Bronx Personal Injury & Real Estate Blog

Monday, September 26, 2016

Federal Courts Continue to Sift Through Residential Home Loan Lawsuits

The residential home loan fallout may be nearly a decade in the rearview mirror, however the legal and financial impact of the economic meltdown remain at the forefront of federal dockets across the United States. In a recent article published by the Economist, the author described the current residential mortgage situation as “a menace to the world’s biggest economy” as well as “ vast, nationalized, unprofitable and undercapitalized.”

In other words, the mortgage debt crisis is not quite American history just yet – especially considering the lingering litigation concerning several home loan-related issues. One such issue, involving the use of Marketing Services Agreements, has been on the radar of the Consumer Fraud Protection Bureau for years – with many cases still left unresolved. These agreements, known as MSA’s, permit lenders to offer incentives (i.e., kickbacks) to other service providers involved in the residential lending process (e.g., title insurers). In 2015, the CFPB issued a grave warning against the legality of MSA’s – and litigation involving the CFPB ensues today.

Earlier in August, a federal court issued a ruling against the Department of Justice, thereby overturning a $1.27 billion penalty issued against Bank of America. Despite the DOJ’s attempts to request a three-judge rehearing – and an opportunity to re-argue its core position – the Second Circuit Court of Appeals determined that the fine was excessive and incongruent with the evidence presented at the trial level.

Also ongoing, a former Fannie Mae CEO was slapped with a mere $100,000 fine from the Securities and Exchange Commission – notwithstanding the clear ties between the financial crisis and the Fannie Mae home lending group. The fine was issued after a finding that the CEO had “misled” investors as to the strength of its residential mortgages. Five other ex-CEO’s also received penalties, none totaling more than $250,000.

Contact a real estate attorney today!

If you are considering a residential home loan transaction and would like to speak with a knowledgeable attorney familiar with state and federal laws, please contact the Law Office of Ryan S. Goldstein, PLLC today: 718-239-0239. 

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