Daily Archives: September 12, 2015

Mortgage banking firm settles with DOJ for participation in fraudulent reimbursement scheme


On September 4, the DOJ announced a settlement of more than $29 million with a Florida-based mortgage banking firm in connection with violations of the False Claims Act. The firm’s subsidiaries participated in HUD’s Home Equity Conversion Mortgages (HECM) program, which insures reverse mortgage loans by reimbursing lenders that are unable to recoup the full amount of a reverse mortgage loan once the loan becomes due and payable. HUD will reimburse sales commissions paid to real estate agents in connection with the liquidation of foreclosed properties, but will not reimburse fees paid to real estate agents for referrals of loans to be liquidated. According to the DOJ, from July 2010 to October 2014, the firm used straw companies to split commissions with real estate agents, and then later submitted claims to HUD for reimbursement of the full commission amount. Additionally, from August 2009 to March 2015, the firm encouraged its subsidiaries to submit false debenture interest claims to HUD. Specifically, the subsidiaries neglected to disclose that they had failed to meet certain required regulatory deadlines and were therefore not entitled to interest payments. The DOJ stated that the settlement “represents a significant milestone in [the DOJ’s] long standing campaign against mortgage fraud.”

JPMorgan policy head leaving to lead Wall Street lobbyist group

The head of regulatory policy for JPMorgan Chase (JPM) is leaving the bank to take over one of Wall Street’s largest lobbying groups.

According to a report from Bloomberg, Gregory Baer, who had been serving as JPMorgan Chase’s managing director and head of regulatory policy, is set to assume the role of president of The Clearing House Association.

From Bloomberg:

Baer will join the Clearing House Association Oct. 5 as its new president, the group said in a statement Friday. The Clearing House is best known for providing the legal underpinnings for banking industry challenges to key rules issued by the Federal Reserve, the Office of the Comptroller of the Currency and other agencies.

According to an announcement from The Clearing House, Baer will lead the Association’s analytical, litigation and advocacy efforts, which focus on promoting sensible regulatory policies that provide for a resilient banking system capable of supporting economic growth.

Again, from Bloomberg:

The lobbying arm, along with an affiliated business that processes payments, is owned by two dozen of the world’s largest lenders, including JPMorgan. The group has spent recent years working on issues arising from the 2010 Dodd-Frank Act and fighting sweeping new capital standards imposed on banks by the Basel Committee on Banking Supervision.

The Clearing House’s comment letters to regulators, while often dry and filled with legalese, have helped Wall Street win victories worth billions of dollars. They include persuading the Fed to raise a proposed cap on debit-card swipe fees and helping the industry ease government constraints on derivatives.

“Greg is a seasoned industry executive with deep regulatory policy skills,” said Brian Moynihan, CEO of Bank of America, who also serves as chairman of The Clearing House’s Supervisory Board. “He will be a strong leader for TCH’s policy work.”

Prior to serving as JPMorgan Chase’s managing director and head of regulatory policy, Baer also served as JPM’s general counsel for corporate and regulatory law.

Earlier in his career, Baer served as deputy general counsel for corporate law at Bank of America and was a partner at Wilmer, Cutler, Pickering, Hale & Dorr.  Baer also spent more than ten years in public service working at the U.S. Department of Treasury and the Board of Governors of the Federal Reserve System.

“I’m honored to be leading the Clearing House Association,” Baer said.  “In my time as a regulator and policymaker, I looked to this organization as a source of thoughtful and credible analysis of the most difficult regulatory issues, and I will strive to maintain that tradition. I’m also pleased that a great team is in place to help in that effort.”

Source: Bloomberg