After reaching billion-dollar settlements with large banks such as JPMorgan Chase and Bank of America, U.S. housing officials are focusing on smaller lenders and servicers. Government agencies are specifically looking at whether several lenders submitted to the Federal Housing Administration (FHA) loans that fell short of underwriting standards.
The probes are part of ongoing civil probes detailed in banks' public filings. In recent months, mid-size players such as Fifth Third Bancorp and SunTrust Banks have disclosed federal investigations related to the origination and servicing of home loans. Banks such as U.S. Bancorp and Capital One Financial Corp. also have disclosed details of queries related to practices that include mortgage servicing and loan securitization.
The examinations illustrate how banks of all sizes are coming under increased scrutiny for their behavior during the housing bubble and the financial crisis. Recouping money from more lenders could help stabilize the FHA's finances. The probes involve officials at the Department of Housing and Urban Development (HUD), the department's inspector-general office, and the Justice Department.