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Mortgage lending to African-Americans has declined since the last housing boom, a direct result of tightened underwriting standards that persist eight years after the meltdown, according to a new report, the Wall Street Journal reported today. Black borrowers accounted for a smaller share of mortgage originations in 2014, at 5 percent, than in 2004 when they were 7 percent. By contrast, white borrowers accounted for 69 percent of mortgages in 2014 versus 58 percent 10 years before then. That is based on an analysis of the most recent Home Mortgage Disclosure Act data in a report commissioned by the National Association of Real Estate Brokers (NAREB), a trade group of African-American real estate agents and brokers. Using similar data, the Wall Street Journal in June reported that minorities are receiving a smaller share of mortgages from the largest U.S. retail banks as many have shifted their mortgage operations toward so-called jumbo mortgages. The report released yesterday by NAREB focuses on the decline of black borrowers receiving smaller mortgages that are eligible for purchase by Fannie Mae or Freddie Mac. Only 3 percent of Fannie Mae- and Freddie Mac-eligible mortgages went to black borrowers in 2014, down from 6 percent in 2004, according to the report.

Redlining has long been outlawed, but in New York City, the federal government is again disproportionately hurting black homeowners, according to a federal lawsuit filed by a nonprofit that represents low-income New Yorkers, the New York Times reported today. This time, the suit says, the government is fueling racial disparities not through its lending policies but in how it handles foreclosures. Since the financial crisis pushed thousands of homeowners in New York and across the country into foreclosure, the federal Department of Housing and Urban Development has been selling insured delinquent mortgages to private investors, typically hedge funds and private equity funds, which then collect monthly payments. The investors, according to the lawsuit filed against the housing agency and a large private equity firm, Lone Star Funds, provide fewer protections to homeowners who fall behind on their mortgage payments than the federal government does, leading to higher rates of foreclosure. Most of the mortgages being sold to these investors are in predominantly black neighborhoods like in southeast Queens and the Canarsie section of Brooklyn. From 2012 to 2014, more than 61 percent of the government-backed mortgages sold to investors were in predominantly black neighborhoods, according to the lawsuit.

Price Waterhouse Cooper (PwC)is being sued for a record $5.5bn for failing to detect fraud that led to a bank collapse during the global financial crisis, in a case that could bring more auditing firms into the line of fire, the Financial Times reported today. The case — the biggest against an auditing firm — has been filed in a Florida state court on behalf of a trustee of Taylor, Bean & Whitaker (TBW), a defunct mortgage underwriter, and accuses PwC of failing to catch a multibillion-dollar conspiracy between Lee Farkas, the company’s founder, and executives at Colonial Bank, an Alabama-based lender that supplied TBW with loans. PwC gave the bank’s parent, Colonial BancGroup, a clean audit opinion every year from 2002 to 2008. Colonial collapsed in 2009, becoming the sixth-largest U.S. bank failure in history. According to TBW’s trustee, PwC certified the existence of more than $1bn of Colonial Bank assets that did not exist, that had been sold or were worthless. Steven Thomas, lead trial lawyer for the trustee, described the case as “particularly egregious” given that Dennis Nally, who retired last month after eight years as PwC’s global chairman, told the Wall Street Journal in 2007 that the “audit profession has always had a responsibility for the detection of fraud.”

The bill is coming due for many homeowners on a type of loan that was widely popular in the run-up to the housing bust, causing a rise in delinquencies at banks, the Wall Street Journal reported today. More homeowners are missing payments on their home-equity lines of credit (Helocs), a type of loan that allows borrowers to withdraw cash from their house to pay for renovations, college tuition or almost any other expense. These loans typically require interest-only payments for the first 10 years, but then principal payments kick in for the next 15 or 20 years. The increased cost of the loan can become a strain for some borrowers. This is becoming an issue now because many borrowers signed up for Helocs in the run-up to the housing bust as home values kept rising. Roughly 840,000 Helocs taken out in 2006 are resetting this year, with principal payments on an additional nearly one million loans expected to hit in 2017. Borrowers who signed up for Helocs in early 2006 were at least 30 days late on $2.8 billion of balances four months after principal payments kicked in this year, according to Equifax. That represents 4.4 percent of the balances on outstanding 2006 Helocs. Delinquencies were at 2.9 percent before the reset.

A severe economic crisis impacting Fannie Mae and Freddie Mac could require a $125.8 billion infusion from the U.S. Treasury to keep the government-sponsored enterprises operational, down from a high-end estimate of $157.3 billion last year, according to stress test results released Monday by the Federal Housing Finance Agency, MorningConsult.com reported. The low end of the estimated infusion, termed a “Treasury draw,” in a severe global recession would be $49.2 billion, FHFA said yesterday. Last year’s results, dated April 30, 2015, put the lowest estimate at $68.6 billion. The Dodd-Frank Act of 2010 requires FHFA to conduct the stress tests.

The Justice Department asked a federal appeals court to reconsider its ruling throwing out a civil mortgage-fraud case against Bank of America Corp., in an uphill effort to rescue one of its highest-profile cases tied to the financial crisis, the Wall Street Journal reported today. The U.S. attorney’s office in Manhattan said in a filing yesterday that the court had “overlooked a wealth of evidence” in reaching a May decision that found the government hadn’t proven fraud by Bank of America’s Countrywide unit over a program dubbed “Hustle.” The court said at the time the case amounted only to breaches of a contract, a stunning setback for the government’s efforts to levy tough fines on corporations and executives. The court also threw out a related penalty against a Countrywide executive, one of the few individuals fined for alleged misdeeds during the crisis. The Justice Department said the unanimous ruling by a three-judge panel at the Second U.S. Circuit Court of Appeals in New York had overlooked the terms of the contract that support its case. It asked the court to reconsider the case and send it back for another trial if it reached the same conclusion.

Fannie Mae reported net income of $2.9 billion from April through June, down from a year earlier as low interest rates brought losses for the mortgage giant on its investments, the Associated Press reported yesterday. The second-quarter results released yesterday marked the 18th straight profitable quarter for the government-controlled company. Washington, D.C.-based Fannie Mae also will pay a dividend of $2.9 billion to the U.S. Treasury next month. With that payment, Fannie will have paid a total $151.4 billion in dividends. Fannie received $116 billion from taxpayers when the financial crisis struck in September 2008. The government rescued Fannie and smaller sibling Freddie Mac after they suffered huge losses from risky mortgages in housing market bust.

The Consumer Financial Protection Bureau finalized new regulations yesterday that it says will ensure homeowners and struggling borrowers are treated fairly by mortgage servicers, HousingWire.com reported. The final mortgage servicing rule will require servicers to provide certain borrowers with foreclosure protections more than once over the life of the loan, clarifies borrower protections when the servicing of a loan is transferred and provides loan information to borrowers in bankruptcy. “These updates to the rule will give greater protections to mortgage borrowers, particularly surviving family members and other successors in interest, who often are especially vulnerable,” said CFPB Director Richard Cordray. The changes also work to ensure family members and others who inherit or receive property generally have the same protections under the CFPB’s mortgage servicing rules as the original borrower.