Compliance

On Aug. 9, 2010 in San Francisco, Wells Fargo & Co. agreed to pay $20 million to settle a nationwide lawsuit brought by mortgage consultants who alleged they were misclassified as exempt by the bank so they would not have to be paid overtime.

In a surprise move, the Federal Reserve Board has issued a final rule that imposes restrictions on loan officer and mortgage broker compensation that is very similar to compensation language in the recently passed Dodd-Frank Wall Street Reform and Consumer Protection Act.

Tustin, Calif.-based Veri-tax LLC, which provides tax verification and fraud management solutions, has been acquired by private investment firm Blue Horizon Capital for an undisclosed sum. The acquisition will provide additional capital and resources to support Veri-tax's growth initiatives.

For lenders who are concerned about "subpar" appraisal quality, it's important to have a technology platform in place to manage multiple AMCs and compare the work of different outsource vendors in order to determine which ones are the best to use.

Now that the industry has moved to a full-doc environment, application misrepresentation is happening on the back end of the business where "it's like doing new origination" and there is the most room for potential fraud in documentation.

Nearly 1,200 depositories have been hit with an enforcement action made public by federal regulators since the start of 2008, and that number is expected to climb at an accelerated rate.

Flim-flammers who promise to help troubled borrowers obtain loan modifications are going to extraordinary lengths to snare their next marks, even so far as hanging out in restrooms.

Michael McGrath, the one-time CEO of U.S. Mortgage/CU National Mortgage, convicted of stealing almost $140 million of credit union funds, will remain free on bail with his sentencing postponed again until Nov. 15.

Ralondria Stafford, 36, and Necole Ward, 31, both formerly of Vallejo, Calif., pleaded guilty before U.S. District Judge Morrison C. England Jr., to bank fraud.

Two Prior Lake, Minn., men have pleaded guilty in Federal Court in Minneapolis for their roles in a scheme that allegedly defrauded mortgage lenders out of more than $2.5 million by causing them to make loans based on false information.

It is no understatement to comment that the Internet has transformed the mortgage lending industry in many ways. The point-of-sale has been influenced tremendously, with borrowers quickly becoming accustomed to rate shopping during the refinance boom and lenders providing an ever-increasing number of online tools to cement relationships.

Less competition and more work for the ones that are left. Problem is that many of the loan officers were classified as independent contractors when they did not meet the criteria under federal or state law. Especially in California.

Scrutiny of so-called free credit report services is increasing as the Federal Trade Commission, in keeping with its consumer protection mission, has intensified its ongoing scrutiny of credit-related services due to concerns that, among other things, scores can affect would-the ability to get a loan.

On July 29, 2010 Arizona Attorney General Terry Goddard announced he filed a lawsuit against THE GUARDIAN GROUP LLC for engaging in allegedly deceptive mortgage loan reduction services that have cost more than 2,500 consumers millions of dollars.

After three long years the wait is over. The Inland Real Estate Group of Cos. in Oak Brook, Ill., is discussing the settlement of the Inland Western Retail Real Estate Trust Inc. lawsuit, which was filed in 2007 shortly after the merger of Inland Western Retail Real Estate Advisory Services Inc., related property managers and Inland Western.

Adding to the injunction filed in Clark County, Nev., last week, another lawsuit has been filed in Los Angeles County on behalf of three local individuals who placed deposits towards condominiums at the Cosmopolitan of Las Vegas.

Congress passed H.R. 4173 on July 15. Although it's formally known as the Dodd-Frank Wall Street Reform and Consumer Protection Act, I like to think of it as "FrankenDodd" because this monster tops out at more than 2,300 pages and will require several hundred new rules to fully implement. It will be at least three years before everything is finalized, and it will take a decade or two to judge whether its purpose—to overhaul the financial services industry so as to prevent another economic collapse—was successful.

Efforts are being made to proactively protect homes in default and foreclosure by sharing valuable information regarding appraisal fraud in short sale transactions.

Bank of America has agreed to pay $600 million to settle several class action lawsuits filed by Countrywide Financial Corp. shareholders over the lender's subprime program, according to a report in The Los Angeles Times.

Thirteen former officers and directors of New Century Financial Corp., have agreed to pay more than $90 million to settle all civil claims in a series of federal and private lawsuits stemming from the collapse of the once high flying subprime giant.