news flash
AUGUST 2010
COLORADO MORTGAGE PROFESSIONAL MAGAZINE
NationalMortgageProfessional.com
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idential mortgage loan originators employed by agency-regulated institutions and requirements for these institutions, including the adoption of policies and procedures to ensure compliance with the SAFE Act and final rules. As required by the SAFE Act, the final rules also require that each residential mortgage loan originator obtain a unique identifier through the registry that will remain with that residential mortgage loan originator, regardless of changes in employment. This will enable consumers to easily access employment and other background information about registered mortgage loan originators from the registry. Under the final rules, registered mortgage loan originators and agency-regulated institutions must provide these unique identifiers to consumers. The final rules take effect on Oct. 1, 2010. The agencies anticipate that the registry could begin accepting federal registrations as early as Jan. 28, 2011. Employees of agency-regulated institutions must not register until the agencies instruct them to do so. The agencies will provide an advance announcement of the date when the registry will begin accepting federal registrations, and agency-regulated institutions and their applicable employees will have
180 days from that date to comply with the initial registration requirements. For more information, visit www.federalreserve.gov.
can withdraw a lender’s FHA approval so that the lender cannot participate in FHA programs. In less serious cases, the Board enters into settlement agreements with lenders to bring them into compliance. The Board can also impose civil money penalties, probation, suspension, and issue letters of reprimand. For more information, visit www.hud.gov.
Citigroup to pay SEC’s $75 million penalty for misleading investors on The Federal Housing sub-prime loans
FHA’s Mortgagee Review Board fines hundreds of lenders for violations
Administration’s Mortgagee Review Board (MRB) has published a notice in the Federal Register to announce dozens of administrative actions against FHAapproved lenders who failed to meet its requirements. This year alone, the MRB took nearly 1,500 administrative sanctions against lenders, including reprimands, probations, suspensions, withdrawals of approval, and civil money penalties. “Lenders should know by now that FHA will not tolerate fraudulent or predatory lending practices,” said FHA Commissioner David H. Stevens. “Any FHA-approved lender that does business with us must follow our standards. If we determine that our partners are not playing by the rules, we will take action—it’s that simple.” FHA’s Mortgagee Review Board sanctions FHA-approved lenders for violations of the agency’s program requirements. For serious violations, the Board
The Securities and Exchange Commission (SEC) has charged Citigroup with misleading investors about the company’s exposure to sub-prime mortgage-related assets. The SEC also charged one current and one former executive for their roles in causing Citigroup to make the misleading statements in an SEC filing. The SEC alleges that, in response to intense investor interest on the topic, Citigroup repeatedly made misleading statements in earnings calls and public filings about the extent of its holdings of assets backed by sub-prime mortgages. Between July and mid-October 2007, Citigroup represented that subprime exposure in its investment banking unit was $13 billion or less, when in fact it was more than $50 billion. “Even as late as fall 2007, as the mortgage market was rapidly deteriorating, Citigroup boasted of superior risk management skills in reducing its subprime exposure to approximately
$13 billion. In fact, billions more in CDO and other subprime exposure sat on its books undisclosed to investors,” said Robert Khuzami, director of the SEC’s Division of Enforcement. “The rules of financial disclosure are simple—if you choose to speak, speak in full and not in half-truths.” Citigroup and the two executives have agreed to settle the SEC’s charges. Citigroup agreed to pay a $75 million penalty. Former chief financial officer Gary Crittenden agreed to pay $100,000, and former head of investor relations Arthur Tildesley Jr., (currently the head of cross marketing at Citigroup) agreed to pay $80,000. According to the SEC’s complaint, filed in U.S. District Court for the District of Columbia, Citigroup represented in earnings calls and public filings from July 20 to Oct. 15, 2007, that its investment bank’s sub-prime exposure was $13 billion or less and had declined over the course of 2007. However, the $13 billion figure reported by Citigroup omitted two categories of sub-prime-backed assets: “super senior” tranches of collateralized debt obligations (CDOs) and “liquidity puts.” Citigroup had more than $40 billion of additional sub-prime exposure in these categories, which it didn’t disclose until November 2007 after a decline in their value. The SEC’s complaint alleges that as early as April 2007, Citigroup’s senior continued on page 17
Mortgage Brokers and Loan Originators
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