The Ottumwa Courier

AP National

June 25, 2014

US weighs lawsuits on alleged insurance kickbacks

WASHINGTON (AP) — The government is considering whether to sue banks and other mortgage servicers to recover its losses from alleged insurance kickbacks that may have cost government-controlled mortgage giants Fannie Mae and Freddie Mac hundreds of millions of dollars, according to an internal report.

The Federal Housing Finance Agency, which is responsible for guarding Fannie and Freddie's finances, told its inspector general's office that it will consider filing the lawsuits and will make a formal decision over the next year.

Fannie Mae and Freddie Mac, which have been under the FHFA's conservatorship since 2008, lost an estimated $168 million from the fees in 2012 alone, according to the report by the FHFA's inspector general. The FHFA didn't accept the inspector general's estimate of damages, but the agency's official response to the report said it "does not object" to the recommendation that it consider suing.

Banks and other mortgage servicers that might be subject to such lawsuits did not immediately respond to phone calls and email messages seeking comment on the threat of litigation.

Though the FHFA barred banks and other mortgage servicers from collecting payments from insurers on June 1, the agency does not normally discuss prospective litigation and has not previously indicated that it might consider suing over past misbehavior.

Should the FHFA decide in favor of such litigation, the lawsuits could reopen a controversy over how the country's biggest banks profited from what is known as "force-placed insurance," a high-cost version of property insurance that protects the homes of uninsured borrowers. Typically purchased by banks when a borrower falls behind on mortgage and insurance payments, force-placed insurance ballooned into a $1 billion-a-year industry after the 2008 housing bust.

According to a 2012 investigation by New York's Department of Financial Services and a slew of private lawsuits, large banks and insurers colluded to inflate the price of force-placed insurance, splitting the profits. Insurers paid banks for referring business. Struggling homeowners and mortgage investors like Fannie Mae and Freddie Mac bore the cost in the form of higher insurance premiums, often many times the price of normal homeowners insurance.

Text Only
AP National
  • State Dept: 'No American is proud' of CIA tactics WASHINGTON (AP) — The State Department has endorsed the broad conclusions of a harshly critical Senate report on the CIA's interrogation and detention practices after the 9/11 attacks, a report that accuses the agency of brutally treating terror susp

    July 31, 2014

  • GOP: Lerner emails show bias against conservatives WASHINGTON (AP) — Congressional investigators say this is why they want all of Lois Lerner's emails. Newly released emails show the former IRS official referring to some right-wing Republicans as "crazies" and more, a revelation that is fueling GOP c

    July 31, 2014

  • Suing Obama: GOP-led House gives the go-ahead WASHINGTON (AP) — A sharply divided House approved a Republican plan Wednesday to launch a campaign-season lawsuit against President Barack Obama, accusing him of exceeding the bounds of his constitutional authority. Obama and other Democrats derided

    July 31, 2014

  • As US job market strengthens, many don't feel it WASHINGTON (AP) — The U.S. unemployment rate has plunged since the start of last year to a five-year low of 6.1 percent. And the July jobs report being released Friday will likely show a sixth straight month of healthy 200,000-plus gains. Yet for Do

    July 31, 2014

  • Senate likely to come up short on border bill WASHINGTON (AP) — A bill to deal with the immigration surge at the border appears headed for procedural defeat in the Senate as lawmakers trade blame over their inaction on the crisis. Days ahead of Congress' five-week summer recess, Senate Democrats

    July 30, 2014

  • House set to take up $17B VA overhaul bill WASHINGTON (AP) — With a new Veterans Affairs secretary in place and an August recess looming, Congress is likely to move quickly to approve a compromise bill to refurbish the VA and improve veterans' health care. The House could vote on the $17 bill

    July 30, 2014

  • Trafficking bust reveals worries over missing kids WASHINGTON (AP) — When FBI agents and police officers fanned out across the country last month in a weeklong effort to rescue child sex trafficking victims, they pulled minors as young as 11 from hotel rooms, truck stops and homes. Among the 168 juve

    July 30, 2014

  • The man responsible for Hilton's grand turnaround McLEAN, Va. (AP) — Nearly every weekend, Chris Nassetta is cooking in his family's oversized kitchen, outfitted with two commercial-grade refrigerators, three sinks and a deep fryer. These aren't small meals. Between his wife, six daughters, friends,

    July 30, 2014

  • What's a group selfie? Usie (pronounced uss-ee) NEW YORK (AP) — What do you call a group selfie? An usie, of course! As in "us." Pronounced uss-ee, rhymes with fussy. "Usies are a growing trend that I think have far more social value than selfies," said Michal Ann Strahilevitz, a professor of mark

    July 30, 2014

  • With Israel at war, US lawmakers give full support WASHINGTON (AP) — As the war in Gaza escalates, U.S. lawmakers are pressing the Obama administration to take no action that puts pressure on Israel to halt its military campaign against Hamas. Many even have criticized the administration's effort to

    July 29, 2014

Obituaries
Record
Facebook
AP National