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The U.S. Justice Department yesterday charged Deutsche Bank’s former head of subprime mortgage trading with civil fraud in connection with conduct dating back to the 2007-2009 financial crisis, Reuters reported. Paul Mangione, the former trader, is accused in the complaint of misrepresenting information about the loans underpinning two residential mortgage-backed securities that were sold to investors. The government’s case against the former trader, filed in a federal court in Brooklyn, came after the bank in January reached a $7.2 billion settlement in a related case over risky mortgage securities sold to investors. The Justice Department charged Mangione for his role in the alleged scheme in its complaint, saying he defrauded investors in a $1 billion security called ACE 2007-HE4 and another $400 million security called ACE 2007-HE5. The government also said he misled people about the origination practices of Chapel Funding LLC, one of the bank’s subsidiaries, and approved offering documents that misstated information about the loans, such as borrowers’ ability to repay and whether they complied with lending guidelines.

Fannie Mae and Freddie Mac are extending additional relief to homeowners affected by the catastrophic flooding caused by Hurricane Harvey, HousingWire.com reported yesterday. Last week, Fannie and Freddie announced a number of measures that mortgage servicers can take to aid borrowers whose homes were damaged by the storm, including mortgage forbearance and other options. Now, with officials declaring that Harvey dumped more water on Texas than any storm in history, Fannie and Freddie announced today that each of the government-sponsored enterprises is suspending foreclosures and evictions in affected areas. Specifically, each of the GSEs is implementing a 90-day foreclosure sale suspension and a 90-day eviction suspension on borrowers whose homes are located in eligible disaster areas. Freddie Mac also said that it will be working with servicers to ensure that no property inspection costs resulting directly from Hurricane Harvey will be passed on to the affected borrowers. Read more.

ABI's thoughts are with those suffering in the wake of Hurricane Harvey. For information and ways to help, please visit https://www.abi.org/newsroom/harvey. 

The Trump administration is planning to raise premiums and place tighter loan limits on some borrowers in a mortgage program that helps seniors supplement their incomes, the Wall Street Journal reported today. The U.S. Department of Housing and Urban Development on Tuesday announced the changes in a letter to lenders to the reverse-mortgage program, which allows seniors to take out a loan against the value of their home. The Trump administration feels the changes are necessary to put the program, which is backstopped by taxpayers, on a sounder financial footing. “Given the losses we’re seeing in the [reverse mortgage] program, we have a responsibility to make changes that balance our mission with our responsibility to protect taxpayers,” HUD Secretary Ben Carson said through a spokesman. The modifications won’t apply to borrowers with existing mortgages, but will affect those who take out new loans. Some 650,000 borrowers have outstanding reverse loans insured by the Federal Housing Administration, which is part of HUD.

A homeowner has filed a lawsuit accusing Wells Fargo & Co. of improperly charging thousands of customers nationwide to lock in interest rates when their mortgage applications were delayed, Reuters reported yesterday. Filed on Monday in San Francisco federal court, the lawsuit said Wells Fargo managers pressured employees to blame homeowners for the delays, sometimes by falsely stating that paperwork was missing, so homeowners could be stuck with extra fees. Wells Fargo Spokesman Tom Goyda said that the bank is reviewing past practices on rate lock extensions and will take steps for customers as appropriate. The lawsuit, which will request the court grant class action status, comes as Wells Fargo is trying to recover from a scandal last year when the bank was fined for opening accounts for customers without their authorization in order to boost sales figures.

Wells Fargo & Co. and U.S. Bancorp have signed deals with mortgage software startup Blend Labs Inc. to move more of their loan applications online, the Wall Street Journal reported today. The five-year-old San Francisco firm is expected to announce its new customers Thursday along with a fresh $100 million fundraising round. The software from Blend offers the two giant lenders a chance to compete better against nimble fin-tech offerings such as Rocket Mortgage, the Quicken Loans Inc. product that has attempted to speed up the often-tedious mortgage application process. Minneapolis-based U.S. Bank says that the latest changes could eventually take four or five days off the process, which now lasts roughly six weeks on average. The actual time to apply could eventually be sliced in half, says Tom Wind, president of U.S. Bank’s mortgage division.

Bank of America Corp. has agreed to pay more than $6 million to a California couple whom a federal judge said had been harassed and illegally foreclosed upon by the bank's mortgage unit, ending an eight-year-long dispute, Dow Jones Newswires reported yesterday. The proposed settlement between the bank and Erik and Renee Sundquist would enable them "to end a long personal and legal nightmare that has impacted every facet of their and their sons' lives," according to court papers the couple filed to request that their 2014 lawsuit against the bank be dropped. The deal calls for Bank of America to pay a fraction of the fine of more than $46 million ordered by Judge Christopher Klein in March. In his ruling, the judge said the bank's mortgage modification process and mistaken foreclosure on the Sundquists' home in Lincoln, Calif., left them in "a state of battle-fatigued demoralization." The exact amount that the bank will pay the Sundquists is confidential, according to documents filed on Tuesday in U.S. Bankruptcy Court in Sacramento. The earlier order called for the bank to pay the couple nearly $6.1 million in damages.