Daily Archives: October 1, 2014

HUD watchdog accuses EverBank of violating FHA short sale policies

This is the same bank that is being investigated by NY AG for redlining of minority homeowners.

The Office of Inspector General of the United States Department of Housing and Urban Development has released a report alleging that EverBank violated the policies of the Federal Housing Administration’s Preforeclosure Sale Program.

According to the report from the HUD-OIG, EverBank improperly determined whether borrowers were eligible to participate in the FHA’s preforeclosure sale program and as a result of those failings, the FHA insurance fund paid approximately $1.57 million in improper claims.

HUD-OIG said that it audited EverBank’s preforeclosure sale program because “it had the highest Florida preforeclosure sale claims of all servicing lenders located in Florida and more than 50% of its Florida FHA claims were from preforeclosure sales with more than $12.9 million paid from 2011 through 2013.”

HUD-OIG said that its objective in the investigation was to determine whether EverBank had gone through the proper steps before a property was placed into the preforeclosure sale program.

“EverBank did not ensure that the mortgagors’ default on the FHA-insured mortgages was due to an adverse and unavoidable financial situation,” the HUD-OIG report stated. “Also, EverBank did not conduct a thorough and independent verification of the mortgagors’ income, claimed expenses and personal resources to properly determine if they had the ability to pay their mortgage payments. Lastly, EverBank did not substantiate that mortgagors’ need to vacate the FHA-insured property was due to the cause of the default.”

Read on.

JPMorgan Says It’s Paid Out Fifth Of Required Consumer Aid

Law360, New York (October 01, 2014, 3:00 PM ET) — JP Morgan Chase & Co. says it has doled out $869 million of the $4 billion in consumer aid it is required to provide under the terms of its $13 billion deal with the Justice Department over its alleged faulty lending during the housing boom years, according to an independent monitor hired to track the bank’s progress.

In a report published Wednesday, Joseph A. Smith Jr. shared JPMorgan’s second-quarter self-reported gross consumer relief and the credited equivalent as shared by the bank’s internal review group —…

Source: Law360

FHFA director faces criticism from former allies

Housing advocates that originally pushed President Barack Obama to appoint Mel Watt as the director of theFederal Housing Finance Agency are frustrated with Watt’s lack of changes to housing policy since he took over. Per Bloomberg:

The National Low Income Housing Coalition and other groups said they expected Watt, the most powerful housing official in America, to move quickly to help troubled borrowers and lower-income families shut out of the two-year housing recovery. Instead, he is maneuvering cautiously, asking for public feedback on many issues — and earning accolades from the mortgage industry.

“Mel Watt has been a huge disappointment,” said Peter Dreier, a public policy professor at Occidental College in Los Angeles who wrote a paper arguing that the FHFA should allow debt reductions for borrowers with Fannie Mae and Freddie Mac mortgages. “No one I know in the housing community understands why he’s sitting on his hands.”

Since taking office, Watt began a nationwide public campaign in July to visit targeted cities with the highest number of in-the-money borrowers who have yet to take advantage of a HARP refinance.

Here’s a link to HousingWire’s exclusive interview with Mel Watt in the directors’ first interview since being appointed.

Source: Bloomberg

Judge throws out Fannie and Freddie investors’ lawsuit, decision favors federal government

A Federal judge late Tuesday threw out a lawsuit brought by investors against the Federal government’s control over Fannie Mae and Freddie Mac.

Currently, Fannie and Freddie profits go to the government, and the investors were suing for their perceived share.

The Washington Post provided full coverage and background, via Danielle Douglas-Gabrielle:

The decision arrives more than a year after hedge fund Perry Capital sued the Treasury Departmentand the Federal Housing Finance Agency, which oversees the government-owned mortgage companies. The fund said they had violated a 2008 law that placed Fannie and Freddie into conservatorship to prevent bankruptcy.

Congress originally authorized Treasury to collect 10% dividend payments from Fannie and Freddie every quarter as a condition of the government’s $188 billion bailout of them. Treasury amended the terms of the agreement in 2012 to make Fannie and Freddie give the government most of their profits, a move known as the “sweep amendment.”

The decision favors the Federal government and its decision to take over the now government-sponsored enterprises.

Tim Pagliara, executive director of Investors Unite, issued the following statement in an email to HousingWire:

“Investors Unite doubts that Congress ever intended for the conservatorship to lead to nationalization of the GSEs with no compensation for shareholders.  We disagree with Judge Lamberth’s decision and we look forward to reviewing what comes out of discovery in the Fairholme trial.”

Source: Wash Post

Ex-Barclays traders facing UK Libor charges sue bank in NY

Reuters) – Three former Barclays Plc traders facing charges in the United Kingdom over manipulation of Libor benchmark interest sued the bank in New York on Tuesday, accusing it of retaliating against them by failing to pay their legal fees.

In a lawsuit filed in Manhattan federal court, Alex Pabon, Jay Merchant and Ryan Reich accused Barclays of violating whistleblower retaliation protections in the Dodd-Frank Act.

The three U.S. citizens who worked for the bank in New York were the first individuals to be charged criminally by the UK Serious Fraud Office (SFO) following a global investigation into alleged rigging of benchmark interest rates. Trial is expected in 2016, the lawsuit said.

Read on.

Citibank, Chase Borrowers’ RICO Class Actions In Jeopardy

Law360, San Francisco (September 30, 2014, 9:50 PM ET) — A California federal judge on Tuesday cast doubt on a pair of proposed class actions accusing Citibank NA and JPMorgan Chase & Co. of violating the Racketeer Influenced and Corrupt Organizations Act by charging property-inspection fees to mortgage borrowers in default, saying she didn’t think their inspection fee policies amounted to racketeering.

Citibank and Chase urged U.S. District Court Judge Yvonne Gonzalez Rogers to toss the complaints, arguing that both companies had been operating within their roles as loan servicers when they ordered a third-party company…

Law360

JPMorgan Chase : to face U.S. class action in $10 billion MBS case

A federal judge on Tuesday said JPMorgan Chase & Co must face a class action lawsuit by investors who claimed the largest U.S. bank misled them about the safety of $10 billion of mortgage-backed securities it sold before the financial crisis.

U.S. District Judge Paul Oetken in Manhattan certified a class action as to JPMorgan’s liability but not as to damages, saying it was unclear how investors could value the certificates they bought, given how the market was “not particularly liquid.” He said the plaintiffs could try again to certify a class on damages.

Oetken ruled 10 months after JPMorgan reached a $13 billion settlement to resolve U.S. and state probes into the New York-based bank’s sale of mortgage securities.

Read on.