Compliance

The high upfront fees Fannie Mae and Freddie Mac charge on certain single-family loans still do not "fully cover" all the costs and risks associated with those loan guarantees, according to Federal Housing Finance Agency acting director Edward DeMarco.

The Financial Industry Regulatory Authority has expelled APS Financial Corp., Austin, Texas, and barred its former president and its former broker from the industry in connection with an alleged scheme involving an elderly investor and markups on collateralized mortgage obligations as well as other types of securities.

Allstate Insurance Co. has sued Bank of America to recoup losses suffered from its purchase of over $700 million in Countrywide-issued mortgage-backed securities.

Ally Financial Inc. has agreed to pay Fannie Mae $462 million to settle repurchase demands for breaches of representations and warranties related to whole loans and private-label securities the lender sold the GSE.

On Dec. 8, Maria Quijada Ramirez of Bakersfield, Calif., was arrested at the home of a relative joining her husband and real estate agent daughter who already are in custody and awaiting trial. She was wanted on a $1 million arrest warrant in connection with an alleged $4.1 million mortgage fraud scheme.

Its Mortgagee Review Board has fined WR Starkey Mortgage $223,000 for violations of Federal Housing Administration lending requirements, according to the Department of Housing and Urban Development.

Especially in times of crisis debt collectors may not be on customers’ favorite list but once a fraudster takes the place of a legitimate collector customers and their financial services providers are victims of financial abuse.Such risk becomes even higher during an economic crisis where the number of debtors tends to grow.

While mortgage fraud is not at the levels it was during the middle years of this decade, it is still having a large impact on the industry.Figures just released by CoreLogic estimate the fraud loss for 2010 to be $11 billion, down from $14 billion in 2009.

In the new era following the subprime-lending disaster most mortgage lenders are looking more carefully at the implementation of their underwriting and quality control criteria—including the Federal Housing Administration.Citing “serious” underwriting standard violations the FHA Mortgagee Review Board has permanently withdrawn FHA approval of Cambridge Home Capital LLC and is also seeking a monetary penalty of $182,000.

Wells Fargo & Co. on Monday agreed to modify more than $2 billion of risky payment option ARMs from two lenders that the mega bank bought during the last years of the decade: World Savings of Oakland, and Wachovia Corp. of Charlotte.

The New York Supreme Court last week ruled that MBIA Insurance Corp. did not have any way to discover if GMAC Mortgage intentionally misrepresented the true nature of MBS that MBIA insured.

Arizona Attorney General Terry Goddard filed a lawsuit against Bank of America Friday morning, alleging that the nation's largest servicer of residential loans committed "widespread consumer fraud" in its handling of loan modifications.

Fannie Mae and Freddie Mac have again delayed implementation of new mortgage and appraisal delivery requirements in the 'Uniform Mortgage Data Program', according to lender updates released Thursday.

A new insurance product designed by Bakerjian Insurance Services aims “to protect lenders against potential damage” from repurchase demands from investors that may have originally been caused by fraudsters.The Novato, Calif.-based company said it created Lenders Misrepresentation Insurance to serve as a policy that protects lenders from buyback requests that are based on “material financial misrepresentation” in the borrower’s loan file.

The more aggressive lenders are in efforts to gather and share fraud data, the more effective their risk control and prevention results will be. At least that is the expectation of some insiders.

In the well-known balcony scene in Shakespeare’s “Romeo and Juliet,” a love-struck Juliet asks, “What’s in a name? That which we call a rose by any other name would smell as sweet.”While that might be true for teenagers and roses, names are a first step for bankers to establish a critical component in lending decisions: the identity of the person seeking a loan.

The former president of a now-defunct title agency faces 30 years in federal prison after pleading guilty to one count each of wire fraud and insurance fraud.

Bank of America Corp. has begun potential settlement discussions with large institutional investors who bought MBS that later underperformed, causing losses at these entities, according to a report in The Wall Street Journal.

A new insurance product has been designed by Bakerjian Insurance Services “to protect lenders against potential damage” from repurchase demands from investors that may have originally been caused by fraudsters.

The robo-signing fiasco has energized overall fraud prevention and management efforts prompting financial service providers to focus on short sales and foreclosure fraud.Compared to fraud, robo-signing mistakes that derive from carelessness and loan processing inefficiency are easier to detect and prevent. Insiders agree that fraudsters who often collaborate with employees of a mortgage firm tend to challenge both lenders and their borrowers with new scams that are becoming increasingly more complicated.