Royal Bank of Scotland Reaches $500 Million Settlement with New York Over Mortgage Securities

March 6, 2018  |  CNBC         Royal Bank of Scotland Group has reached a $500 million settlement with New York state to resolve claims over its sale of risky residential mortgage-backed securities that contributed to the 2008 global financial crisis.

New York Attorney General Eric Schneiderman on Tuesday said the accord includes a $100 million cash payment to the state, plus $400 million of consumer relief for homeowners and communities.

Schneiderman said RBS admitted to having sold investors residential mortgage-backed securities that did not meet underwriting guidelines, contrary to its representations, and did not comply with applicable laws and regulations.  Link to article here.

Credit Suisse Finalizes $5.3 Billion Mortgage Deal with US

CNBC | January 18, 2017         Credit Suisse formally agreed to pay $5.3 billion to settle with U.S. authorities over claims it misled investors in residential mortgage-backed securities it sold in the run-up to the 2008 financial crisis, the U.S. Department of Justice said on Wednesday.

Zurich-based Credit Suisse will pay a $2.48 billion cash penalty and provide $2.8 billion in consumer relief, including loan forgiveness and financing for affordable housing, the Justice Department said in a statement.

"The bank concedes that it knew it was peddling investments that were likely to fail," Principal Associate Attorney General Bill Baer said in the statement.

Credit Suisse, which had announced the agreement in principle on Dec. 23, said in a statement it was "pleased to have reached an amicable settlement that allows the bank to put this legacy matter behind it."

Shares of Credit Suisse on the Swiss stock exchange closed down 2.5 percent at 15.28 Swiss francs, a steeper drop than the broader European banking sector.

In a statement of facts, Credit Suisse acknowledged it knew the loans it pooled into securities did not meet underwriting guidelines.  Read more here.

 

JPMorgan Agrees to $55 Million Settlement of Mortgage Discrimination Complaint: Source

Reuters | January 18, 2017          JPMorgan Chase & Co has agreed to pay $55 million to settle a U.S. Justice Department lawsuit accusing it of discriminating against minority borrowers by allowing mortgage brokers to charge them more for home loans, a person familiar with the matter said on Wednesday.

The U.S. Justice Department complaint, filed in Manhattan federal court on Wednesday, accused the bank of willfully violating the U.S. Fair Housing Act and the Equal Credit Opportunity Act between 2006 and 2009 and showing "reckless disregard" for the rights of at least 53,000 African-American and Hispanic borrowers.

"We’ve agreed to settle these legacy allegations that relate to pricing set by independent brokers," JPMorgan spokeswoman Elizabeth Seymour said. "We deny any wrongdoing and remain committed to providing equal access to credit."

A spokeswoman for U.S. Attorney Preet Bharara had no immediate comment.

The alleged discrimination involved so-called wholesale loans that were made through mortgage brokers the bank used to help originate loans, the complaint said. Chase allowed brokers to change rates charged for loans from those initially set based on objective credit-related factors, the complaint said.   Read more here.

Wells Fargo to Pay $50 Million to Settle Home Appraisal Overcharges

The New York Times | November 1, 2016       In the latest hit to the battered bank, Wells Fargo has agreed to pay $50 million to settle a class-action lawsuit that accused the bank of overcharging hundreds of thousands of homeowners for appraisals ordered after the homeowners defaulted on their mortgage loans.

The proposed settlement calls for Wells Fargo to automatically mail checks to more than 250,000 customers nationwide whose home loans were serviced by the bank between 2005 and 2010.

The checks will typically be for $120, according to Roland Tellis, a lawyer with Baron & Budd, the law firm that represented Wells Fargo’s customers. If a judge signs off on the settlement, as expected, the checks will be distributed next year.

When a borrower falls behind on a loan, mortgage contracts typically let the lender order an appraisal of the home’s current value. The cost of that appraisal, known as a “broker price opinion,” can be passed on to the borrower, but Wells Fargo used one of its own subsidiaries to conduct appraisals and then routinely marked up the cost, according to the lawsuit.

Borrowers would be charged $95 to $120 for a service that cost the bank $50 or less, the complaint said. The charges were then listed cryptically on mortgage statements, with vague descriptions like “other charges” or “other fees.”

“People who are behind on their loans are the people who can least afford to be charged marked-up fees, but unfortunately, that’s exactly what happened,” Mr. Tellis said.

Several homeowners filed suit against Wells Fargo in 2012 in a Northern California federal court. Last year, a judge granted class-action status to a portion of the claims related to racketeering charges.  Read more here.

U.S. Bank to Pay L.A. $13.5-Million over Foreclosed Homes that Fell into Disrepair

Los Angeles Times | September 29, 2016        The Los Angeles city attorney has reached a $13.5-million settlement with U.S. Bank to resolve allegations that the nation’s fifth-largest bank operated as a slumlord and allowed hundreds of foreclosed properties to deteriorate, fostering crime and blight in L.A. neighborhoods slammed by the housing crisis.

The settlement, announced Thursday, requires the Minneapolis-based firm to maintain its foreclosed properties in “accordance with all applicable laws and standards for two years.” A full-time bank employee will work with city agencies to resolve code violations of foreclosed properties across Los Angeles, the city attorney’s office said.

“Banks must be accountable for the condition of the properties they hold,” City Atty Mike Feuer said in a statement. “This significant settlement underscores my commitment that all foreclosed and vacant properties be kept up to code, so they don't become sources of blight or magnets for crime.”   Read more here.

HSBC to Pay $1.575 Billion, Ending Household International Class action

Reuters | June 16, 2016      A unit of HSBC Holdings Plc said on Thursday it will pay $1.575 billion to end a 14-year-old shareholder class action lawsuit stemming from the Household International consumer finance business that the British bank bought in 2003.

HSBC Finance Corp expects to take a roughly $585 million pre-tax charge in the second quarter for the settlement, which requires court approval. It said it could have faced liability as high as $3.6 billion.

The accord averts a second trial in the litigation, which had been expected to begin last week in the U.S. District Court in Chicago before being put on hold.

"We are pleased to resolve this 14-year case that's based on events that took place before HSBC acquired Household," HSBC spokesman Rob Sherman said in a statement.  Read more here.

Foreclosure Fraud Is Supposed to Be a Thing of the Past, But It Happens Every Day

The Intercept | May 18, 2016       Six years ago, FBI agents in Jacksonville, Florida, wrote a memo to their bosses in Washington, DC, that could have unraveled the largest consumer fraud in American history. It went to the heart of the shady mortgage industry that precipitated the financial crisis, and the case promised to involve nearly every major bank in the country, honing in on the despicable practice of using bogus documents to illegally kick people out of their homes.

But despite impaneling a grand jury, calling in dozens of agents and forensic examiners, doing 75 interviews, issuing hundreds of subpoenas, and reviewing millions of documents, the criminal investigation resulted in just one conviction. And that convict—Lorraine Brown, CEO of the third-party company DocX that facilitated the fraud scheme—was sent to prison for duping the banks.

Thanks to a Freedom of Information Act request, VICE has obtained some 600 pages of documents from the Jacksonville FBI field office showing how agents conducted a sprawling investigation. (The Jacksonville case is also featured in my new book, Chain of Title.) The documents suggest the feds gained a detailed understanding of how and why the mortgage industry enlisted third-party companies to create false documents they presented to courts, as detailed in the 2012 National Mortgage Settlement, for which the big banks paid billions in civil fines. The banks' conduct is described in the settlement documents as "unlawful," and the Jacksonville FBI had it nailed almost two years earlier.   Read more here.

2 Banks Agree on Fines to End Foreclosure Enforcement

The Detroit News | February 9, 2016   U.S. Bancorp will pay $10 million and Banco Santander SA agreed to turn over $3.4 million to settle Office of the Comptroller of the Currency complaints over missteps in how the banks handled regulators’ orders to fix faulty foreclosure practices.

The fines stem from violations of 2013 accords over mortgage-servicing flaws, the OCC said in a statement Tuesday. The new penalties close out a series of restrictions the companies were placed under in June after they failed to live up to earlier agreements related to loans mishandled after the 2008 financial crisis.

U.S. Bank and the Santander U.S. unit formerly known as Sovereign Bank were among a group of mortgage servicers accused of mishandling loan papers or robo-signing — fraudulently endorsing affidavits used in foreclosures. After an aborted effort to force the banks to review individual files for wrongdoing, most of the companies agreed in 2013 to pay a combined $10 billion in settlements and to fix their practices.  Read more here.

HSBC Agrees to $470 Million Settlement Over Alleged U.S. Mortgage Abuses

About 136,000 borrowers will be compensated as a result of the settlement.

Time | February 5, 2016    Some Americans who lost their homes to foreclosure during the financial crisis will soon be eligible for relief. Today New York Attorney General Eric Schneiderman announced that the state has reached a settlement with HSBC over charges that the mortgage lender engaged in abusive foreclosures and related practices. The attorney general accused HSBC of “robo-signing” foreclosure documents and evicting people from their homes without adequate verification.

“There has to be one set of rules for everyone, no matter how rich or how powerful, and that includes lenders who engage in abusive business practices,” Schneiderman said in a statement. “The settlement announced today is a joint partnership that will create tough new servicing standards that will ensure fair treatment for HSBC’s borrowers and provide relief to customers across New York State and across the country.”  Read more here.

Wells Fargo to Pay $1.2 Billion in Mortgage Settlement

The New York Times | February 3, 2016    Wells Fargo has agreed to pay $1.2 billion to put to rest claims that it engaged in reckless lending under a Federal Housing Administration program that left a government insurance fund to clean up the mess.

The bank, which is the nation’s largest mortgage lender, has been in talks with the government since 2012 over accusations that it improperly classified some F.H.A. loans as qualifying for federal insurance when they did not, and that it knew of the misclassification but failed to inform housing regulators about the deficiencies before filing insurance claims.

Wells Fargo, based in San Francisco, had been a holdout among large lenders. Citigroup, Bank of America and JPMorgan Chase all previously settled similar claims.  The settlement means Wells Fargo has to reduce 2015 profit by $134 million to account for the extra legal expense.  Read more here.