Archive

January 31, 2017

The CFPB took action against Prospect Mortgage, LLC, a major mortgage lender, for paying illegal kickbacks for mortgage business referrals, and two real estate brokers and a mortgage servicer that took illegal kickbacks from Prospect. Prospect will pay a $3.5 million civil penalty for its illegal conduct, and the real estate brokers and servicer will pay a combined $495,000 in consumer relief, repayment of ill-gotten gains, and penalties. CFPB

January 23, 2017

The CFPB took separate actions against CitiFinancial Servicing and CitiMortgage, Inc. for creating obstacles for struggling homeowners seeking options to save their homes. The mortgage servicers kept borrowers in the dark about options to avoid foreclosure or burdened them with excessive paperwork demands in applying for foreclosure relief. CitiMortgage has been ordered to pay an estimated $17 million in compensation and another $3 million in civil penalties. CitiFinancial Services is to refund approximately $4.4 million to consumers, and pay a civil penalty of $4.4 million. CFPB

January 18, 2017

Credit Suisse agreed to pay $5.28 billion to resolve charges it misled investors in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS) in the years leading up to the Great Recession. As part of the settlement, the bank agreed to a detailed Statement of Facts describing how it knowingly made false and misleading representations to investors about the characteristics of the billions of dollars of mortgage loans it securitized in RMBS. Whistleblower Insider

January 17, 2017

Deutsche Bank agreed to pay $7.2 billion to resolve charges it misled investors in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS) in the years leading up to the Great Recession. It is the largest RMBS resolution in what has been a string of multi-billion dollar settlements. As part of the settlement, the bank agreed to a detailed Statement of Facts describing how it knowingly made false and misleading representations to investors about the characteristics of the billions of dollars of mortgage loans it securitized in RMBS. Whistleblower Insider

January 13, 2017

The Department of Justice, 21 states, and the District of Columbia reached a nearly $864 million settlement agreement with Moody’s Investors Service Inc., Moody’s Analytics Inc., and their parent, Moody’s Corporation to resolve allegations arising from Moody’s role in providing credit ratings for Residential Mortgage-Backed Securities (RMBS) and Collateralized Debt Obligations (CDO), contributing to the worst financial crisis since the Great Depression. According to the government, "Moody’s failed to adhere to its own credit rating standards and fell short on its pledge of transparency in the run-up to the Great Recession [and] . . . used a more lenient standard than it had itself published." The settlement includes a $437.5 million federal civil penalty, which is the second largest payment of this type ever made to the federal government by a ratings agency. DOJ

January 13, 2017

Illinois, the Department of Justice, and 21 other states announced an $864 million settlement with Moody’s Corporation, Moody’s Investors Service Inc. and Moody’s Analytics Inc. to resolve allegations that the credit ratings agency compromised its independence and objectivity in assigning its highest ratings to risky mortgage-backed securities and other structured finance securities in the lead up to the 2008 economic collapse. According to the settlement, Moody’s consistently made misrepresentations about the processes it used to assign credit ratings to structured finance securities. While publicly promising independent, objective analyses, the company privately relaxed its ratings criteria to ensure its clients’ residential mortgage-backed securities (RMBS) and collateralized debt obligations (CDOs) would achieve higher ratings than the actual quality of the assets supported. Structured finance securities, including RMBS and CDOs, derive their value from the monthly payments consumers make on their mortgages. The alleged misconduct began as early as 2001 and became particularly rampant between 2004 and 2007. IL, CA, PA, MA

December 28, 2016

United Shore Financial Services LLC agreed to pay $48 million to resolve allegations it violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements. DOJ

November 30, 2016

A Houston jury found the entities formerly known as Allied Home Mortgage Capital Corp., Allied Home Mortgage Corp., and their president and chief executive officer Jim C. Hodge liable for violating the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”) relating to mortgage fraud.  After a five-week trial, the jury awarded the United States roughly $93 million in damages, including more than $7 million against Hodge.  The allegations originated in a whistleblower lawsuit filed by former Allied manager Peter Belli under the qui tam provisions of the False Claims Act.  He will receive a yet-to-be determined whistleblower award from the proceeds of the government’s recovery.  Whistleblower Insider

December 20, 2016

The CFPB sued Military Credit Services, LLC (MCS) for making loans with improper disclosures. This is the CFPB’s second enforcement action against MCS. In 2014, the CFPB and the states of North Carolina and Virginia sued the company for similar violations, and MCS was ordered to revise its contract disclosures in 2015. In today’s action, the CFPB ordered the company to ensure that its contracts comply with the law. It also required MCS to hire an independent consultant to review its practices and to pay a $200,000 civil penalty.  CFPB

December 7, 2016

The CFPB issued orders against three reverse mortgage companies for deceptive advertisements, including claiming that consumers could not lose their homes. American Advisors Group, Reverse Mortgage Solutions, and Aegean Financial have been ordered to cease deceptive advertising practices, implement systems to ensure they are complying with all laws, and pay penalties.  CFPB