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The Consumer Financial Protection Bureau (CFPB) is ordering Wells Fargo Bank to pay more than $2 billion in redress to consumers and a $1.7 billion civil penalty for legal violations across several of its largest product lines, according to a CFPB's press release. The bank’s illegal conduct led to billions of dollars in financial harm to its customers and, for thousands of customers, the loss of their vehicles and homes. Consumers were illegally assessed fees and interest charges on auto and mortgage loans, had their cars wrongly repossessed, and had payments to auto and mortgage loans misapplied by the bank. Wells Fargo also charged consumers unlawful surprise overdraft fees and applied other incorrect charges to checking and savings accounts. Under the terms of the order, Wells Fargo will pay redress to the over 16 million affected consumer accounts, and pay a $1.7 billion fine, which will go to the CFPB's Civil Penalty Fund, where it will be used to provide relief to victims of consumer financial law violations.

A bankruptcy judge approved a new $34.5 million loan to allow Reverse Mortgage Investment Trust Inc. to continue operating under chapter 11 after rising interest rates disrupted its business, WSJ Pro Bankruptcy reported. In an emergency hearing Thursday, Judge Mary Walrath of the U.S. Bankruptcy Court in Wilmington, Del., granted approval for a $44.5 million loan. Of the total, $10 million was already advanced to Reverse Mortgage by Leadenhall Capital Partners LLP, one of its lenders. The $34.5 million in new financing is being provided by Leadenhall and Reverse Mortgage’s parent company, BNGL Holdings LLC, a Starwood Capital Group affiliate. The funds are critical for Reverse Mortgage to “deliver money into the hands of consumers” and to “mitigate disruption to borrowers and facilitate a smooth transition” of its mortgage-servicing platform to reverse-mortgage provider Longbridge Financial LLC, said Anthony Grossi, a lawyer representing the bankrupt company. Bloomfield, N.J.-based Reverse Mortgage is one of the U.S.’s largest originators and servicers of reverse mortgages, which enable people — typically seniors — to tap into the equity built up in their homes. Most of the mortgages originated by the company are insured by the Federal Housing Administration. Reverse Mortgage securitized those loans and sold them to investors to generate revenue. The company also originated and serviced other loans.

Reverse Mortgage Investment Trust Inc., one of the nation’s largest mortgage lenders that enables people to tap the equity built up in their homes, has filed for chapter 11 bankruptcy protection, WSJ Pro Bankruptcy reported. The Bloomfield, N.J.-based company partly attributed rising interest rates to the disruption of its business. Reverse Mortgage said it faced a liquidity crunch and stopped mortgage origination in early November as it had to increase the capital to support the origination of new loans and to service portfolios. Reverse mortgages are typically made to seniors looking to tap the value built up in their homes. Backed by investment firm Starwood Capital Group, the company lists both assets and liabilities of $10 billion to $50 billion, according to a court filing. Reverse Mortgage is in talks to ensure that its servicing portfolio is managed and that work has begun to transfer loans in its pipeline to other lenders. Reverse Mortgage, established in 2012, is at least the second real-estate lender to file for bankruptcy this year. In June, residential lender First Guaranty Mortgage Corp. filed for bankruptcy as fewer home borrowers were refinancing due to rising interest rates and tight housing supply.

A bipartisan group of U.S. lawmakers has pledged support for an affordable housing bill that could lead to the development of 500,000 starter homes in struggling communities over the next decade, The Hill reported. The Neighborhood Homes Investment Act, introduced in both the House and Senate, would offer a tax incentive to developers to minimize their risk when building or rehabilitating existing housing. In some areas of the U.S., the cost of rehabilitating or building a home could exceed the eventual sale price. This bill would fill the “value gap,” up to 35 percent of eligible development costs for new homes. The bill currently has the support of 124 U.S. lawmakers across 37 states, and lawmakers have stressed the urgency to pass the bill before the end the current legislative session. “It is critical that we get the Neighborhood Homes Investment Act over the finish line,” Sen. Rob Portman (Ohio), the lead Republican sponsor of the bill, said in a statement. The Neighborhood Homes Coalition estimates that the Neighborhood Homes Investment Act could lead to 785,714 jobs in construction and construction-related industries, $42.9 billion in wages and salaries, and $29.3 billion in federal, state and local tax revenues and fees.

The federal government is about to backstop mortgages of more than $1 million for the first time in high-cost markets, such as parts of California and New York, the Wall Street Journal reported. The increase reflects the rapid appreciation in home prices over the past few years, even as the mortgage market has recently cooled. The maximum size of home-mortgage loans eligible for backing by Fannie Mae and Freddie Mac will rise to $1,089,300 next year in a few expensive markets, from $970,800 this year, the Federal Housing Finance Agency said Tuesday. For most parts of the country, loan limits will rise to $726,200 from a 2022 maximum of $647,200, said FHFA, which oversees mortgage-finance giants. By law, loan limits are calculated annually using a formula that factors in average housing prices. In all, about 100 counties and county equivalents, out of more than 3,000 across the U.S. are designated as high-cost markets, also including some in New Jersey, Virginia and Utah, according to the FHFA.