Legal Issues

Browse articles from all of our Newsletters related to Legal Issues.

December 2, 2016 - Inside FHA/VA Lending

HUD Fears Cycle of Restatements As IG Withholds Opinion Again

The Department of Housing and Urban Development has expressed concern about the inspector general’s decision to withhold its opinion on the results of FY 2016 audits of HUD and Ginnie Mae. In its audit report, the HUD inspector general said it has issued a disclaimer of opinion on HUD’s fiscal years 2016 and 2015 (restated) consolidated financial statements because of the agency’s failure to deliver both statements and their accompanying notes in a timely manner. In addition, there were several unresolved audit matters from past audits that prevented the IG from completing an examination of HUD’s and Ginnie Mae’s accounts and rendering an opinion. These unresolved matters related to a number of things, including the Office of General Counsel’s refusal to sign a management representation letter, HUD’s improper use of budgetary accounting methods, and the $4.2 billion in ...

December 2, 2016 - Inside FHA/VA Lending

Groups Favoring One-Unit Approval, Differ on Owner-Occupancy Rate

Stakeholders voiced support for an FHA proposal to revive the agency’s single-unit approval policy for condominium financing but differed on owner-occupancy requirements. Both items are part of a proposed rule which would give the FHA more wiggle room in formulating its condo rules. The proposed rule’s 60-day comment period ended on Nov. 28. Among other things, the FHA is proposing to reinstate “spot approval” financing on individual units in condo projects that are not currently approved for FHA insurance. The Department of Housing and Urban Development terminated single-unit approvals a few years ago in favor of mandatory condo-project approval. Ultimately, the current approval process proved to be more cumbersome, resulting in many condo projects opting out of FHA. Under the proposed rule, single-unit approvals are limited to a maximum of 20 percent of the units in the ...

December 2, 2016 - Inside FHA/VA Lending

CFPB Issues New Exam Procedures For Reverse Mortgage Servicing

The Consumer Financial Protection Bureau has ditched the antiquated method for assessing servicer compliance with reverse mortgage-servicing rules in favor of new examination procedures. Depending on the scope, each reverse mortgage-servicing exam will include one or more of eight modules covering various facets of reverse mortgage servicing. There are two kinds of reverse mortgages. The FHA, under the Home Equity Conversion Mortgage program, insures most reverse mortgages. As with other FHA mortgage products, it has a maximum loan amount. Some lenders also offer proprietary (non-HECM) reverse mortgages, which are designed generally for borrowers with higher home values and more equity, the CFPB noted. Proprietary reverse mortgages are not federally insured. However, companies that offer them copy the consumer protections found in the HECM program, including ...

December 2, 2016 - Inside MBS & ABS

Courtrooms Attempt to Wrap Up Several MBS Lawsuits Stemming from Financial Crisis

Several pending mortgage lawsuits spawned by the housing crisis are inching closer to closure, including an apparent victory for Bank of America. The Department of Justice let the deadline pass to appeal a ruling from May in which BofA, defending practices of Countrywide Financial, escaped having to pay more than $1 billion in penalties to the Federal Housing Finance Agency. In 2014, a federal judge ordered...

December 2, 2016 - Inside MBS & ABS

DOJ’s MBS Case Against Deutsche Bank Could Be A Conflict of Interest for the Trump Administration

Democrats in the House Financial Services Committee raised concerns last week about how the Department of Justice will handle MBS-related charges against Deutsche Bank with President-elect Donald Trump set to take office. The Democrats called for strong oversight by eight inspectors general involved with regulators of the financial services industry, noting potential conflicts due to Trump’s business interests. “While federal ethics rules require nearly all government employees to recuse themselves from matters that affect their outside financial interests, these rules do not apply...

November 28, 2016 - Inside the CFPB

Election Results May Foster More Aggressive State Enforcement

With the CFPB widely expected to be less aggressive on the enforcement front in the wake of the elections earlier this month, the industry is being warned to be wary of a potentially more activist posture on the part of various state government agencies. Since the elections, “there has been much discussion of how expected changes under a Trump administration are likely to reduce the CFPB’s impact, particularly in the enforcement arena,” Ballard Spahr partner Alan Kaplinsky wrote in a recent online blog post. Little attention, however, has been paid to the implications of the election’s results for the role of state attorneys general and state financial services regulators in enforcing federal and state consumer financial protection laws, he added....

November 28, 2016 - Inside the CFPB

CFPB Files Appeal in High-Stakes, High-Profile Dispute With PHH

With CFPB Director Richard Cordray’s tenure possibly on the line while a pro-business President-elect Donald Trump works on staffing up his incoming administration, the bureau earlier this month filed its highly anticipated appeal to the full U.S. Court of Appeals for the District of Columbia Circuit in its long-running dispute with PHH Corp. Back in mid-October, in PHH Corp. v. CFPB, a three-judge panel of the court nixed the agency’s $109 million penalty against the lender under the Real Estate Settlement Procedures Act, and determined that the CFPB’s leadership structure was unconstitutional because it is run by a sole director who can only be removed for cause. While an appeal by the bureau was widely expected, the issue took on ...

November 25, 2016 - Inside The GSEs

GSE Shareholder Case Attorney Details Pending Litigation

Fairholme Funds, the plaintiff in an ongoing GSE shareholder lawsuit, hosted a conference call late last week and dished on recent developments in the case. “Fannie Mae and Freddie Mac are obligated to protect the capital of all preferred shareholders, not just one of those shareholders, the Obama Treasury,” said Bruce Berkowitz, Fairholme’s CEO. Plaintiffs in Fairholme Funds Inc. v. United States, et al, argue that the U.S. Treasury’s net worth sweep of GSE profits is against the law. “And, really, only those who oppose the dream of American homeownership would attempt to dismantle two publicly traded, shareholder-owned companies that have single-handedly provided $7 trillion in liquidity to support America’s mortgage market since 2009,” he said.

November 23, 2016 - Inside MBS & ABS

GSE Shareholder Case Attorney Details Plight of Fairholme in Ongoing Litigation

Fairholme Funds officials this week continued to press their case for restoring shareholder rights for private investors in Fannie Mae and Freddie Mac, expressing hope that the incoming Trump administration will be friendlier to their cause. In Fairholme Funds Inc. v. United States, et al, the plaintiffs argue that the net worth sweep imposed by the Treasury Department and Federal Housing Finance Agency was illegal and that the two government-sponsored enterprises were not in a “death spiral” at the time of the bailout as the government claims. During a conference call this week, Fairholme CEO Bruce Berkowitz said...

November 23, 2016 - Inside MBS & ABS

Court Grants Cert in NovaStar; FHLB Claims versus RBS Dismissed; Ally Settles; Nomura/RBS to Pay Up

A U.S. district court judge in New York has certified a class of investors to move forward with mortgage-related fraud claims they have brought against three large banks. MBS investors led by plaintiff New Jersey Carpenters Health Fund sued units of Wells Fargo that were acquired from Wachovia Capital Markets, Royal Bank of Scotland and Deutsche Bank that helped underwrite $7.7 billion of MBS issued by failed subprime lender NovaStar Mortgage. The plaintiffs accused...

November 23, 2016 - Inside Mortgage Finance

DC Court Orders Transfer of DOJ’s FCA Lawsuit Against Quicken Loans to Federal Court in Detroit

A federal district court judge in Washington, DC, ordered the transfer of a False Claims Act complaint filed by the Department of Justice against Quicken Loans alleging violation of FHA rules to the nonbank lender’s home court. Judge Reggie Walton of the U.S. District Court for the District of Columbia denied the DOJ’s arguments to keep the case in the nation’s capital and instead granted Quicken’s motion to transfer it to the U.S. District Court for the Eastern District of Michigan in downtown Detroit. Among other things, the government accused...

November 23, 2016 - Inside Mortgage Finance

CFPB Asks Appeals Court to Reconsider Questions of Constitutionality, Legality of Tying Arrangements

The Consumer Financial Protection Bureau late last week filed its much-anticipated petition with the U.S. Court of Appeals for the DC Circuit to reconsider some of the key holdings made by a three-judge panel of the court against the agency in PHH Corp. v. CFPB back in mid-October. One such holding was the panel’s determination that the CFPB’s leadership structure is unconstitutional because it is run by a sole director who can only be removed by the president for cause. While an appeal by the bureau was widely expected, the issue took on a new urgency after Republican real estate developer Donald Trump won the presidential election. In its petition, the CFPB asserted...

November 18, 2016 - Inside FHA/VA Lending

Around the Industry

Industry Groups Urge Congressional Leaders to Pass ‘Tax Extenders’ Legislation. Three industry groups called upon House and Senate leaders to pass “tax extenders” legislation, including two critical tax provisions that are scheduled to expire at the end of 2016. In a joint letter this week, the Mortgage Bankers Association, National Association of Realtors and the National Association of Home Builders called for the “rapid enactment” of a broad “tax extenders” package, including mortgage-debt forgiveness and tax deduction for mortgage insurance premiums. Passing a legislative package of tax extenders that includes the two provisions would provide much-needed certainty to the residential real estate markets, the letter said. Federal Agencies Propose Rule to Expand Access to Private Flood Insurance. Federal banking and credit union regulators and the Farm Credit Administration have published a ...

November 18, 2016 - Inside FHA/VA Lending

Study Debunks HUD IG’s Claim that HFA DPAs Put FHA Fund at Risk

State housing finance agencies’ downpayment assistance poses minimal risk to the FHA, and the scope of the problem is nowhere near the size suggested by the Department of Housing and Urban Development’s inspector general, according to a new study by the Urban Institute. The study’s conclusion would appear to bolster HUD’s defense of permissible downpayment assistance in a disagreement with the agency’s inspector general. The dispute arose from an IG audit of NOVA Financial & Investment Corp., an originator of FHA-insured mortgages with downpayment assistance provided by state housing finance agencies (HFAs). In a July 2015 report on NOVA’s audit, the IG alleged that some HFAs were allowing downpayment assistance that was being paid for through higher mortgage rates, in violation of FHA requirements for downpayment assistance. It also put FHA’s mortgage insurance fund at ...

November 18, 2016 - Inside FHA/VA Lending

CFPB Study Finds Aggressive Refi Lenders to be Vets’ #1 Complaint

Aggressive refinance solicitation can be a double-edged sword for lenders: It could either result in increased VA refi business or, as the Consumer Financial Protection Bureau found out, consumer complaints. Since the CFPB began taking mortgage-related complaints in 2012, it has received more than 12,500 complaints from servicemembers, veterans, and their families. Of those complaints, 1,800 were related to VA refinancing. The VA offers two types of refinancing options to eligible borrowers – the VA cash-out refinance and the VA streamline refi, or Interest Rate Reduction Refinance Loan (IRRRL). In a cash-out refi, the veteran homeowner can refinance a VA or non-VA loan into a lower-rate VA loan and take cash out of home equity to pay off a debt, finance an educational pursuit or pay for a home improvement. The VA will guaranty up to the full value of the home. On the other hand, an IRRRL can only refinance a ...

November 18, 2016 - Inside FHA/VA Lending

U.S. Court Orders Quicken’s FHA Case Moved to MI District Court

The Department of Justice lost its bid to have an FHA lawsuit against Quicken Loans heard in the nation’s capital after a federal judge this week ordered the case transferred to federal district court in Michigan. Judge Reggie Walton of the U.S. District Court for the District of Columbia agreed with Quicken that the proper forum for adjudicating the government’s False Claims Act case is the Eastern District Court in downtown Detroit. While the court agreed that the case has national implications, it also noted the “strong local interest in this matter in the Eastern District of Michigan,” where “Quicken Loans underwrote the FHA loans at issue, endorsed those loans, and certified its compliance as to those loans.” While certain factors weighed against the transfer, the alleged unlawful activity occurred in or near Detroit, where the lender is headquartered and most of its employees are located. The case, U.S. v. Quicken Loans, ...

November 18, 2016 - Inside FHA/VA Lending

MMI Fund Continues Upward Arc, MIP Reduction Remains Uncertain

The FY 2016 Actuarial Review showed a stronger FHA mortgage insurance fund, thanks to a surging forward loan portfolio, but the prospect of a price adjustment remains unlikely. Review results were a mixture of good news and bad news. The good news is the Mutual Mortgage Insurance Fund’s economic net worth grew by $3.8 billion to $27.6 billion – $4.2 billion short of what last year’s actuarial report projected. The capital ratio rose to 2.32 percent, exceeding the 2.0 percent minimum established by Congress to cover future losses. Observers said the increases demonstrate steady but modest growth in the fund. The Department of Housing and Urban Development’s top officials credited the fund’s growth to a stronger forward-mortgage portfolio, which increased by $18 billion to $35.3 billion – $10.1 billion above projections – with a capital ratio of 3.28 percent. The report attributed the increase to a ...

November 18, 2016 - Inside MBS & ABS

Groups Seek Broader SCOTUS Interpretation of CTS v. Waldburger, NY Allows MBS Case v. JPM

Three financial-industry trade associations submitted a joint amici brief to the Supreme Court of the U.S. seeking an end to the confusion over whether extender statutes that refer only to the “statute of limitations” should apply to the “statute of repose” as well. The circuit courts are split on the issue, with four courts deviating from a 2014 SCOTUS ruling in CTS v. Waldburger, in which property owners tried to hold CTS Corp., operator of an electronic plant in North Carolina, liable for damages from toxic contaminants on the land. The property owners filed...

November 14, 2016 - Inside the CFPB

Other News in Brief

Vendor Provides TRID-Oriented Video Content. Fast Forward Stories, a Bellingham, WA, provider of “brand-able” video content for the mortgage, title and real estate industries, recently released a download-ready library of 26 mortgage explainer videos on the CFPB’s Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure Rule (TRID).... ICYMI: Here’s What Happens to Fines, Penalties Levied by the CFPB. A new report from the Government Accountability Office summarizes what happens to the fines and penalties the CFPB imposes on financial institutions for mortgage-related offenses, as follows ...

November 14, 2016 - Inside the CFPB

CFPB’s Enforcement, UDAAP Authority at Stake in PHH Case

The recent decision by the U.S. Court of Appeals for the District of Columbia Circuit in the dispute between the CFPB and PHH Corp. has some significant enforcement implications for the bureau, according to a top compliance attorney. At stake in particular is the bureau’s authority to enforce federal consumer financial protection laws as well as the Consumer Financial Protection Act (CFPA) prohibition of unfair, deceptive, or abusive acts or practices (UDAAP). In a recent client note, Barbara Mishkin, of counsel in the Philadelphia office of the Ballard Spahr law firm, noted that among the court’s findings was that the Real Estate Settlement Procedures Act’s three-year statute of limitations (SOL) applies to the agency’s administrative enforcement actions. “Not only did ...

November 14, 2016 - Inside the CFPB

CFPB Issues Some HMDA Data Reminders for the Coming Year

The CFPB’s latest supervisory highlights report provides some Home Mortgage Disclosure Act data collection and reporting reminders for 2017. For starters, beginning with HMDA data collected in 2017 and submitted in 2018, responsibility to receive and process HMDA data will transfer from the Federal Reserve Board to the CFPB. “The HMDA agencies have agreed that a covered institution filing HMDA data collected in or after 2017 with the CFPB will be deemed to have submitted the HMDA data to the appropriate federal agency,” the bureau stated. (The HMDA agencies are the CFPB, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., the Fed, the National Credit Union Administration, and the Department of Housing and Urban Development.) ...

November 14, 2016 - Inside the CFPB

Trump Win Means CFPB Will Be Defanged. But Just How Much?

Last week’s surprise presidential victory by Republican billionaire real estate developer Donald Trump means some big changes for rulemaking and enforcement activities at the CFPB, to the benefit of the financial services industry, according to the consensus of a variety of analysts and experts. The most likely changes have to do with replacing the bureau’s single director leadership structure a bipartisan commission, and subjecting the agency to the congressional appropriations process. But the tenure of the current director, Richard Cordray, also could come into play, some feel. FBR & Co. analyst Edward Mills and his team predict the agency will have a new director “following the D.C. Circuit Court of Appeals ruling [involving PHH Corp.] that allows the president to ...

November 11, 2016 - Inside The GSEs

Fairholme GSE Shareholder Case Battle Over Document Review

November 11, 2016 - Inside MBS & ABS

Goldman Sachs to Settle CDO Case; Nomura to Pay $3M to NCUA; REIT Accused of Excessive Fees

Goldman Sachs has agreed to pay an undisclosed settlement amount to ACA Financial Guaranty Corp. to resolve allegations of fraud related to insurance on a collateralized debt obligation backed by subprime mortgages. Details of the Abacus CDO settlement were not disclosed, although ACA initially sought $120 million in damages. First filed in 2011, ACA’s lawsuit accused Goldman Sachs and hedge fund Paulson & Co. of fraudulently persuading it to guarantee payments on the CDO prior to the financial crisis. ACA alleged...

November 10, 2016 - Inside Mortgage Finance

Supreme Court Justices Appear Willing to Let Miami Pursue Fair-Housing Lawsuit Against Mortgage Lenders

The Supreme Court of the U.S. heard oral arguments this week in a case involving novel lawsuits filed by the city of Miami seeking to recover damages from lenders. Questions and comments by Supreme Court justices indicated some disagreement but perhaps a willingness to let the city pursue its controversial lawsuit. In Bank of America v. City of Miami, BofA and Wells Fargo are challenging lawsuits brought by Miami under the Fair Housing Act. The city is seeking millions of dollars in damages, claiming that mortgages originated by the banks in the run-up to the financial crisis were predatory and counteracted the city’s efforts on fair housing, causing the city to lose the benefits of social, professional and business opportunities that come with an integrated community free from housing discrimination. Neal Katyal, a partner at the law firm of Hogan Lovells and former acting solicitor general of the U.S., argued...

November 10, 2016 - Inside Mortgage Finance

A Tale of Two Nonbank Giants: Ocwen’s Outlook Improves, While PHH Continues to ‘Self Liquidate’

PHH Corp. and Ocwen Financial – both large publicly traded nonbank mortgage lenders – released third quarter results suggesting that at least one of them, Ocwen, might have a future. Ocwen, which has been bleeding red ink for roughly two years, posted net third-quarter earnings of $9.4 million, though there were several caveats to its results, including previously announced legal settlements that have yet to be paid. Still, Ocwen continued...

November 4, 2016 - Inside MBS & ABS

Barclays Seeking a Much Lower Settlement Amount To Resolve MBS Claims, Mortgage-Related Lawsuits

Barclays plc is reportedly working out a deal with the Department of Justice for a much lower settlement amount to resolve non-agency MBS and ongoing multi-agency investigations of other mortgage-related matters, according to a recent Bloomberg report. Citing a source “with knowledge of the situation,” the news service said the London-based bank has rejected an initial amount offered by the DOJ, aiming instead to limit the settlement to no more than $2 billion, possibly less. The report didn’t disclose the amount DOJ offered, although industry observers speculated it might be significantly more than what the firm is willing to pay. Like many U.S. and European banks, Barclays was...

November 3, 2016 - Inside Mortgage Finance

Attorneys Urge Covered Lenders to Take Advantage of the CFPB’s One-Year Window to Adjust to HMDA Changes

Collecting disaggregated race and ethnicity data a full year before the revised Home Mortgage Disclosure Act regulations become effective will benefit covered creditors as they become used to the new requirements and make the necessary system adjustments to accommodate a new wave of granular HMDA data, according to industry attorneys. A policy statement issued by the Consumer Financial Protection Bureau in late September creates a temporary safe harbor for lenders that take advantage of the one-year window – Jan. 1, 2017, through Dec. 31, 2017 – to collect disaggregated ethnic and racial information in their home-loan application if borrowers agree to provide it. Previous amendments to HMDA will require...

October 31, 2016 - Inside the CFPB

Inside the CFPB Full Issue October 31, 2016 (PDF)

View Inside the CFPB Full Issue October 31, 2016 (PDF)

October 31, 2016 - Inside the CFPB

Groups Oppose Expanding Sharing Of Confidential Supervisory Info

Another burr under the industry’s saddle stemming from the CFPB’s recent proposal on disclosures of records and information is a proposed significant expansion of the bureau’s ability to share confidential supervisory information (CSI) with other agencies or entities. Under current rules, the bureau may disclose CSI only to the small set of federal and state agencies that have “jurisdiction over a supervised financial institution.” However, the bureau has proposed disseminating CSI to any “federal, state or foreign governmental authority, or an entity exercising governmental authority” whenever “it is relevant to the exercise of the agency’s statutory or regulatory authority.” This is extremely problematic to the industry, according to a joint comment letter submitted to the CFPB by the Consumer Mortgage ...

October 31, 2016 - Inside the CFPB

Commenters Against Proposed Restraint on Recipients of a CID

One little noticed provision of the CFPB’s recent proposal on disclosures of records and information would constrain regulated entities from sharing information about when they are being investigated by the CFPB – a concept industry representatives strongly oppose. More specifically, the proposal would restrict individual entities that are the subject of a civil investigative demand (CID) from voluntarily disclosing the receipt of such a demand, which is confidential investigative information (CII), without first getting permission from the CFPB. In a joint comment letter submitted to the CFPB, the Consumer Mortgage Coalition, the Credit Union National Association, the Independent Community Bankers of America, the Mortgage Bankers Association, and the National Association of Federal Credit Unions said they strongly oppose this component of ...

October 31, 2016 - Inside the CFPB

Mortgage Servicing Problems Persist, Cordray Tells Bankers

Mortgage servicers are going to have to bring their “A” game more consistently to the table if they wish to avoid punitive actions from the CFPB, the bureau’s director, Richard Cordray, made clear recently. Speaking to the attendees of the Mortgage Bankers Association conference in Boston last week, the nation’s top consumer regulator said it is regrettable that much of the damage done during the financial crisis to consumers and the broader economy could likely have been contained early on by more effective servicing. “A more effective system might have been up to the task of working with struggling borrowers to find appropriate ways to avoid foreclosure through loan modifications and short sales,” Cordray said. “But servicers were ill prepared ...

October 31, 2016 - Inside the CFPB

CFPB Sends HMDA Data Collection Warning to 44 Lenders, Brokers

The CFPB said last week it will issue warning letters to 44 residential lenders and mortgage brokers that are not properly collecting Home Mortgage Disclosure Act information – data that helps the agency uncover discriminatory lending practices – and advised them to review their practices and step up their compliance efforts, if need be. The bureau said it has information that appears to show they may be required to collect, record and report data about their housing-related lending activity, and that they may be in violation of those requirements. The CFPB said it identified the 44 companies by reviewing available bank and nonbank mortgage data. The identities of the 44 firms were not provided by the agency. “Financial institutions that fail to ...

October 31, 2016 - Inside the CFPB

Cordray Suggests Diagnostic Enforcement Will Continue

Comments by CFPB Director Richard Cordray at last week’s Mortgage Bankers Association conference in Boston indicate that the industry can expect the bureau’s diagnostic approach to enforcing the TRID rule will continue, apparently until further notice. “As I told you last year, in our examination work around compliance with this rule, we and the other regulators have pledged to be sensitive to the progress made by lenders that are squarely focused on making good faith efforts to come into compliance with the rule on time,” Cordray said. “We have also said that our approach would be diagnostic and corrective, not punitive. That is precisely what we are doing.” This means that the regulators will evaluate a company’s compliance management system ...

October 31, 2016 - Inside the CFPB

Tech Vendors Say the Industry Needs at Least One Year to Comply

A number of industry software and technology vendors told the CFPB they must have a minimum of one year to fully test and comply with all the changes the agency wants to implement with its TRID clarifying proposed rule. Computer systems and software vendor Jack Henry & Associates said that due to the nature of these proposed changes (which will require revisions to forms, calculations and logic in the software), the industry needs an absolute minimum of 12 months for its implementation period. “Software providers such as Jack Henry & Associates work with multiple business partners and need lead time to analyze, plan, design, develop, test, document and distribute software changes to our financial institution clients prior to the implementation ...

October 31, 2016 - Inside the CFPB

Bureau Should Extend Diagnostic Enforcement, Industry Says

In the weeks leading up to the effective date of the CFPB’s integrated disclosure rule, the agency’s director, Richard Cordray, made clear that, from a supervisory perspective, the bureau would view enforcement of the rule as more diagnostic than punitive – an approach many industry officials believe should continue. In commenting on the CFPB’s proposed rule to clarify a number of aspects of TRID, the Mortgage Bankers Association strongly urged the current diagnostic examination approach be formally extended until the changes necessitated by a final rule have been fully implemented and it is clear that the compliance difficulties with such a complex rule have been largely resolved. “With this policy and the bureau’s and industry’s active engagement as compliance moves forward ...

October 28, 2016 - Inside The GSEs

GSE Roundup

Fairholme Files Motion to Force Government to Produce Docs ASAP. Plaintiffs in Fairholme Funds Inc. v. United States, et al, filed an emergency enforcement motion this week arguing that the government is purposely taking too long to produce documents and requesting unnecessary extensions. “The defendant has repeatedly delayed complying with the court’s order,” said Fairholme in the court documents. The judge gave the government until Nov. 1 to produce the documents. Freddie prices $217M K-deal. Freddie Mac priced a new offering of Structured Pass-Through Certificates (K Certificates) that are backed by underlying collateral consisting of supplemental multifamily mortgages. The company expects to issue approximately $217 million in K Certificates, which...

October 28, 2016 - Inside The GSEs

Cato Supports Freddie CFO Golden Parachute Appeal

The Cato Institute recently filed an amicus brief challenging the Federal Housing Finance Agency’s denial of compensation benefits to a former Freddie Mac CFO at the start of the conservatorship. The FHFA terminated Anthony Piszel two weeks after the government took over the GSEs in September 2008. The primary issue was whether a government prohibition on making golden parachute (severance) payments to terminated Freddie employees was illegal or not. Piszel appealed a judgment from the U.S. Court of Federal Claims dismissing his complaint that Freddie breached its contract and owed him payment for his golden parachute compensation.

October 28, 2016 - Inside MBS & ABS

DOJ, State AGs Take Aim at Moody’s for Pre-Crisis MBS Ratings; Case May Mirror S&P’s 2013 Lawsuit

Allegations in an impending government MBS fraud case against Moody’s Corp. will likely mirror allegations of fraud and misrepresentation in a 2013 civil suit against Standard & Poor’s, according to industry observers. Moody’s disclosed the expected case in a recent filing of third-quarter earnings results with the Securities and Exchange Commission. According to the credit rating agency, lawsuits are likely pending from both the Department of Justice and state attorneys general over ratings of MBS in the years leading up to the financial crisis. In a letter dated Sept. 29, 2016, the DOJ informed...


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