U.S. sues Quicken Loans over improper FHA loans


The U.S. Justice Department sued Quicken Loans on Thursday alleging the Detroit mortgage lending giant had improperly originated and underwrote mortgages insured by the Federal Housing Administration.

The complaint, filed in the U.S. District Court in Washington, D.C., alleges that from September 2007 through December 2011, Quicken knowingly submitted, or caused the submission of, claims for hundreds of improperly underwritten FHA-insured loans.

The government is claiming that Quicken encouraged its employees to disregard FHA rules and falsely certify compliance with underwriting requirements in order to reap the profits from FHA-insured mortgages.

For example, the government’s complaint states that when Quicken received an appraised value for a home that was too low to approve a loan, Quicken often requested a specific new and higher value from the appraiser with no justification for the increase. That practice is prohibited by FHA rules.

Jay Farner, president and […]

CFPB Takes Aim at Referral Fees


The long-standing practice of banks and mortgage lenders paying real estate brokers and homebuilders for referrals could soon be coming to an end.

Lenders are scaling back, making bold changes to or simply eliminating marketing services agreements after the Consumer Financial Protection Bureau essentially banned contracts that involve any referrals for mortgage products. Doing so, the CFPB said in a consent order last year, is a violation of anti-kickback provisions under the Real Estate Settlement Procedures Act.

At issue is the CFPB’s interpretation of a law that has been in place for 40 years.

Section 8(a) of Respa bans the charging or payment of fees in exchange for referrals of real estate services. For years, the industry got around it because of an exception in Respa that allows the payment or compensation for goods or services actually performed, even if there is a referral involved. For […]

Did Fannie Mae run afoul of California’s short sale laws?


Fannie Mae and its servicers maybe broke the law in California when collecting contributions from borrowers on short sales, the office of the inspector general for theFederal Housing Finance Agency claims in a new report. The government-sponsored entity, while not admitting culpability, said a data error may be to blame.

The detailed report, which is available here, prompted the FHFA to issue a response, saying while it “recognizes the GSEs’ obligations” to protect borrower interests, it is “unclear whether or not actions occurred that run contrary to California law as noted by the FHFA-OIG.”

Back in July 2011, California issued a law prohibiting note holders from requiring a borrower to pay added compensation when the homeowner provides a written consent to a short sale.

Despite the rule going live, the FHFA-OIG claims Fannie servicers collected borrower contributions on 124 short sales completed […]

New mortgage rules aim to protect home buyers, owners


Six years after the housing meltdown exposed fissures in the system, new mortgage rules that will take effect Friday stand to remodel the market.

Housing groups worry that changes meant to shield Americans from abusive lending practices that contributed to the financial crisis will make it harder for many to buy homes. But experts say the rules will create sustainable homeownership by ensuring that borrowers can afford to repay their home loans.

“The rules may cut some credit [availability] at the margins, but as a whole they will ensure that borrowers have a product they can afford,” said Sam Khater, deputy chief economist at the housing data provider CoreLogic. “The terms of the debate are always about access to credit, but it’s also about access to sustainable homeownership.”

The reforms written by the Consumer Financial Protection Bureau aim to protect Americans in the process of buying a home and […]