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Branch Banking & Trust Company will pay the federal government $83 million as part of a settlement relating to its lending practices for mortgages insured by the Federal Housing Administration, the Justice Department said yesterday, according to Morningconsult.com reported. The Winston-Salem, N.C.-based BB&T didn’t follow rules for FHA-insured mortgages prescribed by the Department of Housing and Urban Development from 2006 through 2014, according to the Justice Department. The bank doubled its loan volume during that period but did not comply with HUD rules on underwriting and quality control, the Justice Department said. Despite that failure to comply, BB&T still sought FHA insurance for the mortgages and pursued payment from that insurance if the loans defaulted, DOJ said.

New York’s financial regulator wants information from Caliber Home Loans, one of the nation’s fastest-growing mortgage firms, about its handling of distressed mortgages and origination of mortgages to borrowers with checkered credit histories, the New York Times reported on Saturday. The request for documents is an indication the New York Department of Financial Services is ratcheting up an early stage investigation into Caliber, a wholly owned subsidiary of Lone Star Funds, a large private equity firm based in Dallas. The New York regulator made the request in a letter sent a week ago to Caliber. The regulator told Caliber that it was investigating multiple complaints from consumers in New York and wanted information related to the firm’s procedures for handling distressed mortgages and foreclosures. The regulator is also asking for information about mortgages Caliber has begun writing to borrowers who have filed for bankruptcy or been foreclosed on but are repairing their credit histories. Caliber is one of the few mortgage firms that has begun making so-called nonprime loans nearly a decade after the start of the housing bust.

Mortgage-finance giant Freddie Mac and two nonbank lenders are loosening income and documentation requirements for mortgage applicants in a new pilot program, the Wall Street Journal reported today. The changes announced yesterday are designed to help boost mortgage originations among first-time buyers, applicants with low-to-moderate incomes and those who live in underserved areas. The moves come nearly a decade after the start of the mortgage meltdown, as many consumers remain shut out of the housing market largely because they can’t meet the underwriting criteria that most lenders require. Under the Freddie program, applicants will be able use the income of people who will live with them but aren’t going to be on the mortgage to qualify.

Deutsche Bank AB is pushing back against the U.S. Justice Department’s demand that it pay $14 billion to settle high-profile probes into its packaging of mortgages in the run-up to the financial crisis, MarketWatch.com reported today. The German bank confirmed on Thursday that it has kicked off negotiations with the U.S. agency over the proposed charges, after the <em>Wall Street Journal</em> reported the proposed settlement Thursday. The Justice Department’s investigations are connected with the bank’s issuance and underwriting of residential mortgage-backed securities between 2005 and 2007. In January, the Justice Department settled mortgage-related claims with Goldman Sachs Group Inc. for $5.1 billion, while JPMorgan Chase & Co. was fined $13 billion in 2013.

The Hope Now alliance reported yesterday that loan modification activity fell again on a monthly basis, but there are still several states where borrowers need assistance, NationalMortgageNews.com reported. Hope Now said that total nonforeclosure solutions, including loan modifications, short sales, deeds-in-lieu and workout plans, in May added up to 112,000. Conversely, there were only 25,000 foreclosure sales for the month, down 12% from June. Foreclosure starts dropped 5 percent month-over-month to 51,000. There were roughly 35,000 permanent loan modifications during the month, down 17 percent month-over-month but up 3 percent year-over-year. Of these modifications, 23,000 were made via proprietary programs, while more than 12,000 were completed through the Home Affordable Mortgage Program. Short sales fell 10 percent from June to 5,700, while deeds-in-lieu similarly decreased 16 percent to 1,400.

Mortgages to borrowers with spotty credit histories have yet to come roaring back from the financial crisis, but they are on the rise at the private equity giant Lone Star Funds, the New York Times reported today. Its wholly owned mortgage business, Caliber Home Loans, is one of the few financial firms to report a significant percentage increase this year in the dollar value of subprime mortgages it is managing and servicing for homeowners. Most of the subprime mortgages at Caliber are “legacy” loans, those issued before the housing bust, which Lone Star acquired from banks and federal agencies. For the second time in three months, Lone Star, which was founded by the billionaire investor John Grayken in 1995, has indicated that it is on the verge of bringing to market a mortgage securitization backed mainly by newly issued mortgages to borrowers with troubled credit histories. Many of the nonprime mortgages bundled into the bond offerings were written by Caliber in the last two years. Lone Star and Caliber sold a similar but smaller bond offering last year.