For years, banks have had a losing record in FHA cases involving False Claims Act allegations. Hence, a federal appeals court’s decision to uphold dismissal of a $2.3 billion lawsuit against a major bank is a rarity. In U.S., ex rel. Advocates for Basic Legal Equality (ABLE) v. U.S. Bank, the U.S. Court of Appeals for the Sixth Circuit affirmed the dismissal of an FCA lawsuit against U.S. Bank because the conduct alleged by the qui tam relator had been previously disclosed publicly in a consent order with federal banking regulators. The court held that ABLE’s claims were barred because the conduct that allegedly violated the FCA had already been disclosed when the plaintiff filed suit in 2013. The Department of Justice declined to intervene. The relator suit alleged that U.S. Bank had a practice of initiating foreclosure on FHA-insured mortgages without complying with the ...

The Department of Veterans Affairs has issued additional lender guidance for dealing with the public water contamination problem in Flint, MI. The guidance expands on the agency’s minimum requirements for properties backed by VA loans. The guidance refers to policy in the VA Lender’s Handbook which requires properties to have “a continuing supply of safe and potable water for drinking and other household uses,” before being approved for a VA-backed home loan. In the VA’s view, safe and potable water also refers to water used for bathing, showering and sanitary uses. Properties not in compliance with this requirement will not be eligible for the VA guaranty. Proper mitigation of lead-contaminated water must include a central filtering system that is acceptable to local health authorities and that can provide safe and potable water. Appraisers must comment and adjust for any ...

A clause in a New York home-purchase contract excluding government-backed financing from seller consideration is raising potential disparate impact concerns. A residential-lending manager in Sarasota, FL, emailed Inside FHA/VA Lending a copy of the contract with the controversial language embedded in Section 8 under the heading “Mortgage Commitment Contingency.” The paragraph read in part, “… institutional lender agrees to make a first loan other than a VA, FHA or other governmentally insured loan, to purchaser …”. “The language makes clear that no government-backed loans such as VA, FHA or USDA are acceptable to the seller [of the property],” the lender, who requested anonymity, said. “It is pretty rampant as cash is king and no one on the selling side wants to wait for payment.” Apparently, such clauses are nothing new. In fact, they have been around for ...

The FHA has issued emergency guidance for handling loan applications in areas affected by the water contamination crisis in Flint, MI, while the VA called for special relief for affected Michigan borrowers. A spokesperson for the Department of Housing and Urban Development said FHA lenders have been seeking guidance on how to handle single-family housing properties with an FHA-insured mortgage that may be affected by the tainted water supply in Genesee County., MI. The FHA’s two-page guidance stated that a property in the affected areas must first meet the agency’s property acceptability standards. Lenders are required to ensure that each property has a continuing adequate supply of clean, safe and potable drinking water. In addition, they must make sure the property is safe to occupy and free of any health or environmental hazard. HUD’s Single Family Policy Handbook ...

The FHA’s Home Equity Reverse Mortgage Information Technology (HERMIT) system will shift to a new vendor-operated host data center beginning March 21, 2016. Reverse Market Insight (RMI), a provider of data, analysis and portfolio valuation services for the reverse mortgage industry, has been tapped to manage, maintain and operate HERMIT. Launched in October 2012, HERMIT is an online, web-based automated system that monitors and tracks the FHA’s Home Equity Conversion Mortgage portfolio and automates insurance claim payments. HERMIT will shut down temporarily from 7 p.m., March 16, to 8 a.m., March 21, in order to complete the transition. The FHA said there would be no changes to the system’s functionality during transition to the host data center. User IDs and passwords for accessing HERMIT will remain unchanged. Following HERMIT’s transition to the ...

Forty-five congressmen signed a letter addressed to the head of the Federal Housing Finance Agency on March 1 citing the need to reform the way nonperforming loan sales are conducted and singled out Lone Star Funds as a “bad actor” in the transactions. The letter, addressed to FHFA Director Mel Watt as well as Secretary Julian Castro of the U.S. Department of Housing and Urban Development, noted that there are improvements both agencies should take to better align the programs with the goals of stabilizing neighborhoods, alleviating the affordable housing crisis and working with organizations that have a track record of homeownership preservation.

One of the companies that purchased a large number of distressed homes from Fannie Mae following the housing crisis was the focus of a recent New York Times piece highlighting the problems brought on by investor-purchased homes that still linger today. Harbour Portfolio Advisors of Dallas is an investment firm that purchased thousands of single-family homes from Fannie in states like Florida, Georgia, Illinois, Michigan and Ohio, by way of a pool sales program that existed from 2010 to 2014. The article accused the firm of targeting and taking advantage of low-income buyers who don’t know what they’re getting themselves into once agreeing to buy a fixer-upper home from Harbour. The investment firm bought...

Consumers complained to the CFPB about debt collection issues at a substantially reduced level during the fourth quarter of 2015, according to a new analysis and ranking by Inside the CFPB. During the period ending Dec. 31, 2015, consumer gripes were down 27.5 percent versus the previous quarter.Among the top 50 companies as ranked by consumer criticisms, 45 saw a double-digit percentage decline. Year over year, the story is less inspirational, with consumer kvetching down a mere 0.6 percent. Six companies saw complaints leap by triple digit percentages. To put some anecdotal flesh on these empirical bones, in the CFPB’s most recent supervisory highlights report, the bureau pointed out that during its examination of at least one debt collector, ...

The growing level of student loan debt notwithstanding, the number of complaints about student loans filed by consumers to the CFPB fell by double digits during the fourth quarter of 2015, according to an analysis by Inside the CFPB of information in the CFPB’s consumer complaint database. Overall gripes fell by 31.7 percent from the third quarter to the fourth, the analysis found. The biggest player in this regard, the Sallie Mae spinoff Navient, saw criticisms fall 29.3 percent during the period, as well as by 13.8 percent year over year. This is particularly significant, given the company’s size and market dominance.On a year-over-year basis, overall kvetching rose a modest 2.7 percent, the data show. However, as the chart [with exclusive data chart]...

The FHA flood insurance requirements could make it difficult or more risky for lenders to originate FHA loans in states with significant flood risk or where flood maps may not accurately reflect the current flood risks, the Mortgage Bankers Association warned. Testifying during a recent hearing on private flood insurance, Steven Bradshaw, executive vice president of Standard Mortgage and MBA representative, warned that FHA’s current requirement for lenders to secure flood insurance on properties only if it is located within a high flood-risk zone has had some unexpected adverse impact, particularly in the wake of hurricane-related catastrophes. Bradshaw noted that many homes that were destroyed by Hurricane Katrina were not located in special flood-hazard areas (SFHA) and therefore were not required to have flood insurance. “Sadly, these borrowers were often uninsured and the ...