July 2012

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THE LATEST SERVICING T Fraud Task Force Issues Call A gage-backed securities miscon- duct recently went live with a new website for whistleblowers. The Residential Mortgage- Backed Securities (RMBS) Working Group established the online portal for those willing to air grievances about miscon- duct in the packaging and sale of mortgages into securities at financial institutions. "The RMBS website is a new task force created by the Obama adminis- tration to crack down on residential mort- Associate Attorney General Tony West said in a statement. "Although the working group and its members have done a tremendous amount of investigative work already—including having is- sued more than 25 civil subpoenas— we know that hearing from insiders is particularly valuable, call to those insiders who know about fraud that occurred in the RMBS market, who know it's time to expose that fraud, and who want to help us hold ac- countable those individuals and institutions who broke the law in pursuit of bigger paydays," acting 50 | THE M REPORT of people who worked in the RMBS market who acted respon- sibly but who also may have witnessed greed and miscon- duct that crossed the legal line and created havoc for investors, homeowners, and our economy. We want to hear from them." The Justice Department He added: "There are scores launched the RMBS Working Group earlier this year with the aim to look into allegations of widespread misconduct in the lead-up to the financial crisis. " West said. to Whistleblowers The RMBS Working Group debuts a new website targeting would-be whistleblowers. proach to RMBS investiga- tions is systematic and smart: cross-agency teams comprised of experienced prosecutors and investigators utilizing market experts and risk-based criteria to triage transactions for review, and bringing to bear the entire palette range of state and federal legal theories and remedies," co-chair and Securities and Exchange Commission (SEC) enforcement director Robert Khuzami said in the statement. Other participating agencies include the FBI, HUD, SEC, office of the New York state at- torney general, and the office of inspector general at the Federal Housing Finance Agency. This includes finding evidentiary connections between existing cases across the United States. "The working group's ap- of Quicken Loans MAKING A FINAL RULING IN THE COMPANY'S ONGOING RESPA LAWSUIT, THE SUPREME COURT DELIVERS A UNANIMOUS DECISION. High Court Decides in Favor from splitting settlement fees with third parties. The decision upholds an he Supreme Court ruled unanimously in favor of Quicken Loans, Inc., in a case that bars lenders interpretation of the Real Estate Settlement Procedures Act (RESPA) that gives lenders leeway when it comes to charging fees. It rejects a longstanding HUD policy that interpreted the law to include a flat ban on unearned fees. Writing for the high court, Justice Antonin Scalia said that plaintiffs "must demonstrate that a charge for settlement services was divided between two or more persons" to establish that a lender violated RESPA. The decision ends a nearly four-year suit against the Detroit- based lender. The case began in 2008 when three Louisiana families filed separate suits against Quicken Loans. The plaintiffs argued the lender billed them for origination discount fees without reducing interest rates. The suits worked their way rounded previous guidance issued by HUD supporting the view that the legal framework prohibits lenders from charging unearned fees. The court wrote that through three lower courts, including a U.S. Fifth Circuit Court of Appeals, whose dis- agreement with past decisions helped land the case before the Supreme Court. Much of the contention sur- the proper interpretation is "manifestly inconsistent with the statute HUD purported to construe," arguing that it "would make no sense if Congress had already resolved" any issues with the law. SECONDARY MARKET ANALYTICS SERVICING ORIGINATION

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