HUD announced Thursday that it reached a $202 million settlement with Deutsche Bank and Mortgageit over allegations of misconduct and false certifications with a government lender program. The agency said that Mortgageit acknowledged and accepted responsibility for false certifications it submitted to HUD in order to gain from a direct lender program under the Federal Housing Administration.
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The National Credit Union Association (NCUA) has reached settlements with Citigroup and Deutsche Bank Securities regarding residential mortgage-backed securities sales to five wholesale credit unions that have recently failed. Citigroup agreed to pay $20.5 million, and Deutsche Bank agreed to pay $145 million to help lessen the losses incurred when the five credit unions failed. Neither bank admitted to fault when agreeing to the settlement. Total losses incurred from the five credit union failures stand at $3.3 billion, according to the NCUA.
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The Federal Housing Finance Agency's decision to pursue legal action against firms that sold residential mortgage-backed securities to Fannie Mae and Freddie Mac could potentially strain relationships between the GSEs and the companies named as defendants, many of whom still sell mortgages to Fannie and Freddie and service home loans held by the two mortgage financiers. Some of the financial firms have been forthcoming with pledges to aggressively defend themselves against the allegations and are disappointed by the fact that FHFA has taken to the courts.
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Germany's largest bank has been hit with its second lawsuit of the week related to the company's U.S. mortgage business.
The city of Los Angeles has filed a civil law enforcement action against Deutsche Bank for allowing properties it has foreclosed on to fall into "serious disrepair" and for the alleged illegal eviction of hundreds of low-income tenants renting the foreclosed homes. The city attorney says Deutsche Bank has become one of the largest slumlords in Los Angeles.
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The U.S. government has filed a lawsuit against Deutsche Bank and its mortgage unit, claiming that Germany's largest bank "repeatedly lied" to get into a program to select mortgages to be insured by FHA against default. Once part of the program, U.S. authorities say Deutsche Bank "recklessly" selected mortgages that violated the program rules "in blatant disregard" of whether borrowers could make their mortgage payments. The U.S. government is seeking $1 billion in damages and penalties.
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The housing crisis and the financial downturn that followed, without question, have profoundly altered the consumer lending landscape.
According to the financial advisory firm Deloitte, one change that may be underappreciated is the rapid emergence of an important customer segment that could have powerful implications for lenders - the first-time defaulter.
A survey conducted by the firm found that 11 percent of banking customers have experienced a negative credit event for the first time in their lives within the last two years.
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Neighborhoods across the country are riddled with empty bank-owned homes and unoccupied foreclosures that erode neighboring property values and open the door for blight and criminal activity.
The nation's glut of vacant REOs took center stage in Washington Wednesday. HUD announced a new nationwide REO "First Look" program, in partnership with the nation's largest mortgage lenders, and it was the first of a two-day Federal Reserve summit to examine the community impacts of foreclosed and vacant properties.
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The FDIC has closed on a sale of securities as part of a securitization backed by approximately $471.3 million of performing single-family mortgages from 16 failed banks.
This pilot program marks the first time the FDIC has sold assets in a securitization during the current financial crisis a method which could allow the federal agency to clear billions of dollars in seized loans from its books, while maximizing the value of these assets for the failed banks' creditors.
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