Women In Housing-2015

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Th e M Rep o RT | 49 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t Department ORIGINATION the latest abacus Bank acquitted of all charges in mortgage Fraud case The small communiTy bank in new york was accused of falsifying residenTial morTgage loan documenTs and Then selling The ineligible loans To fannie mae. NEW YORK // Law360's John Kennedy reported a New York state jury found Abacus Federal Savings Bank not guilty of resi- dential mortgage fraud, falsifying business records, and grand lar- ceny charges in June, a spokes- woman for Manhattan District Attorney Cyrus R. Vance, Jr.'s of- fice confirmed to the site. James C. McKinley, Jr. at the New York Times also reported the jury rejected the Manhattan district attorney's attempt to prove the bank systematically lied for years to Fannie Mae about the qualifi- cations of its mortgage applicants in the four-month trial. Abacus is a small bank that mostly serves New York City's Chinese community, provid- ing mortgages to many recent immigrants who live in a cash economy and have hidden assets, according to the bank. The bank has about $300 million in assets and is headquartered on Bowery Street in Chinatown. Law360 reported Yiu Wah Wong, the bank's chief credit officer, VP, and underwriting supervisor, and Wai Hung "Raymond" Tam, the loan origination supervisor, were both cleared of about 80 counts each. A number of former bank em- ployees waived their indictment and admitted their guilt and connection with the case. "Eight people have publicly accepted criminal responsibility for their roles in this conspiracy by pleading guilty to crimes they committed while employed in Abacus Bank's loan department," Joan Vollero, spokeswoman for Vance's office, said in a state- ment to Law 360. "While today's verdict is disappointing, we are confident that as a result of this prosecution and enhanced supervision by the Office of the Comptroller of the Currency, the fraud perpetrated within the loan origination department has been terminated." Vollero said the case began in 2010 with a complaint by an Abacus borrower to the Fifth Precinct, Law360 reported. She said the ensuing grand jury investigation revealed widespread fraud, and when confronted with loan after loan with allegedly falsified paperwork, the grand jury voted to indict the bank and its former employees in 2012. The investigation allegedly showed the defendants falsified residential mortgage documents between May 2005 and February 2010 so they could earn com- missions and fees by ensuring otherwise unqualified borrowers would receive loans, which Abacus then sold to Fannie Mae as part of an ongoing agreement, Law 360 reported. The New York Times reported prosecutors held on to the argu- ment that Fannie Mae had been sold mortgages based on falsified documents, likening what the bank had done to a merchant who sells someone a product that does not meet the custom- er's stated requirements. "Fannie Mae is the vic- tim in this case," said Rachel Hochhauser, the lead prosecutor during her summation on May 20, the New York Times reported. "They are the victim because it was a crime to misrepresent material facts to Fannie Mae and thereby induce Fannie Mae to give the bank their money." The bank's founder, Thomas Sung, told the New York Times the office of the district attorney, Cyrus R. Vance, Jr., persecuted a community bank with a mis- guided prosecution. He also mentioned legal bills had drained his family's resources, cost- ing more than $10 million, and restricted the bank's business for three years. "This entire wrongful prosecu- tion has exhausted a small com- munity bank such as ours," Sung told the New York Times. "This is a gross injustice, not only to a small bank, but is casting a shadow on our community, that this com- munity somehow condones or conducts illegal activity. This is totally prejudicial and incorrect." cFPB investigates mortgage rate compression tool bankraTe agreed To a poTenTial $15 million seTTlemenT , buT a final seTTlemenT has noT yeT been reached. FLORIDA // The Consumer Financial Protection Bureau (CFPB) is investigating the mortgage rate comparison tool on Bankrate, which is headquartered in West Palm Beach, Florida, discussed the CFPB investigation in a recent Securities and Exchange Commission (SEC) filing. The investigation will exam- ine whether accounting entries may have improperly impacted the company's reported results, including relative to market expectations at that time. "We have been responding to ongoing investigations conducted by the staff of the SEC and by the DOJ concerning our financial reporting over various periods of time," Bankrate stated in the fil- ing. "These matters have required and continue to require us to expend substantial management time and incur significant legal and other expenses. We are at- tempting to resolve these matters and the Company has agreed to the terms of a potential settlement of the SEC investigation with respect to the Company that the SEC enforcement staff has indi- cated it is prepared to recommend to the Commission." Bankrate said the CFPB is- sued Civil Investigate Demands to the company and its em- ployees, according to the filing. The CFPB requested Bankrate provide unmentioned documents and answer questions related to the quality control process for determining mortgage rate tables. The Bureau also made note of potential claims it may use against the company in the event of a lawsuit. According to the filing, Bankrate agreed to the terms of a potential settlement of the investigation. The proposed settlement is subject to acceptance and autho- rization by the commission and would require the company to pay a $15 million penalty, among other things. No terms of the settlement have been approved as of now, so there is no guarantee the SEC investigation will be successful, the settlement amount will be as anticipated, or the reserve with respect thereto will be sufficient. "We are unable to predict when the CFPB investigation will be completed or the final outcome of the investigation, and cannot presently estimate the amount of loss, if any, that would result from an adverse resolution of this matter," Bankrate said. ORIGINATION local eDition

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