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Wells Fargo Facing DOJ Mortgage Probe After $1.2B Deal

February 26th, 2016 by

Wells Fargo is under investigation from the U.S. Department of Justice for its mortgage practices, despite reaching a $1.2 billion settlement of claims it defrauded the Federal Housing Administration with faulty loans in early February, the bank disclosed Wednesday.

by Ben Lane for HOUSING WIRE

Despite recently agreeing to a $1.2 billion settlement with the federal government to resolve claims related to its Federal Housing Administration lending program from 2001-2010, Wells Fargo is still facing investigations into its “mortgage related practices” from the Department of Justice, as well as other federal and state agencies, the megabank disclosed this week.

According to a Reuters report, Wells Fargo stated in is 10-K filing with the Securities and Exchange Commission that the bank is currently under investigation by a number of agencies over the mortgage operations of both Wells Fargo and its “predecessor institutions.”

The news of the ongoing investigations come less than a month after Wells Fargo agreed to the more than $1 billion settlement with the DOJ, the U.S. Attorney’s Office for the Southern District of New York, the U.S. Attorney’s Office for the Northern District of California and the U.S. Department of Housing and Urban Development.

That settlement stemmed from a lawsuit that was originally filed in October 2012, in which the DOJ sought damages and civil penalties under the False Claims Act.

In its 10-K, Wells Fargo noted that the $1.2 billion settlement with the feds is not yet finalized.

“Although Wells Fargo and the Federal Government have reached an agreement in principle to resolve these matters, there can be no assurance that Wells Fargo and the Federal Government will agree on the final documentation of the settlement,” Wells Fargo said in its 10-K.

And, it appears that settlement didn’t get Wells Fargo out of the crosshairs of the DOJ and other agencies.

“Wells Fargo, for itself and for predecessor institutions, has responded, and continues to respond, to requests from these agencies seeking information regarding the origination, underwriting and securitization of residential mortgages, including sub-prime mortgages,” the bank stated.

Wells Fargo also stated that it has established a potential liability for its “contingent litigation losses,” based ona “range of potential losses for each matter that is both probable and estimable.”

Wells Fargo stated that the “high end of the range of reasonably possible potential litigation losses in excess of the company’s liability for probable and estimable losses was approximately $1.3 billion,” as of Dec. 31, 2015.

“For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated,” Wells Fargo added.

“Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome of the actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo’s consolidated financial position,” Wells Fargo stated. “However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo’s results of operations for any particular period.”

Ben Lane

New Jersey Still Leads Nation in Foreclosures

February 24th, 2016 by

Based on data supplied by RealtyTrac, for the first month of 2016, January, New Jersey leads the nation in foreclosures.

The top 5 states in foreclosure rates in the U.S. for January 2016 according to RealtyTrac are: New Jersey, Nevada, Maryland, Florida, and Delaware.

Within the state of New Jersey the top five counties with the highest foreclosure rates are: Atlantic County, Camden County, Cumberland County, Sussex County and Passaic County.

The current distribution of foreclosures based on the active number of foreclosures homes in New Jersey are as follows according the the January 2016 RealtyTrac data.

CFPB Orders Citibank to Provide Relief to Consumers for Illegal Debt Sales and Collection Practices

February 24th, 2016 by

CFPB Compliance Bulletin Reminds Debt Collectors that In Person Collection Attempts Often Violation of Federal Law

By Adam Deutsch

Director, Richard Cordray

Feb 23, 2016 WASHINGTON, D.C. – The Consumer Financial Protection Bureau today took two separate actions against Citibank for illegal debt sales and debt collection practices. In the first action, the CFPB ordered Citibank to provide nearly $5 million in consumer relief and pay a $3 million penalty for selling credit card debt with inflated interest rates and for failing to forward consumer payments promptly to debt buyers. The second action is against both Citibank and two debt collection law firms it used that falsified court documents filed in debt collection cases in New Jersey state courts. The CFPB ordered Citibank and the law firms to comply with a court order that Citibank refund $11 million to consumers and forgo collecting about $34 million from nearly 7,000 consumers.

“Citibank sent inaccurate information to buyers when it sold off credit card debt and it also used law firms that altered court documents,” said CFPB Director Richard Cordray.

“Today’s action provides redress to consumers who were victimized by slipshod practices as part of our ongoing work to fight abuses in the debt collection market.”

Citibank, N.A., is a national bank with headquarters in New York, N.Y., that issues consumer credit cards. From 2010 to 2013, Citibank sold portfolios of charged-off credit card accounts. It typically provided debt buyers with information about the consumer and the debt, including the supposed annual percentage rate (APR). A “charged-off” account is one the bank deems unlikely to be repaid, but may sell to a debt buyer, usually for a fraction of face value. The debt buyer then can try to collect on those accounts.

Illegal Debt Sales Practices

Citibank broke the law when, from February 2010 until June 2013, it provided inaccurate and inflated APR information for almost 130,000 credit card accounts it sold to debt buyers. These buyers then used the exaggerated APR in debt collection attempts. Citibank also failed to promptly forward to debt buyers approximately 14,000 customer payments totaling almost $1 million. The CFPB found that Citibank violated the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act. Specifically, Citibank:

  • Overstated the annual percentage rate in accounts sold to debt buyers:Between February 2010 and June 2013, Citibank overstated the APR for 128,809 accounts it sold to 16 different debt buyers. For some accounts, Citibank claimed the APR was 29 percent when it was actually 0 percent. Consumers paid about $4.89 million to debt buyers who used an APR inflated by more than 1 percent in collection efforts.
  • Delayed sending consumer payments to debt buyers: From 2010 to 2013, Citibank delayed forwarding to debt buyers nearly 14,000 payments made by consumers, totaling almost $1 million. This delayed the updating of account balances and subjected consumers to collection efforts from debt buyers after they had already, in reality, paid off their account.

Enforcement action

Under the Dodd-Frank Act, the CFPB has the authority to take action against institutions or individuals engaged in unfair, deceptive, or abusive acts or practices. Under the CFPB’s order addressing illegal debt sales practices, Citibank must:

  • Refund an estimated $4.89 million to roughly 2,100 consumers:Citibank must refund all payments consumers made from Feb. 1, 2010 to Nov. 14, 2013 to debt buyers that referenced an inflated APR provided by Citibank in their collection efforts where the discrepancy was more than 1 percent.
  • Accurately document the debt it sells: Citibank must provide certain account documents when it sells debt, such as the credit agreement and recent account statements.
  • Stop selling debt it cannot verify: Citibank cannot sell debts if it cannot provide documentation, if the consumers notified Citibank of identity theft or unauthorized use, if consumers allege in writing that they do not owe the amount claimed, or if the account is within 150 days of the end of the statute of limitations.
  • Include certain protections in debt sales contracts: Citibank must include provisions in its debt sales contracts prohibiting the debt buyer from reselling the debt.
  • Provide consumers with basic information about the debt: When it sells a debt, Citibank must give consumers information about the debt, such as the name of the original creditor, the credit agreement, and recent account statements.
  • Pay civil money penalties: Citibank must pay a $3 million penalty to the CFPB’s Civil Penalty Fund.

The full text of the CFPB’s consent order on debt sales is found at:http://files.consumerfinance.gov/f/201602_cfpb_consent-order-citibank-na.pdf

Altered Affidavits

Separately, the CFPB is taking action today against Citibank, two of its affiliates – Department Stores National Bank and CitiFinancial Servicing, LLC – and two debt collection law firms for altering affidavits filed in debt collection lawsuits. Citibank retained Faloni & Associates, LLC, of Fairfield, N.J., and Solomon & Solomon, P.C., of Albany, N.Y. to collect credit card debt on its behalf in New Jersey state courts.

Citibank filed sworn statements attesting to the accuracy of the debt allegedly owed. Citibank then provided the affidavits to their attorneys to file with New Jersey courts. The two firms retained by Citibank altered the dates of the affidavits, the amount of the debt allegedly owed, or both, after the affidavits were executed. This violated the Fair Debt Collection Practices Act.

In May 2011, Citibank learned that one of its law firms had altered affidavits and stopped referring new credit card accounts to it. At Citibank’s request, a New Jersey court dismissed actions pending as of Sept. 12, 2011 that Citibank identified as involving altered affidavits or incorrect information.

The CFPB’s order requires Citibank to comply with the New Jersey state court order, in which Citibank had to refund $11 million collected from consumers and stop collection of an additional $34 million in debts, both of which Citibank has done. Solomon & Solomon, P.C., must pay a $65,000 penalty to the Bureau’s Civil Penalty Fund. Faloni & Associates, LLC, must pay $15,000. Consistent with the Bureau’s Responsible Business Conduct bulletin, the CFPB did not impose civil money penalties on Citibank for this violation, especially in light of its efforts to recompense harmed consumers.

The full text of the CFPB’s consent order against Citibank, N.A., Department Stores National Bank, and CitiFinancial Servicing, LLC, related to the altered affidavits matters is available at:http://files.consumerfinance.gov/f/201602_cfpb_consent-order-citibank-na-department-stores-national-bank-and-citifinancial-servicing-llc.pdf

The full text of the CFPB’s consent order against Faloni & Associates relating to the altered affidavits matters is available at:http://files.consumerfinance.gov/f/201602_cfpb_consent-order-faloni-and-associates-llc.pdf

The full text of the CFPB’s consent order against Solomon & Solomon relating to the altered affidavits matters is available at:http://files.consumerfinance.gov/f/201602_cfpb_consent-order-solomon-and-solomon-pc.pdf

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The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov.

Market for Fixer-Uppers Traps Low-Income Buyers: High-Risk Deals on Shabby Homes Ensnare Buyers

February 21st, 2016 by

Market for Fixer-Uppers Traps Low-Income Buyers 

Some of the homes in Akron, Ohio, that have been sold through contracts for deeds that have been condemned or have housing code issues. Many derelict houses across the Midwest and the South have been sold to private investors, who then sell them through contracts for deeds.

A version of this article appears in print on February 21, 2016, on page A1 of the New York edition with the headline: High-Risk Deals on Shabby Homes Ensnare Buyers.

AKRON, Ohio — Hundreds of broken-down houses still dot the streets of this onetime tire capital of the world, a scar from the financial crisis and housing bust.

The wood has rotted in some; others have black mold, broken windows or failing foundations. Many lack working electrical systems or are missing water pipes and furnaces. The unpaid property taxes mount.

Dozens of these houses were scooped up after the financial crisis by investors, who then make deals with low-income home buyers unable to get traditional mortgages. The arrangement is something like buying a home on an installment plan, with a high-interest, long-term loan called a contract for deed, or land contract.

But for buyers lured by the dream of homeownership, these seller-financed transactions can become a money trap that ends with a quick eviction by the seller, who can flip the home again. Before the housing crisis, low-income buyers got too much of a house that they couldn’t afford. Now, they are getting too little of a house that they can’t afford to repair. CLICK ON THIS LINK FOR THE FULL ARTICLE, or click on the heading.

Documents on Land Contracts

Judge’s Ruling a NJ Foreclosure Game Changer

February 16th, 2016 by

Why is this important?
It is the idea that the best defense is to be able to be in control and have an aggressive offensive strategy. This applies to whether you are trying to stop a foreclosure, get a loan modification, or believe that you were subject to fraud.

This is why this ruling is such a game changer for you. It allows you to turn the tables on the banks, loan servicers, and even their attorneys.

A loan servicer trying to foreclose on your home is subject to the same laws as that apply to a debt collector.  A law firm that represents a loan servicer is also subject to the same laws. In a foreclosure action both the loan servicer and the law firm are subject to penalties and enforcement under federal laws as debt collectors and can be sued by a homeowner.

What changed?
In the landmark case [Psaros vs. Gree Tree Servicing ] brought and won this year by Denbeaux and Denbeaux, possible favorable outcomes for foreclosure defense shifted more in favor of the homeowner.

The takeaway for New Jersey homeowners facing foreclosure as explained in the articles “Debt collectors beware: Judge’s Ruling Could Change the Game” by David Porter of the Associate Press, and ‘These Are People’s Lives You’re Playing With’:The Fight to Curb Debt Collector Lies” by Alan Pyke is this: a law firm who represents a bank in a foreclosure case can be held responsible for the mortgage company’s loan servicing errors.

Both the loan servicer and the law firm that represent them can have complaints filed against them and the law firm can be made to testify and provide evidence against their client.

Judge’s Ruling a NJ Foreclosure Game Changer

Joshua Denbeaux, Esq.

On the surface this may not seem like a big deal, but here is why it is important to a homeowner who may be facing or fighting foreclosure.

Here is how it helps the homeowner.

Foreclosures are filed in state court.  In New Jersey, the state courts have become more unfavorable to homeowners since 2012, and they often rubber stamp bank requests even where the documents are missing.  Courts have made it easier and easier for banks to obtain foreclosure judgments in New Jersey.

Psaros v. Green Tree Servicing is a good example, where the State Court allowed the bank to get a judgment including money not owed by the homeowner, the Federal Court ruled that by seeking to collect money not owed the attorneys involved violated Federal Law.  When a bank seeks to collect money it is not owed, a homeowner can sue in Federal Court instead of State Court.  Federal Courts apply the law more accurately than the State Courts.

Homeowners that go on the offensive level the playing field.  A homeowner that shows the bank they are not afraid to fight when their rights are violated, creates leverage.

The number of ways banks and their collection attorneys violate homeowner rights is never-ending and always evolving.  Federal Courts can hear claims where a bank refuses to honor a loan modification, misapplies money paid to the bank, or where the bank breaks into a home.  These are the types of violations that happen on a daily basis across the country.  These are violations of homeowner rights ignored by the State Courts.

Additionally, banks process foreclosure cases as quickly and inexpensively as possible and don’t look into details unless forced to.  Often times they haven’t even looked at the repayment history or loan servicing file before filing a foreclosure.  This increases the chance for an error on by the debt collecting lawyers.  Finding these errors and turning them into leverage for the homeowner is the foundation to creating a smart and effective legal plan for combating foreclosure.

Denbeaux & Denbeaux doesn’t just think about how to defend a foreclosure, they have developed tools to utilize several Federal Laws that allow homeowners to go on the offensive if their rights have been violated by the loan owner, servicer, attorney or their representatives.  The Denbeaux firm uses the Real Estate Settlement Procedures Act to obtain a homeowner’s complete loan servicing file.  This includes loan payment history, letters sent by the loan servicer, loan modification applications, phone call records, and other documents that often demonstrate violations of Federal Law that can be acted upon by the homeowner.

Going on the offensive is the best way a homeowner facing foreclosure can improve their situation.  The banks, loan servicers, and their attorneys take matters seriously when they get sued with legitimate claims.  They pay attention in part because they are under a close watch from the Financial Consumer Protection Bureau (CFPB) which pays attention to how often financial institutions get sued, and the reasons for the lawsuits.  The ruling in Psaros v. Green Tree Servicing demonstrates the difference between operating in State Court and Federal Court and shows that homeowners facing foreclosure have many rights, but only if they are willing to directly stand up for themselves.

‘These Are People’s Lives You’re Playing With:’ The Fight To Curb Debt Collector Lies

February 2nd, 2016 by

‘These Are People’s Lives You’re Playing With:’ The Fight To Curb Debt Collector Lies

The lawyers who enable an abusive business model for collecting consumer debts are now on the hook for their clients’ screwups. The post ‘These Are People’s Lives You’re Playing With:’ The Fight To Curb Debt Collector Lies appeared first on ThinkProgress. Read entire story.

Source: ThinkProgress