Mortgage Insurer Catches Heat On Refinancing

A group of Senate Democrats is criticizing the mortgage-insurance unit of AIG, accusing the company of putting up obstacles that make it harder for homeowners to refinance their home loans.

BOA Settles Gender Discrimination Suit

Bank of America (BOA) has settled
accusations by the Department of Housing and Urban Development (HUD) that one
of its California branches had discriminated against a woman on maternity
leave
.  This is the second settlement of
such a suit against a mortgage related entity in a month.

According to a statement released by
HUD, BOA has agreed to pay $161,180 to settle allegations that, after offering
her a loan and receiving all of the necessary documentation, it refused to
finance the mortgage loan of an Irvine California woman even though she was
receiving full pay and benefits while on maternity leave.  When the bank did approve her loan two months
later it was at a rate 25 basis points higher than originally promised. Discriminating
against a woman who is pregnant or on maternity leave is a violation of the
Fair Housing Act’s prohibition against sex and family status discrimination.

In May Mortgage Guaranty Insurance
Corporation (MGIC), the nation’s largest provider of private mortgage
insurance, settled a similar complaint with HUD over its  policy that required women on maternity leave
to return to work before the company would insure their mortgages even when
those women had a guaranteed right to return to work.  MGIC agreed to pay a $38,750 civil penalty
and to establish a $511,250 fund to compensate 70 individuals who had been
refused coverage.  

“The
Fair Housing Act prohibits lenders from denying home loans to women because
they are pregnant or on maternity leave,” said John Trasviña, HUD Assistant
Secretary for Fair Housing and Equal Opportunity. “Today’s settlement follows
HUD actions involving other lenders across the country which we will continue
until maternity leave discrimination is eliminated.”

A Bank of America official said: “We
regret our treatment of the applicant. We take our Fair Lending
responsibilities very seriously and will work with HUD to ensure our customers
on maternity leave are treated appropriately during the mortgage application
process.”

…(read more)

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U.S. Agency to Sell More Troubled Home Loans

The Federal Housing Administration, struggling to manage a growing glut of delinquent home mortgages, plans to ramp up sales of the nonperforming loans to investors.

Refinancing Effort Grows, But Levels Still Low for Most ‘Under Water’

The number of homeowners who have refinanced their home loans under a revamped federal program for those with sunken property values is rising, but the effort is just starting to reach the most severely “underwater” borrowers.

Banks Take More Hits on Bad Loans

A problem that bankers hoped was behind them—rising costs to repurchase soured home loans they previously sold to the government-backed mortgage investors Fannie Mae and Freddie Mac—has instead bitten back with a vengeance.