April 20, 2012

Holding the Mortgage Industry Accountable

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We’ve heard the stories – financial institutions or their employees violate the public trust and engage in practices that both harm the mortgage markets and consumers who depend on them for their homes.  These stories inflame our sense of right and wrong and they leave us wondering, who’s holding the mortgage industry to account?  Well, among many others, HUD is.

HUD’s mission is to strengthen the housing market and ensuring consumers have fair and informed access to housing. HUD takes strong action to hold the mortgage industry accountable for the products and services they provide to families who are either seeking to buy or rent a home or struggling to keep the home they have.

Let’s begin with the largest federal-state settlement agreement in our nation’s history.  In response to allegations of widespread mortgage servicing abuses,   HUD, the Justice Department and 49 state attorneys general brokered a landmark agreement that requires Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial Inc. (formerly GMAC) to pay $25 billion.  This agreement provides substantial financial relief to homeowners and establishes significant new homeowner protections for the future.  In addition, HUD and the U.S. Attorney in Brooklyn reached a separate agreement with Bank of America requiring the lender to pay $1 billion related to claims it engaged in mortgage fraud by making loans to unqualified borrowers.

For its part, HUD constantly monitors lenders who are approved by the Federal Housing Administration (FHA). By evaluating loan performance, FHA can identify those lenders who fail to apply the agency’s standards when originating, underwriting or servicing mortgages. In addition, HUD’s Mortgagee Review Board can take strong action against lenders who fall short of their responsibilities to adhere to FHA’s guidelines.

HUD’s Office of the Inspector General can also investigate allegations of improper lending and servicing behavior in the housing market. In the most extreme cases of alleged misconduct, HUD may event refer particular cases for the U.S. Department of Justice for action.

Read more on HUD’s efforts to hold the mortgage industry accountable.

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