issued last month and provides additional details on initial and continuing eligibility for Lender Insurance. It also talks about HUD monitoring of program participants as well indemnification procedures, which were discussed in ...

Wall Street has unveiled policy proposals calling for premium and guaranty fee adjustments and reduced loan limits for FHA and the government-sponsored enterprises to jump start the return of private capital to the U.S. housing market. The American Securitization Forum said the current level of government activity in the mortgage market is neither sustainable nor advisable. The government, through FHA, Fannie Mae and Freddie Mac, directly or indirectly guarantees 90 to 95 percent of new mortgage originations in the country, the trade association said. While everyone agrees the government’s role in housing should be reduced over the long term, there is ...

The Department of Housing and Urban Development has announced plans to consolidate multifamily hubs nationwide and close a number of its smaller field offices. The plan would result in an estimated $61.9 million in annual costs savings for HUD after completion and affect approximately 900 of the department’s 9,300 employees. No employee will be laid off as a result of the restructuring, according to HUD Secretary Shaun Donovan. Donovan said the changes are part of a broader, long-term effort that will allow HUD to continue to deliver high-quality services by adapting modern best practices. The decision to ...

The Department of Housing and Urban Development’s Office of the Inspector General has recommended that two lenders be reviewed for potential treble damages under the False Claims Act for allowing restrictive covenants to be recorded in regard to 864 FHA-insured loans in violation of FHA regulations. CTX Mortgage Co. of Dallas, TX, and Pulte Mortgage of Englewood, CO, could be on the hook for millions of dollars if HUD agrees to accept the OIG’s recommendations, which also include reimbursements and indemnification for paid and potential future claims. Both lenders maintained that ...

The Department of Housing and Urban Development this week issued guidance that spells out procedures for demanding indemnification from lenders participating in the agency’s Lenders Insurance (LI) program for loans deemed ineligible for FHA insurance. The guidance (Mortgagee Letter 2013-10) implements regulation that HUD finalized in January 2012. Indemnification for defective LI loans became even more important for the FHA after an independent actuarial audit in November revealed a negative capital reserve ratio and that a taxpayer bailout seemed imminent. Compliance experts warned that, with the policy changes, the more than ...

Department of Housing and Urban Development Secretary Shaun Donovan this week reiterated his agency’s request for additional legislative authority to regulate the Home Equity Conversion Mortgage program by mortgagee letter so that much-needed changes can be implemented immediately. Rather than go through the tedious legislative process of amending HECM legislation to improve the program and reduce HECM losses, expanding HUD’s authority would enable the department to undertake immediate reforms, such as restricting lump sum payments, requiring financial assessments of HECM applicants and requiring borrowers to ...

The Department of Justice recently announced enforcement actions against a New York-based FHA lender and its owner/president for fraudulent certification of FHA-insured loans as well as two separate settlements with bank subsidiaries for alleged violations of the Servicemembers Civil Relief Act. In the first action, the U.S. Attorney for the Southern District of New York, the Department of Housing and Urban Development, and the HUD Office of the Inspector General jointly announced a civil mortgage fraud lawsuit against ...

The Department of Housing and Urban Development’s Mortgagee Review Board slapped 157 FHA lenders during the first nine months of 2012 with various administrative actions, including more than $1.7 million in civil money penalties and indemnifications to HUD for paid and potential claim losses totaling $1.25 million. The MRB, which is HUD’s disciplinary arm, took action against the approved lenders from Jan. 1, 2012, to Sept. 30, 2012. According to a notice published in the April 11 Federal Register, the board withdrew the FHA approval of 130 lenders for failing to ...

Reaction to a report about Obama administration efforts to get banks to increase their purchase mortgage lending, particularly through the FHA, has ranged from supportive to dire warnings of déjà vu. Apparently, administration officials are trying to push banks to make more loans to qualified lower-income borrowers as well as minority and first-time homebuyers who have been shut out of the mortgage market because of stringent credit overlays. The report, which ran in the April 2 Washington Post, described the targeted borrowers as “people with weaker credit,” which, for some, conjures up the ...