A little too Late…crash happened! HUD reconsiders RESPA rule on incentives

Now if “steering” was involved…

WASHINGTON – June 4, 2010 – The U.S. Department of Housing and Urban Development (HUD) is taking a closer look at the Real Estate Settlement Procedures Act’s (RESPA) prohibition against the “required use” of affiliated settlement service providers. DinSFLA: They need to take a closer look if these were part of “Appraisal Fraud” & “Illegal Kickbacks”.

It violates RESPA if a consumer is required to use a particular mortgage lender, title company or other settlement service provider that’s affiliated with another business in their mortgage transaction. However, it’s less clear whether it’s a RESPA violation if it is offered as a discount or other incentive to steer them to a lender, title company, etc. DinSFLA: COERCION or not COERCE is the Question! I wonder what they would think of the Mills using their own title companies to close on their foreclosures? Any violations?

HUD is currently trying to determine if incentives violate the “required use” requirement. As part of the process, HUD published a notice about the issue and is seeking public comment.

HUD took the step because it has received a number of consumer complaints, many of which focused on a home builder that might reduce the cost of a home (by adding free construction upgrades or by discounting the home price) if the homebuyer uses the developer or builder’s affiliated mortgage lender. In some cases, the incentives may not represent true discounts if the homebuyers ultimately pay more in total loan costs.

According to HUD, consumers also say that the timing of the contract with the builder precludes them from shopping around, and the builder’s lender can then charge higher settlement costs or interest rates not competitive with non-affiliated lenders. HUD says that the steering of clients ” effectively violates” the “required use” ban in RESPA.

“It is our intent to keep an open mind on how to approach this vexing question over what is, and what is not, ‘required use,'” says David Stevens, HUD’s Assistant Secretary for Housing/Federal Housing Commissioner. “Clearly, consumers are complaining that they are being presented offers they believe they can’t refuse, and are essentially being required to use certain affiliated service providers.”

HUD’s current definition of “required use” reads:

“Required use means a situation in which a person must use a particular provider of a settlement service in order to have access to some distinct service or property, and the person will pay for the settlement service of the particular provider or will pay a charge attributable, in whole or in part, to the settlement service. However, the offering of a package or (combination of settlement services) or the offering of discounts or rebates to consumers for the purchase of multiple settlement services does not constitute a required use. Any package or discount must be optional to the purchaser. The discount must be a true discount below the prices that are otherwise generally available, and must not be made up by higher costs elsewhere in the settlement process.”

HUD’s call for comments is published in the Federal Register. To view the document (PDF format), go to:http://edocket.access.gpo.gov/2010/pdf/2010-13350.pdf

Comments must refer to the docket number and title:

Docket No. FR–5352–A–01 RIN 2502–A178 Real Estate Settlement Procedures Act (RESPA): Strengthening and Clarifying RESPA’s “Required Use” Prohibition Advance Notice of Proposed Rulemaking.

Comment due date: Sept. 1, 2010.

HUD strongly encourages people to submit comments electronically through the Federal eRulemaking Portal atwww.regulations.gov.

Comments can also be mailed to:

ANPR to the Regulations Division Office of General Counsel Department of Housing and Urban Development

451 7th Street, SW. Room 10276

Washington, DC 20410–0500

No FAX comments are accepted.

© 2010 Florida Realtors®

RELATED STORY:

ARE FORECLOSURE MILLS Coercing Buyers for BANK OWNED homes? ARE ALL THE MILLS?

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Banks Have Recognized 60% of Expected Loan Charge-Offs: Moody’s

Gee, and here I thought that the Federal Reserve bought $1.4-$2 *trillion* of them! Let alone Lehman and its 50 billion in subprime mortgages that it “hid” (and what about all the other TARP/Federal Reserve member banks??)

BY: CARRIE BAY 6/3/2010 DSNEWS

n its latest quarterly report on credit conditions of the U.S. banking system, Moody’s Investors Service says banks’ asset quality issues are “past the peak” butcharge-offs and non-performers continue to eat away at profitability and sheer fundamentals.

Based on Moody’s market data, banks’ non-performing loans stood at 5.0 percent of total loan assets at March 31, 2010.

Moody’s says U.S. rated banks have already charged off or written-down $436 billion of loans in 2008, 2009, and the first quarter of 2010. That leaves another $307 billion to reach the rating agency’s full estimate of $744 billion of loan charge-offs from 2008 through 2011.

In aggregate, the banks have recognized 60 percent of Moody’s estimated total charge-offs and 65 percent of estimated residential mortgage losses, but only 45 percent of projected commercial real estate losses.

In the first quarter of this year, the banking industry’s collective annualized net charge-offs came to 3.3 percent of loans, versus 3.6 percent of loans in the fourth quarter

of 2009, Moody’s said. Despite two consecutive quarters of improvement in charge-offs, the ratings agency notes that the figures still remain near historic highs, dating back to the Great Depression.

According to Moody’s analysts, the decline in aggregate charge-offs was driven by commercial real estate improvement, which “we believe is likely to reverse in coming quarters,” they said in the report. A similar commercial real estate decline was experienced in the first quarter of 2009 before charge-offs accelerated through the rest of the year.

“The return to ‘normal’ levels of asset quality will be slow and uneven over the next 12 to 18 months,” said Moody’sSVP Craig Emrick.

But Emrick added that “Although remaining losses are sizable, they are beginning to look manageable in relation to bank’s loan loss allowances and tangible common equity.”

U.S. banks’ allowances for loan losses stood at $221 billion as of March 31, 2010, which is equal to 4.1 percent of loans, Moody’s reported. Although this can be used to offset a sizable portion of remaining charge-offs, banks will still require substantial provisions in 2010, the agency said.

Moody’s says its negative outlook for the U.S. banking system is driven by asset quality concerns and effects on profitability and capital. The agency’s ratings outlook is also influenced by the potential for a worse-than-expected macroeconomic environment, Moody’s said.

“More severe macroeconomic developments, the probability of which we place at 10 percent to 20 percent, would significantly strain U.S. bank fundamental credit quality,” Moody’s analysts wrote in their report.

LENDER PROCESSING SERVICES (LPS) BUYING UP HOMES AT AUCTIONS? Take a look to see if this address is on your documents!

Lender Processing Svc
(651) 234-3500
1270 Northland Dr Ste 200
Mendota Heights, MN 55120

Take a good look at the Buyer and the address in the document below. I investigated a little more and found multiple addresses below in forums and placed them here for you to see.

If you take a look at the Buyer in this Title the “Certificate Of Title” was issued under IndyMac Federal Bank…HUH? IndyMac FB does not exist…This seriously needs to be investigated! How are these being sold under failed banks?? Where does the money go after the auction and from the new sale?

Everyone needs to look at their documentation and look carefully for this address. If you have them under this address please forward them to StopForeclosureFraud@gmail.com.

OTHERS LISTED WITH 1270 Northland Dr. Ste 200 Mendota Heights, MN 55120

Fidelity National Foreclosure Solutions 1270 Northland Drive Suite 200.Mendota HeightsMN 55120 · (651)234-3500

Foreclosure & Bankruptcy Services. 1270 Northland Drive, Suite 200, Telephone, (651) 234-3500. Mendota HeightsMN 55120, Fax, (651) 234-3600 

http://www.tampagov.net/CEBAgendas/20071001.pdf

WELLS FARGO BANK NA TRUSTEE
1270 NORTHLAND DR SUITE 200
MENDOTA HEIGHTS, MN 55120
INSPECTOR: Eddie Prieto  274-5545

DEUTSCHE BANK NATIONAL TRUST
1270 NORTHLAND DR STE 200
MENDOTA HEIGHTS, MN 55120
INSPECTOR: RANDEL SMITH 274-5545

http://www.newspapernotice.com/details.aspx?id=1889632
Current Beneficiary: MERS as nominee for Aegis Mortgage Corp Care of / Servicer Aegis Mortgage Corp/Fidelity C/O Fidelity National Foreclosure Solutions 1270 Northland Drive. Suite 200 Mendota Heights, MN 55120

http://www.geodetix.com/ftp/APPRAISAL_INFO_SAMPLE.TXT
BANK ONE NATIONAL ASSN TRUSTEE
1270 NORTHLAND DR STE 200
MENDOTA HEIGHTS MN 55120

http://ao.lackawannacounty.org/details.php?mapno=14204010007

DEUTSCHE BANK NATL TRUST CO
1270 NORTHLAND DR SUITE 200
MENDOTA HEIGHTS, MN 55120

http://www.stpete.org/pdf/vacantandboarded.pdf
WELLS FARGO BANK NA  TRE
1270 NORTHLAND DR STE 200
MENDOTA HEIGHTS                MN
551201176

LONG BEACH MTG LOAN TRUST
1270 NORTHLAND DR STE 20
MENDOTA HEIGHTS                MN
551201156

DEUTSCHE BANK NATL TRUST CO  T
1270 NORTHLAND DR STE 200
MENDOTA HEIGHTS                MN
551201176

http://www.alsb.uscourts.gov/credclaim.pdf
HomEq Servicing Corp.
1270 Northland Dr., #200
Mendota MN
55120-

IndyMac Bank-FSB;The Leader
Mortgage Co.
1270 Northland Drive, Suite 200
Mendota Heights
MN
55120-

Saxon Mortgage; Homecomings
Financial
1270 Northland Dr., #200
Mendota Heights
MN
55120-

http://madison-co.com/elected_offices/tax_assessor/display_parcel.php?pn=082I-29%20-007/02.29&street_name=v
FEDERAL NATIONAL MORTGAGE ASSOC
1270 NORTHLAND DR STE 200
MENDOTA HEIGHTS
MN 55120

http://gis.meridian.mi.us/assessing/details_process.asp?IDValue=33-02-02-06-378-004

JP MORGAN CHASE BANK
1270 NORTHLAND DR STE 200
MENDOTA HEIGHTS
MN  55120http://www.co.bibb.ga.us/TaxBills/NFBill.asp?id=346133

BANK ON E AS TRUSTEE

1270 NORTHLAND DR STE 200
MENDOTA HEIGHTS MN 55120-

http://www2.county.allegheny.pa.us/RealEstate/General.asp?CurrBloLot=0079B00251000000&SearchBloLot=0079B00251000000&SingleResult=True


JP MORGAN CHASE BANK (TRUSTEE)
1270 NORTHLAND DR SUITE 200
SAINT PAUL, MN 55120

http://www.lehighcounty.org/Assessment/puba.cfm?doc=HeroesGrant_form.cfm&pin=640703621999&parnum=1
WELLS FARGO BANK NA
1270 NORTHLAND DR STE 200
MENDOTA HEIGHTS MN, 55120

Contact Matrix and Team Breakdown of FIS Foreclosure Solutions, Inc.
operations for the month of December 2007

Select Portfolio Servicing Inc.
1270 Northland Drive, Ste. 200
Mendota Heights, MN 55120

http://www.dailycourt.com/bankruptcy.php/3:05-bk-39314/
Case #3:2005-bk-39314
Select Portfolio Servicing, Inc.
1270 Northland Drive, Suite 200
Mendota Heights, MN 55120

RELATED STORY:

ARE FORECLOSURE MILLS Coercing Buyers for BANK OWNED homes? ARE ALL THE MILLS?

One Size Fits All Doesn’t Work! MERS/CITIMORTGAGE PreLIMINARY INJUNCTION Dalton V. CitiMortgage Reno, Nevada No. 3:09-CV-534-RCJ (VPC) 2009

“One Size DOES NOT FIT ALL”

This is a case where Plaintiff’s counsel aggressively sought to have all foreclosures stopped due to no standing. He states “Thats why the MERS system tried to be a nationwide system”.

“One Size Fits All Doesn’t Work”

“Cat Out Of the Bag” (Trade Secrets) in CAPITAL ONE, NA v. Forbes, Fla: Dist. Court of Appeal, 2nd Dist. 2010

CAPITAL ONE, N.A., as successor by merger to Chevy Chase Bank, F.S.B., Petitioner,
v.
DOUGLAS R. FORBES, Respondent.

Case No. 2D09-4735.

District Court of Appeal of Florida, Second District.

Opinion filed May 12, 2010.

Carrie Ann Wozniak of Akerman Senterfitt, Orlando, for Petitioner.

Nicole E. Durkin of Deeb & Durkin, P.A., St. Petersburg, for Respondent.

LaROSE, Judge.

Capital One, N.A. (the Bank), seeks a writ of certiorari to quash a protective order that allows the disclosure of trade secrets to Mr. Forbes’s consultants and experts. The Bank also asks us to quash the trial court’s order because it did not sufficiently limit the scope of discovery.

Factual Background

The Bank filed a mortgage foreclosure action against Mr. Forbes. Allegedly, Mr. Forbes breached a construction loan agreement. Mr. Forbes filed a counterclaim alleging breach of contract, anticipatory breach of contract, and fraud in the inducement.

Mr. Forbes requested documents from the Bank. It produced responsive documents except, as relevant here, for requests ten and thirteen:

10. All technical and administrative manuals used in the internal communications system of Lender, or through which Lender policies, practices and procedures were communicated to its bank officers, employees, agents, partners, managers and/or “staff,” effective during the period from January 1, 2006 through the present, including, but not limited to, those manuals relating to construction or developer financing.

. . . .

13. All complaints, claims or protests brought in any judicial forum, arbitration proceeding, or industry dispute resolution forum by Lender clients or third parties against Lender alleging any breach of obligations, terms, conditions, or responsibilities by Lender in the conduct or exercise of its responsibilities and obligations with respect to or arising from engaging in the business of banking within the preceding five (5) years.

The Bank sought a protective order. The Bank argued that its construction-lending manual is a trade secret requiring adequate measures to protect against improper dissemination. There appears to be no dispute that the manual is a trade secret. The Bank also argued that other complaints, claims, or protests made against the Bank in any forum in the past five years were irrelevant, not reasonably calculated to lead to the discovery of any admissible evidence, and intended solely to harass the Bank. See generally, Allstate Ins. Co. v. Boecher, 733 So. 2d 993, 995 (Fla. 1999) (holding that there is an exception to the rule of complete discovery where it may be harassing or embarrassing).

After a hearing, the trial court denied the Bank’s motion as to request 13, except it narrowed the time frame to three years. The trial court concluded that the requested documents “may potentially lead to admissible evidence just based upon the counter plaintiff’s theory of policy written or potentially otherwise as to the lender’s motive to pull out of the project.”

As for the manual, the Bank’s counsel brought the document to the hearing for an in-camera inspection. The trial court did not inspect the materials but accepted counsel’s explanation that the materials contained the Bank’s lending guidelines and practices. The Bank’s counsel argued that the Bank would produce the materials if the trial court entered an adequate confidentiality order. The trial court denied the motion for a protective order, but agreed to grant a “confidentiality agreement between the parties for the protection of [the Bank].”

The trial court asked Mr. Forbes’s counsel to take the Bank’s proposed confidentiality order from the hearing and draft an order satisfactory to both sides. The Bank and Mr. Forbes could not agree. Each submitted a proposed order to the trial court. To center the dispute, we note that Mr. Forbes’s proposed order had no provision requiring consultants, experts, or their employees retained for the litigation to consent to the confidentiality provisions before viewing the manual.

The trial court adopted Mr. Forbes’s proposed order. The order provided that documents marked “Confidential” shall not be disclosed to any persons, except for counsel actively engaged in the litigation along with their employees and staff, parties and employees of the parties, persons with prior knowledge of the documents or the confidential information contained therein, and court officials involved in the litigation. Other relevant portions of the order provide as follows:

3. Plaintiff shall produce the documents requested, however the time period shall be limited to three (3) years prior to the date of this Order.

4. That the documents being produced pursuant to Paragraph 10 of Defendant’s First Request for Production of Documents which are marked “Confidential” by Plaintiff’s counsel shall not be disclosed to any persons, except that such documents may be disclosed or otherwise utilized as follows:

. . . .

(B) Such documents may also be disclosed to persons noticed for depositions during the course of such depositions, including retained outside consultants or experts and their employees retained for the purpose of assisting counsel in the litigation;

. . . .

5. Within 30 days after final conclusion of all aspects of this litigation, stamped confidential documents and all copies of same . . . shall be returned to the party or person which produced such documents or, at the option of the producer, destroyed.

(Emphasis added.)

Certiorari Jurisdiction

We may grant a petition for certiorari “only when the petitioner establishes (1) a departure from the essential requirements of the law, (2) resulting in material injury for the remainder of the trial (3) that cannot be corrected on postjudgment appeal. We examine prongs two and three first to determine our certiorari jurisdiction.” DeLoach v. Aird, 989 So. 2d 652, 654 (Fla. 2d DCA 2007)(citing Parkway Bank v. Ft. Myers Armature Works, Inc., 658 So. 2d 646, 648-49 (Fla. 2d DCA 1995)). If jurisdictional prongs two and three are not fulfilled, then we dismiss the petition rather than deny it. Id.

Analysis

Other Claims Specified in Request 13

The trial court denied, in part, and granted, in part, the Bank’s motion for a protective order as to these materials. The trial court narrowed Mr. Forbes’s request from five years to three years but did not otherwise narrow its breadth.

Discovery allows the parties to find potentially relevant evidence. The conduct of discovery is left to the trial court’s sound discretion. Fla. R. Civ. P. 1.280(b)(1); Friedman v. Heart Inst. of Port St. Lucie, Inc., 863 So. 2d 189, 193 (Fla. 2003). The order on review does not necessarily cause irreparable harm by allowing discovery of what the Bank claims to be irrelevant materials. See Am. Home Assurance Co. v. Vreeland, 973 So. 2d 668, 671 (Fla. 2d DCA 2008) (citingFirst Paradee, Ltd. v. Jones, 828 So. 2d 483, 485 (Fla. 2d DCA 2002)). Thus, certiorari jurisdiction is improper. We dismiss this portion of the Bank’s petition.

Manuals Specified in Request 10

The Bank argues that the trial court departed from the essential requirements of law by requiring the disclosure of trade secrets without providing adequate protective measures. An order requiring disclosure of trade secrets may cause irreparable injury that cannot be corrected on appeal; the disclosure lets the “cat out of the bag.” Id. Here, the trial court did not err. Its order sufficiently protects the Bank. See Allstate Ins. Co. v. Langston, 655 So. 2d 91, 94 (Fla. 1995). The Bank is concerned that experts or consultants retained by Mr. Forbes will misuse the materials. The order does not ignore that concern; only specified individuals may have access to the materials for the stated and limited purposes of assisting counsel in the litigation. No other use is contemplated. Further, the order requires that designated confidential materials, and any copies, be returned or destroyed at the end of the litigation.

Perhaps the order could have been clearer. However, we understand it to limit experts’ and consultants’ access to confidential information. Paragraph 4 of the order provides a blanket protection that documents may not be disclosed to “any person,” with enumerated exceptions. Importantly, the identification of people to whom access is granted is drawn narrowly to include only the parties and their employees, court employees, and outside consultants and experts. As for the consultants and experts, the order allows access only for a limited time and for the limited purposes of assisting counsel in this litigation.[1] The trial court did not depart from the essential requirements of law by entering the order proposed by Mr. Forbes’s counsel. As to this issue, the petition for certiorari is denied.

Dismissed in part; denied in part.

SILBERMAN and CRENSHAW, JJ., Concur.

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DETERMINED.

[1] We do not decide who would be liable should a consultant or expert violate the protective order. See, e.g.,Quinter v. Volkswagen of Am., 676 F.2d 969, 973 (3d Cir. 1982) (holding a nonparty liable for civil contempt where the nonparty had knowledge of the protective order.)