While it’s still settling multibillion-dollar tabs tied to the mortgage meltdown, Bank of America continues to face new legal and regulatory pressure. Yesterday, the bank revealed that it is being investigated by federal authorities to see whether it has complied with a program aimed to ease the mortgage-lending process.
In its latest filing with the Securities and Exchange Commission [PDF], BofA writes that, “[T]he Civil Division of the U.S. Attorney’s office for the Eastern District of New York is conducting an investigation concerning our compliance with the requirements of the Federal Housing Administration’s Direct Endorsement Program.”
Under the Direct Endorsement program, mortgage lenders can approve loans that are then insured by the FHA without review. However, if a mortgage defaults and regulators determine that the lender failed to comply with FHA underwriting standards, the government can come after the bank for any losses it experiences.
In 2012, Citi paid $158 million to settle claims related to violations of this program. That same year, the government sued Wells Fargo for allegedly lying about the quality of FHA-insured mortgages. In 2013, Wells attempted to have the case thrown out but could not convince the court to do so.
BofA had previously reached a $1 billion deal with the feds to settle similar claims that Countrywide, which the bank acquired when the housing market collapsed, misled the FHA about the quality of some mortgages. That deal only covers loans made before May 2009.
by Chris Morran via Consumerist
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