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Federal investigators zero in on smaller lenders
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Federal investigators allegedly plan on shifting their focus to some of the nation’s smaller lenders over potential poor lending practices that contributed to the housing crash now that legal disputes concerning similar issues have been settled with larger banks such as J.P. Morgan and Bank of America.
The nature of the investigations is said to revolve around banks who pawned off mortgage loans to the Federal Housing Administration (FHA) — the largest insurer of mortgages in the world — that did not conform to acceptable underwriting standards, an unnamed government official told The Wall Street Journal.
While no allegations of wrongdoing have been made public at this juncture, officials at smaller banks such as Fifth Third Bancorp, SunTrust Banks, Regions Financial Corp., U.S. Bancorp and Capital One Financial Corp. have already acknowledged investigations in recent months that focused on their past mortgage origination, loan servicing and packaging of loans into securities.
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