April, 2012

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LOCAL EDITION SERVICING It quoted an Inside Mortgage Finance report that rates Aurora as the 19th largest lender for residential mortgages in the United States. BofA Accused of Homebuyer Discrimination GOVERNMENT INITIATES A LAWSUIT AGAINST THE MAJOR FINANCIAL INSTITUTION OVER BORROWER-RELATED ALLEGATIONS. NEW YORK // The federal government recently leveled charges against Bank of America that the mortgage company wrongfully discriminated against three borrowers with disabilities. HUD filed suit under the False Claims Act, alleging that Bank of America requested proof of disability from borrowers and Social Security income informa- tion after denying their qualifica- tions for mortgage loans. The agency led up to the charges with a "secretary-initiat- ed investigation," according to a statement, following an investiga- tion into complaints brought by two borrowers in Michigan and one in Wisconsin. "Holding homebuyers with disabilities to a higher standard just because they rely on dis- ability payments as a source of income is against the law," John Trasviña, HUD assistant secre- tary for fair housing and equal opportunity, said in a statement. He said that mortgage com- panies are able to verify income and eligibility criteria but "may not single out homebuyers with disabilities to delay or deny financing when they are other- wise eligible." Terry Francisco, a spokesman for Bank of America, said in a statement that the three cases brought by HUD "involve in- consistencies between FHA and conventional standards concern- ing underwriting procedures" for disability income awards. "There is no basis to al- lege that Bank of America has engaged in a systemic practice 56 | THE M REPORT Fraud Enforcement Task Force, which will assign the case to a non-discrimination group. FBC Reached Deal with DOJ FLAGSTAR ESTABLISHES AN UNDERWRITING AGREEMENT WITH THE DOJ. MICHIGAN // The Justice Department has reached a deal with Flagstar Bancorp, Inc (FBC). The agency recently announced that the two entities have struck an agreement that pertains to underwriting practices related to loans insured by the Federal Housing Administration (FHA) and for fourth-quarter findings in 2011. Other key aspects of the Justice Department's deal encompass FBC's continued compliance with all FHA and HUD rules, establishment of a $15 million initial payment within 30 business days of the agreement's effective date, conditional obligations to make payments of up to $118 million pending "the occurrence of certain future events," and a comprehensive monitoring period by an independent third party as chosen by FBC and approved by HUD. Commenting on the nature of the agreement, FBC's chairman, president, and CEO, Joseph P. Campanelli, said, "Flagstar Bank is one of the leading originators of discriminating on the basis of disability in connection with mortgage lending," he said. In a sign of the growing authority for working groups, HUD said that it would hand off the investigation to the Justice Department and Federal Financial HUD. FBC will revise its fourth- quarter and full-year financial results for 2011 as per the terms of the transaction. Additionally, FBC will reaffirm its forward-looking statements for 2012, made by the company during its earnings call and servicers of FHA-insured loans, and we remain committed to continuing in that capacity. This agreement with the Department of Justice allows us to move forward and to continue to focus on core operations and on serving our customers." The agreement elaborated on the specific nature of "future events," and such potential instances were described in detail. Related events covered by the deal include allowances for FBC's possible generation of "positive income for a sustained period, such that part or all of its Deferred Tax Asset (DTA) is likely to be realized as evidenced by the reversal of the DTA Valuation Allowance in accordance with US GAAP;" the ability to apply "capital derived from the reversal of the DTA Valuation Allowance in its Tier 1 capital;" and the adjustment of the company's repayment obligation of "$266.7 million in preferred stock held by the Treasury Department under the TARP program, which can now be extinguished or excluded from Tier 1 capital for purposes of calculating the Tier 1 capital ratio." The Justice Department went on to add that, "Upon the occurrence of each of the future events described above, and provided doing so would not violate any banking regulatory requirement or the Office of Comptroller of Currency does not otherwise object, FBC will begin making additional payments provided that (i) each annual payment would be equal to the lesser of $25 million or the portion of the additional payments that remains outstanding after deducting prior payments and (ii) no obligation arises until FBC's call report as filed with the OCC, including any amendments thereto, for the period ending at least six months prior to the making of such additional payments, reflects a minimum Tier 1 capital ratio, after excluding any un- extinguished portion of TARP, of 11 percent (or higher ratio if required by regulators)." SECONDARY MARKET ANALYTICS SERVICING ORIGINATION

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