InfoBytes, April 29,2011 - Weekly In-depth review of news & developments in the financial services industry

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Topics In This Issue

• Federal Issues

• Courts

• Firm News

• Miscellany

• Mortgages

• Banking

• Litigation

• Criminal Enforcement Action

Federal Issues

FTC Returns $1.5 Million to Hispanic Consumers from Mortgage Lender Charged with Discrimination. On April 25, the Federal Trade Commission (FTC) announced that, in accordance with the settlement of a lawsuit filed by the FTC against Golden Empire Mortgage, Inc. (Golden Empire) and its owner Howard D. Koostra, the FTC issued 3,162 refund checks to Hispanic borrowers purportedly harmed by discriminatory practices. The lawsuit alleged that Golden Empire and Koostra charged higher prices for mortgage loans to Hispanic borrowers than non-Hispanic white borrowers, and that these price disparities could not be explained by applicants’ credit characteristics or underwriting risk. A settlement order imposing a $5.5 million judgment was suspended when the defendants paid $1.5 million for consumer redress. The settlement order (i) bars the defendants from discriminating on the basis of national origin in credit transactions, and (ii) requires Golden Empire to establish and maintain a policy that restricts loan originators’ pricing discretion, a fair lending monitoring program, a program to ensure the accuracy and completeness of its data, and employee training programs. For a copy of the press release, please see http://www.ftc.gov/opa/2011/04/goldenempire.shtm.

HUD Offers Guidance on RESPA Tolerance Violations, Credit Report Charges, and Tax Transcript Fees. Recently, the U.S. Department of Housing and Urban Development (HUD) published its April issue of RESPA Roundup, providing guidance on RESPA tolerance violations, credit report charges, and tax transcript fees. With respect to RESPA tolerance violations, HUD clarified that curing a tolerance violation on Lines 801 and/or 802 of a HUD-1 settlement statement may also correct a corresponding tolerance violation on Line 803 as long as the settlement agent provides a revised settlement statement to the borrower, the lender, and, as appropriate, the seller. Additionally, if a loan originator fails to provide a consumer with a good faith estimate (GFE), the settlement agent may cure any resulting tolerance violations by reimbursing the borrower the amount by which the tolerance was exceeded.

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