Are All Marketing Services Agreements Illegal?


It’s clear that the Consumer Financial Protection Bureau has targeted marketing services agreements, but its crackdown on some alleged kickback schemes and failure to take action after other investigations has created confusion in the mortgage industry.

For example, the agency sent a letter in June to American Home Shield, which offers warranties to homeowners, saying it would not pursue an enforcement action against the company after checking for violations of the anti-kickback provision of the Real Estate Settlement Procedures Act. The outcome of the probe, which lasted more than a year, was disclosed in its parent company’s second-quarter earnings press release.

There have been other cases in which the bureau has opted against enforcement actions, said Marx Sterbcow, an attorney with Sterbcow Law Group in New Orleans.

“They say all MSAs are illegal. How can they all be illegal when you let all of these other […]

Lenders See Edge for FHA in Quest for New Buyers


WASHINGTON — The Federal Housing Administration’s lower insurance premium — already credited with boosting refinancing and purchase loans — is now seen as giving the agency a possible advantage over competitors in attracting first-time buyers and others with low credit scores.

The FHA endorsed nearly 80,000 purchase mortgages in June, an almost 116% rise from February. The uptick is attributed to the 50-basis point drop in its insurance premium — to 1.35% — in January. But lenders also point to the pricing reduction as drawing first time buyers and others with low credit scores. As purchase loans have grown overall, the percentage of FHA loans to new homeowners has remained constant at around 82%.

Observers said the lower FHA pricing combined with other factors may be giving the agency an edge over the mortgage giants Fannie Mae and Freddie Mac when it comes to borrowers with credit scores below 720 […]

Is Marketplace Lending a Friend or Foe to Mortgage Firms?


The burgeoning marketplace lending sector seeks to disrupt traditional financial services with online platforms that connect borrowers to individual and institutional investors.
But in real estate, marketplace lenders — which are also known as peer-to-peer or alternative lenders — have focused on facilitating loans to underserved niches within both the residential and commercial sectors. It’s an approach that, at least for now, seeks to co-exist with, rather than supplant, the traditional mortgage market.
“Banks in the beginning really didn’t know how to view peer-to-peer lending. Like, ‘Is it going to hurt us? Is it competitive to us?’ But I think banks have come to recognize that it can actually be very complementary to their businesses,” said David Manshoory, CEO of marketplace lender AssetAvenue in Los Angeles.
Marketplace lenders such as AssetAvenue see their best prospects for real estate lending in private commercial real estate loans […]

More Regional Banks to Face Probes of Shoddy FHA Loans


Banks are still haunted by bad underwriting of mortgage loans from the last housing boom, and the nightmare could endure for months to come.

M&T Bank’s disclosure Thursday that it is in settlement talks with the Justice Department for not complying with underwriting guidelines on Federal Housing Administration loans has renewed fears that more lenders will be the targets of probes and possible litigation.

The $97 billion-asset bank M&T, in Buffalo, N.Y., joins a growing list of large and regional banks currently in litigation or settlement discussions with the government for allegations of shoddy underwriting.

Wells Fargo, Quicken Loans, PNC Financial Services Group, Regions Financial and BB&T all have outstanding investigations of FHA loans, according to company filings.

What is unique about M&T’s case is that it is not a top-20 mortgage lender. Most of the top […]

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