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As part of its third-quarter regulatory filing, Freddie Mac declared it helped approximately 16,000 borrowers avoid foreclosure, HousingWire.com reported. Most of that is dealing with crisis-era mortgages, but Freddie Mac CEO Donald Layton revealed that this strategy is changing. Freddie Mac is now working with its regulator, the Federal Housing Finance Agency, to create permanent foreclosure-avoidance programs as HAMP and HARP look to expire. Now, as part of the regular course of business, and with foreclosure still the option of last resort, Layton said that efforts are being made to make permanent a government-defined method for handling the modification of distressed mortgages. “These crisis-era programs are not disappearing, the new solutions will be permanent,” he said, without giving a specific timeline. Currently, both HAMP and HARP are set to expire at the end of next year. Read more. 

In related news, Freddie Mac in its regulatory filing said that it posted a profit of $2.3 billion in the third quarter after avoiding derivative losses it’s experienced in the past, Bloomberg News reported yesterday. The company, which was seized along with Fannie Mae during the 2008 financial crisis, will send the Treasury Department $2.3 billion at the end of December, bringing the total amount returned to $101.4 billion, according to its filing. Freddie Mac had posted a loss of $475 million in the third quarter of 2015 stemming mostly from accounting for hedges against interest-rate risk. The company uses derivatives to hedge away the impact of rising and falling rates on its holdings. But because the company values the derivatives at a different time than it values the hedged assets, in prior quarters that’s resulted in large swings in profits. Under the terms of Fannie Mae and Freddie Mac’s bailout agreement, the companies have to send almost all profits to the government. Read more.

The Consumer Financial Protection Bureau (CFPB) on Monday urged a federal appeals court to let the agency revive an investigation into an accreditor of for-profit colleges after a trial judge scuttled the probe and scolded the agency for straying outside its jurisdiction, the National Law Journal reported yesterday. U.S. District Judge Richard Leon in April said that the CFPB lacked authority to investigate the college accreditation process, striking down an administrative subpoena the agency issued to the Accrediting Council for Independent Colleges and Schools. Leon said that the CFPB chose to “plow [headlong] into fields not clearly ceded to them by Congress.” The decision was a setback for the CFPB and more broadly gave ammunition to the U.S. Chamber of Commerce and businesses that are working to restrict the investigative scope of the agency. The CFPB said in its opening brief on Monday in the U.S. Court of Appeals for the D.C. Circuit that Leon wrongly spiked the investigation of the college accreditor.

Wells Fargo & Co. has agreed to pay $50 million to settle a racketeering lawsuit accusing it of overcharging hundreds of thousands of homeowners for appraisals ordered after they defaulted on their mortgage loans, Reuters reported today. The proposed settlement, which requires court approval, was disclosed in a filing on Friday in an Oakland, Calif. federal court. If approved, it will resolve nationwide claims that Wells Fargo charged much more than it paid for third-party appraisals, exploiting borrowers who could least afford it and driving them further into default. Wells Fargo's settlement of the lawsuit comes as the bank is still recoiling from a scandal over sales targets that drove employees to create unauthorized accounts for customers. Multiple lawsuits over those practices are pending. Read more. 

Mortgage escrow accounts remain a mystery in many cases as debtors’ and creditors’ attorneys both struggle to understand the calculations set forth in them and the effect they have on chapter 13 cases. A panel at the 2016 Hon. Steven W. Rhodes Consumer Bankruptcy Conference on Nov. 11 will focus on escrow accounts, as well as new proof-of-claim forms and how they treat escrow accounts. Click here to register. 

Student loan borrowers are regularly being denied their right under the law to make lower payments, according to the Consumer Financial Protection Bureau (CFPB), MarketWatch.com reported yesterday. CFPB examiners found that servicers, the private companies the federal government pays to manage the student loan repayment process, are regularly denying borrowers’ applications to enroll in plans that allow them to make payments according to their income, even though these borrowers qualify. Federal student loan borrowers have a right to these so-called income-driven repayment programs under the law, which cap a borrower’s student loan payment at a percentage of her income. Consumer advocates, the CFPB and others have accused servicers of not providing borrowers with the right or enough information to pick the payment plan that best suits their needs. The CFPB instructed one or more servicers to enroll borrowers who were improperly denied into income-driven plans and to enhance their policies for working with borrowers who submit incomplete applications as well as those that are approaching the deadline to recertify their income to stay on the plans. In addition, the CFPB directed these servicers to implement a program to oversee and verify the accuracy of decisions regarding borrowers’ applications for income-driven repayment plans.

Legal experts warned the Consumer Financial Protection Bureau that its proposal to force companies under investigation to keep quiet about the probe might violate free speech rights, the Wall Street Journal reported on Saturday. The reactions came during the public comment period for the watchdog agency’s proposed regulation, which broadly updates rules and procedures for the confidential treatment of information obtained through the bureau’s supervision and enforcement actions, as well as the public’s access to information under disclosure rules. Among the 27 comments submitted to the bureau, the American Civil Liberties Union and a group within the American Bar Association criticized a provision within the regulation that would prohibit individuals and companies from disclosing confidential investigative information. The proposed step would restrict companies from discussing information on a wide range of issues connected to any bureau investigation, including the existence of the investigation itself. A company planning to disclose the information with external entities would have to get approval to do so from a senior CFPB official.

Financial regulators sent letters on Thursday to 44 mortgage lenders and mortgage brokers warning that they might be in violation of certain loan reporting requirements, The Hill reported on Friday. Under the Home Mortgage Disclosure Act, the Consumer Financial Protection Bureau (CFPB) said that financial institutions are required to collect data about their housing-related lending activity, including home purchase loans, home improvement loans, and refinancings that they originate or purchase, or for which they receive applications. The data must be made public through the federal agencies on an annual basis. The CFPB said it has identified 44 companies that might be in violation, but did not name the companies specifically. “Financial institutions that fail to report mortgage information as required make it harder to identify and address discriminatory lending,” CFPB Director Richard Cordray said.

The bankruptcy trustee mopping up after the collapse of ITT Educational Services Inc. has lined up $6 million worth of financing for the cleanup effort, the Wall Street Journal reported on Saturday. Loans are coming from finance affiliates of Cerberus Capital Management, an existing lender to the failed for-profit educator, operator of the ITT Tech chain. Lawyers for bankruptcy trustee Deborah J. Caruso say that the cash is desperately needed, as the trustee can’t do much without funding. A bankruptcy judge in Indianapolis will review the loan at a hearing next week. ITT Tech shut its doors abruptly in September, after federal education authorities cut off its access to taxpayer-backed loans. The sudden closure was a shock to some 40,000 students enrolled for the fall semester and some 8,000 employees.

A new rule finalized on Friday by the Obama administration will cost student debtors who say that their colleges defrauded them some longstanding rights to get their federal loans canceled, while colleges on shaky financial footing dodged a government crackdown, Bloomberg News reported. Those regulations, proposed in June, mark the administration's response to the spate of closures of for-profit colleges, following state and federal investigations and lawsuits that have so far led more than 80,000 Americans to seek debt relief, alleging fraud, according to new figures the U.S. Department of Education also released on Friday. According to a summary of the rule the agency provided on Thursday, borrowers who receive federal student loans starting next July and who subsequently accuse their colleges of misleading them into enrolling will face a narrower path to debt relief than today's borrowers. If the rule is upheld, defrauded student debtors no longer will be able to get their loans canceled by alleging that their schools violated state laws, unless they first successfully sue. Instead, they'll be subject to a new federal standard — one that officials say is more efficient but consumer advocates say limits borrowers' ability to file claims.