The long arm of the government is tough to elude, even if you are the nation’s largest home lender.
Wells Fargo stunned the mortgage industry Wednesday by tentatively agreeing to pay $1.2 billion to resolve civil claims by the Justice Department and other federal agencies that it originated shoddy loans insured by the Federal Housing Administration.
The proposed settlement could prove a bellwether for other banks that have outstanding investigations of FHA loans including PNC Financial Services Group, Regions Financial and BB&T.
Wells had been the lone big bank holdout willing to go to trial as a potential test of the government’s pursuit of banks for violations of the False Claims Act. That Civil War-era law allows the government to collect triple damages for fraud against the government. The law also has been a lightning rod for banks, causing some to pull out of […]
Lawmakers and housing groups are urging the Federal Housing Administration to relax its condominium regulations to help open up homeownership opportunities for first-time buyers and urban families.
More than 50 House members signed a letter last week asking the FHA to make policy changes.
“FHA places significant restrictions on the purchase and sale of condominium, even though they are often the most affordable homeownership option for first-time buyers, small families, urban and older Americans,” said the Oct. 13 letter, whose signers included Reps. Emanuel Cleaver, D-Mo., and Mike Fitzpatrick, R-Pa.
Rep. Blaine Luetkemeyer, the chairman of the House Financial Services subcommittee on housing, held a hearing Tuesday on his bill that would force the FHA to make significant changes to its condo rules. The “Housing Opportunity Through Modernization Act” would streamline FHA’s certification requirements for condo projects, allow more commercial space in agency-approved condo […]
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 […]
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 […]