In Chicago, Illinois, Reuters reports:
A Royal Bank of Canada mortgage unit will pay $10.98 million to settle charges it gave the U.S. government false information about borrowers who took out 219 home loans that ended up in foreclosure.
RBC Mortgage Co agreed to the payment to avoid litigation but denied wrongdoing, according to Patrick Fitzgerald, the U.S. attorney in Chicago, who announced the settlement.
The civil case is related to a separate federal criminal probe that resulted in the convictions of 25 defendants, including three RBC Mortgage officers, Fitzgerald said.
For more, see http://www.reuters.com/article/bondsNews/idUSN2529275720081125.
In Sacramento, California, the San Francisco Chronicle reports:
Gov. Arnold Schwarzenegger proposed a new plan Wednesday to induce lenders to modify home loans to help struggling borrowers avoid foreclosure. […] Schwarzenegger suggests imposing a 90-day stay for the foreclosure process for owner-occupied homes that have received notices of default. Lenders could be exempted from the stay by proving they have an “aggressive modification program” to keep borrowers in their homes.
The loan modifications would be modeled on the approach used by the Federal Deposit Insurance Corp. to help borrowers of the failed IndyMac Bank.
[State officials] said the proposal would increase loan modifications by removing loan servicers’ fears that they could be sued by the investors who actually own the mortgages, and by getting the majority of companies involved in working out loans, so no one company need fear it is the only one taking such actions.
For more, see http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/06/BUEP13V1MH.DTL.
The New York Times reports:
Former Washington Mutual (WaMu) senior mortgage underwriter Keysha Cooper tells of the bank’s unethical and deceptive lending practices. According to her, “At WaMu it wasn’t about the quality of the loans; it was about the numbers.” “They didn’t care if we were giving loans to people that didn’t qualify. Instead, it was how many loans did you guys close and fund?”
According to her, when underwriters did not approve even the most questionable loans, they were punished and she believes that her unwillingness to approve dubious loans led to her ultimate lay off. According to her, she was made to approve roughly 60 percent of the loans she saw at her supervisors’ orders.
For more, see http://www.nytimes.com/2008/11/02/business/02gret.html?pagewanted=2&_r=1.
The Wall Street Journal reports:
J.P. Morgan Chase & Co. launched a plan on Friday to modify the terms of $70 billion in mortgages for borrowers who are behind on their payments or soon could be. The move by the New York bank will cover as many as 400,000 borrowers. They’ll be moved into loans carrying lower interest rates, smaller principal amounts or other more-affordable terms.
Under the plan, option Adjustable Rate Mortgages that are accumulating interest will be replaced with fixed-rate loans that are more stable for borrowers and seen as far less likely to default. J.P. Morgan said it wouldn’t begin the foreclosure process on borrowers during the next 90 days, as it opens loan-counseling centers and takes other steps to launch the program.
For more, see