Enforcement Nearing on Subprime Pricing?

The first enforcement actions relating to investigations into the pricing of 2004 subprime loans could be announced in the next three to six months, according to industry attorney Andrew Sandler."I would expect over the course of the next three to six months there will be at least several consent decrees or lawsuits by federal enforcement agencies and/or state attorneys general involving mortgage loan pricing that reflect the conclusion of investigations related to 2004 HMDA data," Mr. Sandler told MortgageWire. The release of 2004 Home Mortgage Disclosure Act loan pricing data last year initiated investigations and special exams of nearly 200 banks and mortgage companies for possible discriminatory pricing practices. Investigations by the Department of Justice, the Federal Trade Commission, the Department of Housing and Urban Development, federal banking regulators, and state AGs can take up to two years. Mr. Sandler, a partner in the Washington office of Skadden Arps, indicated that additional enforcement actions are possible. Based on the newly released 2005 HMDA data, the Federal Reserve Board referred 270 lenders to their primary regulators for further fair-lending reviews. A Fed spokeswoman said there is a lot of overlap between lenders on the 2004 list and the 270 lenders on the 2005 list.