9 MORTGAGE ORIGINATION + SERVICING Goodwin tracked 49 federal and state enforcement actions related to mortgages in 2017. This matches the mortgage related actions in 2016, but remains a significant decrease from the 68 actions Goodwin tracked in 2015. The trend over the past two years suggests that actions arising directly from the financial crisis are dwindling, if not nearly extinguished, and also may be attributable to a new equilibrium between the mortgage industry and federal regulatory and enforcement agencies. The DOJ and U.S. Department of Housing and Urban Development (HUD) remained the most active federal agencies, initiating roughly half of the enforcement actions in 2017, although the CFPB remained a key player as well. State attorneys general combined to initiate one fifth of actions in 2017. The attorneys general of Massachusetts and New York remained particularly active, having brought eleven (11) and nine (9) actions, respectively, over the past three years. The areas enforcers targeted in 2017 include alleged kickback schemes, Federal Housing Administration (FHA)-insured loans, discriminatory lending, mortgage modification and foreclosure relief services, and deceptive advertising. Enforcement agencies predicated these actions on a variety of statutes, including the FCA, Fair Housing Act, the Consumer Financial Protection Act (CFPA), and state consumer protection statutes. And enforcers secured civil money penalties and consumer relief in total of approximately $864 million (ranging from $5,000 to over $300 million), a drastic reduction from the $3.6 billion agencies secured in 2016 (ranging from $25,000 to over $1.2 billion). KEY TRENDS The DOJ continued to use the FCA to pursue national banks and non-bank lenders, alleging that during and after the financial crisis they recklessly or knowingly violated government guidelines when they underwrote FHA-insured loans. In 2016, DOJ secured 13 separate FCA settlements, and this past year 5 more lenders entered settlements with DOJ or HUD concerning FHA-insured loans. DOJ and HUD also continued their aggressive approach to policing discriminatory lending practices, such as redlining and discretionary pricing policies. While some of these actions netted significant recoveries, such as JPMorgan Chase Bank agreeing to pay $50 million over its discretionary pricing practices, most of these actions targeted state or regional lenders or insurers for “redlining” of minority neighborhoods or discriminating against individual loan applicants, resulting in small recoveries. As Goodwin forecasted in 2016’s year-in-review, mortgage servicing became a focal point of the CFPB’s enforcement activity in 2017. According to the CFPB’s monthly complaint spotlight from January, mortgages continue to be the second most complained about topic (24%), and the vast majority of For more information, please visit www.lenderlawwatch.com or www.enforcementwatch.com