Mortgage Mix: Lawsuits, Rate Hikes and Settlements, Oh My!

Editor’s Note: The Mortgage Mix is RISMedia’s weekly highlight reel of need-to-know mortgage-industry happenings. Watch for it each Friday.

-After a momentary tick back up, rates are falling again, hitting 6.15% this week as Freddie Mac Chief Economist Sam Khater said he is tracking large swings relative to small changes in rates,” with buyers seemingly very tuned into a volatile mortgage market.

-In an attempt to address the persistent ugliness of racial bias in appraisals, the Department of Housing and Urban Development (HUD) announced an updated process for homeowners to appeal appraisals when there “is an indication of bias, Fair Housing regulations have been violated, or unlawful discrimination has been identified.” HUD is currently soliciting feedback from the industry on the new rule.

-The GSEs announced an update to their upfront fee structures, meant to “strengthen the safety and soundness of the Enterprises” according to Federal Housing Finance Agency (FHFA) Director Sandra Thompson. The changes “broadly impact purchase and rate-term refinance loans and build on upfront fee changes,” according to an FHFA release, and will take effect on May 1.

-A class action lawsuit against First Guaranty Mortgage by former employees is moving forward, according to National Mortgage News. The laid-off workers filed the suit in the summer, alleging that the lender (which filed for bankruptcy days later) had not provided proper notice of the layoffs, and withheld wages and commission.

-Anticipation continues to build over the Federal Reserve’s decision next month on rate hikes. With many Fed officials chatting publicly about possibilities, the debate so far seems to be how fast and for how long rates should be raised, with most members setting a target of slightly above 5% in the near-term.

-Part of an ongoing initiative to combat redlining, the Department of Justice (DOJ) announced a historic $31 million settlement with California-based City National Bank, which was accused of refusing to provide mortgage lending and other services in Black and Hispanic neighborhoods. The DOJ initiative has racked up $75 million in restitution in slightly over a year.

-Already the target of several related lawsuits, Cross Country Mortgage—one of the largest retail operations in the country—is being accused of racketeering by AmNet, a rival firm, over the alleged practice of stealing loans and employees. According to a National Mortgage News report, AmNet says that a “dedicated migration team” at Cross Country sought to convince loan officers to reroute loans and steal confidential information—sometimes successfully.

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