Wells Fargo, Ticor settle allegations of false FHA claims
Federal prosecutors in Arizona said they reached a $4.3 million civil settlement with Wells Fargo Bank and Ticor Title Agency of Arizona this month that settles allegations that Wells Fargo submitted false claims to the Federal Housing Administration’s pre-foreclosure sales program.
The program allows homeowners with FHA-backed mortgages to avoid foreclosure in some cases by conducting a short sale. If the sales price is not enough to pay off a loan, lenders submit an insurance claim to the FHA, which pays the lender the balance owing on the loan. The U.S. Attorney for the District of Arizona alleged that Well Fargo Bank submitted more than 70 false claims to the FHA’s pre-foreclosure sales program, and that Ticor Title prepared inaccurate escrow documents. Both companies denied the allegations, but agreed to settlements. Wells Fargo agreed to pay $4.05 million, and Ticor Title agreed to pay $265,370, prosecutors said.
Mortgage insurance policies fall 17% in May
The number of policies issued by private mortgage insurers fell 17.5 percent from April to May, and 47.5 percent from a year ago, an industry association reports. The Mortgage Insurance Companies of America (MICA) said members issued 89,355 insurance policies — typically required when borrowers make less than a 20 percent down payment — in May.
MICA said applications for the month totaled 109,210, down 14.8 percent from April and 47.6 percent from a year ago. Defaults, which surged in April due to a major lender’s changes in reporting policies (see story), were down 8 percent in May, to 67,967. Compared to the same month a year ago, defaults were up 47.8 percent. With 40,687 cures, the ratio of cures to defaults was 59.9 percent, compared with 53.7 percent in April and 65.1 percent a year ago.
The statistics in the report included data from AIG United Guaranty, Genworth Mortgage Insurance Corp., Mortgage Guaranty Insurance Corp., PMI Mortgage Insurance Co., Republic Mortgage Insurance Co. and Triad Guaranty Insurance Corp.
KB Home: Orders up, cancellations down
Although KB Home recorded a $255.9 million net loss in the second quarter, even orders for new homes picked up and the company’s cancelation rate improved dramatically from the previous quarter.
In a regulatory filing, the Los Angeles-based home builder said it was forced to recognize noncash charges of $176.5 million for inventory and joint venture impairments and the abandonment of land option contracts. New-home orders nearly tripled from the first quarter to the second, to 4,200, while the cancellation rate fell to 27 percent, down from 53 percent in the first quarter.
At the end of May, KB Home’s backlog totaled 6,233 homes, down 54 percent from a year ago. The company valued its backlogged inventory at $1.47 billion, down 61 percent from a year ago.
Schwarzenegger sees California recovery in 2009
California Gov. Arnold Schwarzenegger said Sunday that state officials were caught by surprise by the housing downturn, which has put a $600-million-a-month dent in tax revenue but which he expects the state to "grow out of" next year.
Speaking on Meet the Press, Schwarzenegger said he was as "amazed as everyone else" at how quickly the downturn took hold. "I think that everyone was on such a roll and the real estate market always, every year, went up and up and up, and so people started speculating. And, of course, what happened was the housing market was like the dot-com bubble, it was a housing bubble, and it finally — the whole thing collapsed."
Schwarzenegger said that California’s diverse economy, including entertainment, biotechnology, high technology, and agriculture, will help the state recover. "And now we have to just wait until we grow our way out of this situation. And I think that by next year we will grow out of it."
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