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Corinthian Colleges is being sued by the federal Consumer Financial Protection Bureau for what it calls a "predatory lending scheme,” the Associated Press reported today. The CFPB is seeking more than $500 million for borrowers who used the for-profit education company's private student loans. Corinthian misled students about their job prospects, in some cases paying employers to offer temporary jobs to graduates, the CFPB said yesterday. Corinthian charged as much as $75,000 for a bachelor's degree and pushed students into private loans with interest rates of roughly 15 percent, more than double the rate for a federal loan, the CFPB said. More than 60 percent of Corinthian students with those loans defaulted within three years.

The Consumer Financial Protection Bureau took action against Amerisave Mortgage and ordered it to pay $19.3 million for deceiving tens of thousands of mortgage customers with a bait-and-switch loan scheme, Housingwire.com reported yesterday. The charges were against Amerisave, its affiliate, Novo Appraisal Management Company, and the owner of both companies, Patrick Markert. According to the bureau, the mortgage firm lured consumers by advertising misleading interest rates, locked them in with costly up-front fees, failed to honor its advertised rates and then illegally overcharged them for affiliated “third-party” services.

Federal and state consumer protection watchdogs on Wednesday took aim at lawyers, filing more than three dozen suits targeting law firms and other entities for running illegal foreclosure-relief scams, The National Law Journal reported Wednesday. The nationwide enforcement sweep, dubbed Operation Mis-Modification, was led by the Federal Trade Commission, the Consumer Financial Protection Bureau and attorneys general or other regulators from 15 states, including New York, Florida and Michigan. The suits — six by the FTC, three by the CFPB and 32 by state attorneys general — make similar allegations: Lawyers or other scammers charged illegal advance fees for services and falsely promised to prevent foreclosures or renegotiate troubled mortgages. The agencies are seeking compensation for victims, civil fines and injunctions, and in some cases have also secured temporary restraining orders freezing the firms' assets.

CitiMortgage is suing two Chicago bankers, Steve and John Calk, alleging that a mortgage bank that the brothers once operated had provided inaccurate residential loan underwriting documents, The St. Louis Post-Dispatch reported on Monday. O’Fallon, Mo.-based CitiMortgage is seeking more than $4.5 million in damages in its breach-of-contract lawsuit, which was filed in U.S. District Court in St. Louis Monday. Since 2004, CitiMortgage has purchased 4,790 loans from Chicago Bancorp, which was once one of the largest privately held retail mortgage banks in the country before it was dissolved in 2012, according to court documents. Eighteen loans Chicago Bancorp sold to CitiMortgage over the last decade contained inaccurate information or material misrepresentations that included misrepresenting a borrower’s income, employment or debt, according to the lawsuit. The new lawsuit isn’t the first time the parties have litigated over home loans. CitiMortgage sued Chicago Bancorp, the Calks, the Federal Savings Bank, and National Bancorp Holdings in February 2012 in federal court alleging that 11 loans contained inaccuracies, and CitiMortgage sought more than $2 million in damages in that case.

Auto loans to people with tarnished credit have risen more than 130 percent in the five years since the immediate aftermath of the financial crisis, with roughly one in four new auto loans last year going to borrowers considered subprime, The New York Times Dealbook reported yesterday. The explosive growth is being driven by some of the same dynamics that were at work in subprime mortgages. Just as Wall Street stoked the boom in mortgages, some of the nation’s biggest banks and private-equity firms are feeding the growth in subprime auto loans by investing in lenders and making money available for loans. Many subprime auto loans are bundled into complex bonds and sold as securities by banks to insurance companies, mutual funds and public pension funds. A New York Times examination found that subprime auto loans can come with interest rates that can exceed 23 percent. The loans were typically at least twice the size of the value of the used cars purchased. Such loans can thrust already vulnerable borrowers further into debt, even propelling some into bankruptcy, according to the court records, as well as interviews with borrowers and lawyers in 19 states. The investigation also found dozens of loans that included incorrect information about borrowers’ income and employment, leading people who had lost their jobs, were in bankruptcy or were living on Social Security to qualify for loans that they could never afford.

When customers fell behind on repaying their short-term, small-dollar loans, Ace Cash Express threatened jail time or pressured them into taking out new loans with exorbitant fees to cover the debt, the Washington Post reported today. Ace was so intent on squeezing money out of customers that its training manual included a graphic of a step-by-step loan process that could trap delinquent borrowers in a cycle of debt, the Consumer Financial Protection Bureau said yesterday. Those sorts of abusive debt-collection practices are at the heart of the $10 million settlement the government watchdog reached with Ace, one of the nation’s largest payday lenders. The Irving, Tex.-based company agreed to the deal but denies wrongdoing. Ace must pay $5 million to refund delinquent customers who were subject to illegal collection practices from March 7, 2011 to Sept. 12, 2012. Ace must also pay a $5 million civil penalty and ­­end its abusive tactics, according to the order.

Wells Fargo & Co. lost a bid to throw out a lawsuit by Los Angeles in the city’s renewed effort to hold mortgage lenders liable for record foreclosures during the collapse of the U.S. housing market, Bloomberg News reported yesterday. U.S. District Judge Otis Wright II in Los Angeles, without ruling on the merits of the claims, today said the city’s allegations that the bank targeted minority lenders with “predatory loans” were legally sufficient at this stage to proceed with the case. The second-largest U.S. city separately sued Wells Fargo, Citigroup Inc. and Bank of America Corp. last year, saying the three mortgage lenders engaged in discriminatory practices since at least 2004, placing minority borrowers in loans they couldn’t afford and driving up the number of foreclosures in their neighborhoods.

Two of the largest U.S. consumer debt buyers agreed to drop collections on about $16 million to settle allegations they pursued debtors in violation of New York law, an accord reached as federal regulators prepare to crack down on the growing industry, Bloomberg News reported yesterday. Portfolio Recovery Associates LLC, based in Norfolk, Va., and Sherman Financial Group LLC also agreed to pay a combined $475,000 in penalties, New York Attorney General Eric Schneiderman said yesterday. The firms, which buy mostly unpaid credit card debt at discounted prices and then get court judgments on the defaults, broke New York law by trying to collect obligations that were too old, the state said.

A U.S. court on Friday ordered North Carolina's Four Oaks Bank to pay a penalty of $1.2 million over claims that it failed to protect consumers' bank accounts in a win for federal prosecutors investigating banks doing business with payday lenders, Reuters reported on Monday. The civil penalty was the result of a complaint filed in January in U.S. District Court in eastern North Carolina that said the bank had been "deliberately ignorant" when dealing with merchants who were defrauding customers. A settlement, including the payment, was proposed when the complaint was filed. The bank said in January that as part of the deal it did not admit to the allegations or to any liability. In their complaint, U.S. prosecutors alleged that Four Oaks Bank allowed a privately owned third-party payment processor in Texas to illegally process around $2.4 billion in return for more than $850,000 in fees.