Issues that mortgage firms are currently confronting in court include the calculation of interest, reverse mortgage advertisements and violation of the Equal Credit Opportunity Act. Mortgage insurance and employment issues are also being litigated.
Mortgage interest overcharges are being investigated by Tripp Levy PLLC, according to a Jan. 28 announcement. The New York-based law firm said it is looking into how several banks calculate mortgage interest.
In addition to Amboy Bank, Boston Private Bank and Trust Co. and Eastern Bank -- companies being investigated include Emigrant Bank, Enterprise Bank and Trust Co. and Middlesex Savings Bank. Also on Tripp Levy's radar are New Alliance Bank, Provident Bank and Shinhan Bank America as well as Sun National Bank, Valley National Bank and Webster Bank.
Special servicer Statebridge Co. said last month that it partnered with American Legal & Financial Network to form a national network of mortgage banking attorneys to assist with its loan servicing efforts.
A lawsuit was filed yesterday in the Circuit Court of Cook County by Illinois Attorney General Lisa Madigan against Woodridge, Ill.-based Hartland Mortgage Centers, a news release said. The reverse mortgage firm allegedly implied that borrowers who opted for lump-sum payments would earn substantially more even though lenders actually earn more interest on loans with larger upfront balances.
Also facing a lawsuit was Irvine, Calif.-based American Advisors Group Inc. and its President Reza Jahangiri.
The state alleges the two companies' advertisements falsely implied ongoing ownership in the property even though lenders can foreclose if requirements such as paying property taxes and maintaining the home are not met. In addition, direct mail solicitations falsely implied that seniors could be eligible for government benefits, though they were actually advertising reverse mortgage programs. Among the alleged statements with false claims were:
- "President Obama's Economic Stimulus Plan Helps Seniors. If you are 62 years of age or older, you may be eligible to take advantage of an important U.S. Government Insured Program," and
- "The United States Congress has authorized a Reverse Lending program you do NOT have to pay back as long as you live in your home!"
Madigan hopes to slap all defendants with $50,000 in civil penalties, up to $60,000 for each fraudulent act committed as well as permanent injunctions banning them from the alleged practices.
"These companies used extremely misleading language in their advertising, sometimes even disguising their loans as government benefits that borrowers don't have to repay," Madigan said in the statement. "Many consumers have reported that they didn't even know these offers were for reverse mortgages or a loan of any kind."
The Federal Trade Commission and Gateway Funding Diversified Mortgage Services LP agreed to settle charges that the Horsham, Pa.-based net branch operation failed to create an effective Fair Lending monitoring program outlined in December 2008 settlement. Gateway was charged with violating the ECOA.
The latest settlement requires a third-party consultant approved by the commission to perform a detailed analyses and annual assessments of lending during the next five years. Gateway will need to take steps recommended by the consultant.
Ameriquest Mortgage -- as well as Argent Mortgage Co. AMC Mortgage Services Inc., Bedford Home Loans Inc., Town & Country Credit Corp. and Olympus Mortgage Co. -- agreed to settle 29 predatory class actions for $22 million, according to a copy of the agreement filed in U.S. District Court for the Northern District of Illinois. The settlement is on top of a $325 million settlement with 49 states reached in early 2006.
A U.S. District Court Judge for the Southern District of New York ruled against HSBC Mortgage in a case where the lender allegedly denied employment because of a misdemeanor charge against the employee-applicant that was subsequently dropped, Courthouse News reported. The judge rejected the bank's claim that New York City's administrative code conflicts with the National Bank Act of the Federal Deposit Insurance Act, noting that HSBC Mortgage and HSBC Bank "are clearly intertwined."
Guaranty Bank is suing Evanston Insurance Co., of Deerfield, Ill., in federal court over $33.4 million in mortgage insurance premiums it paid on home-equity loans when the insurer was not licensed, the Journal Sentinel reported. In a boost to Guaranty's case, the Wisconsin insurance commissioner fined Evanston in November because it was not authorized to sell such insurance in the state.
Federal Trade Commission, Plaintiff, v. Gateway Funding Diversified Mortgage Services, L.P. and Gateway Funding, Inc., Defendants.
FTC File No. 0623063 (U.S. District Court For The Eastern District of Pennsylvania).
In re Ameriquest Mortgage Co. Mortgage Lending Practices Litigation.
MDL No. 05-cv-07097 (U.S. District Court for the Northern District of Illinois).