Lawsuits in the mortgage industry are becoming increasingly prevalent as banks are suing lenders and lenders are suing insurers in hopes of recouping losses from the sub-prime meltdown that occurred in 2008. The latest in this serious of suits comes from Bank of America (NYSE: BAC) which recently brought suit against insurer First American Corp (NYSE: FAF).

In the suit, Bank of America claims that First American failed to provide proper title searches on more than 5,500 home equity loans, resulting in $535 million in losses for the lender.

The suit, filed in Charlotte, N.C., alleges that First American relied on borrowers to disclose on information about liens and other issues that would cloud the title on their properties, rather than conducting traditional independent title searches which would demonstrate without a doubt that there are no other competing ownership claims.

“Bank of America had a reasonable expectation to be paid its charge-off amount or unpaid principal balance as the amount of loss in the event of an insured defect under the … policies,” the lawsuit states.

According to several media reports, the title policies were issued under what was called the “QuickClose Program”, which acted as more of a lien protection program rather than full-fledged title insurance.

Lenders, including Bank of America, started to turn to these protection plans because they could be processed more quickly and were less expensive than traditional title insurance.

Charlotte-based Bank of America says that it has had to write off between $1.5 billion and $2 billion in soured home-equity loans each quarter.

This article (Bank of America (NYSE: BAC) Sues First American Insurance Corp (NYSE:FAF)) was originally developed by and is property of American Banking News. Checkout American Banking News for up-to-date banking news and peer to peer lending news.

Fifth Third Bancorp (NYSE: FITB) President Bob James said an in an interview this week with the Charlotte Business Journal that his bank will follow a move made by Bank of America (NYSE: BAC) to stop charging customers overdraft fees.

James said that customers should have choices about whether or not they should pay overdraft fees.

“As I understand the Bank of America change, if you’re in the grocery store with $100 of groceries and you don’t have the money in your bank account, they’re going to decline you. There is no option. That’s going to be pretty embarrassing,” James says.

“What we want to do is offer the customer a choice. You can opt in to a program, and we will honor your debit card even if you don’t have the money, for a fee, because it’s a service we provide. But it will be a choice.”

Last week, Bank of America announced that it would be ending the practice of approving customer debit card purchases when there was no money in their account and charging them a $39.00 overdraft fees. Under Bank of America’s new policy, the megabank will instead be declining customers’ transactions when they have no money in their accounts.

Bank of America will allow also customers to link a savings account or credit card to cover a charge when there is no money in their account.

James said that Fifth Third hasn’t released any specific plans about their plans for their debit cards, but allowing customers to choose will be the “theme” of any coming changes.

This article (Fifth Third Bancorp (NYSE: FITB) May Follow Bank of America (NYSE: BAC) in Ending Overdraft Fees) was originally developed by and is property of American Banking News. Checkout American Banking News for up-to-date banking news and peer to peer lending news.

Citigroup (NYSE: C) is taking moves to expand its consumer lending business as the U.S. economy slowly begins to recover.

The New York-based financial behemoth had originally planned to be scaling back its consumer lending business, specifically mortgages, but a Friday report from Bloomberg said that Citigroup was planning on reversing that stance by increasing its purchases of home mortgage and by keeping more loans on its balance sheet.

According to a statement made by Citigroup made on Friday, a company spokeswoman commented via email that Citigroup is “committed to growing our mortgage business with a focus on quality and long-term sustainability.”

Citibank has “reengineered quality controls to be best in class and are looking to grow the correspondent channel, in a controlled, deliberate manner, with high-quality lenders who provide superior quality loans,” the statement said. It continued, “This expansion is an important step to ensuring the foundation for future success is in place.”

The ailing megabank decided in January 2009 that mortgages were no longer part of its core business and had placed its CitiMortgage unit within its “Citi Holdings” entity, which are businesses that the company plans to sell or wind-down. Since then, Citigroup has still been originating mortgages through its “Citibank” retail banking franchise.

In an interview with Bloomberg, Sanjiv Das, head of Citigroup’s U.S. mortgage business, told Bloomberg that mortgages are a “core” part of Citigroup’s business along with other consumer banking products and that the company will continue to offer mortgages through Citicorp.

“In order to be full-service consumer bank we had to be able to offer mortgages to our customers,” Das said to Bloomberg. “Then, we said let’s now start to rebuild this business.”

This article (Citigroup Taking Moves to Expand Consumer Lending Business (NYSE: C)) was originally developed by and is property of American Banking News. Checkout American Banking News for up-to-date banking news and peer to peer lending news.