The U.S. Attorney for the District of Texas indicted the former CEO of the Federal Home Loan Bank of Dallas, along with two other former bank employees, for fraud. They were accused of creating fake travel reimbursement requests for lavish trips and embezzlement schemes that began back in 2008. Terrence Smith, at the helm of the bank from 2000 to 2013, and Nancy Parker, chief information officer around the same time, were charged with six counts of making false statements, according to the Department of Justice. And Michael Sims, chief financial officer from 2005 to 2014, was charged with three counts of making false statements.

Some three dozen appraisal trade groups are fighting to keep Fannie Mae and Freddie Mac from issuing waivers that eliminate the need for traditional home valuations. Earlier this year, the GSEs announced they would offer appraisal waivers on some refinance loans to borrowers who have at least 20 percent equity in their homes. And more recently Fannie and Freddie said that they will extend the waiver to include certain purchase loans as well. But the groups said first purchase transactions carry higher risk from a property information standpoint and, to make matters worse, the change comes at a time when markets are at all-time highs and risk mitigation should be tantamount.

On the heels of making concessions for Houston area homeowners with property damaged by Hurricane Harvey, another storm threatens the housing industry this weekend. As Inside The GSEs went to press, Hurricane Irma was approaching the U.S., potentially hitting Florida and several southern states and prompting the GSEs to remind lenders and homeowners about their disaster-relief options for affected areas. Freddie Mac said it is monitoring the approach of Irma. “We stand ready to work with the nation’s servicers to ensure that mortgage relief is made available to homeowners who may be affected,” said Yvette Gilmore, Freddie’s vice president of single-family servicer performance management.

The Independent Community Bankers of America issued a statement midweek questioning – nine years after the fact – the federal takeover of Fannie Mae and Freddie Mac, saying it was the government’s way of putting the two mortgage giants in a “time out.” ICBA said the move by the Bush administration on Sept. 6, 2008, was made to “help calm the fears of global investors of GSE mortgage-backed securities.” MBS issued by Fannie and Freddie have an “implicit” government guarantee, not an explicit one. However, before and since the takeover, the GSEs have never missed a bond payment to MBS investors. ICBA said, “After being put into conservatorship – an action that has since been proven to be...

The International Monetary Fund proposed that Fannie Mae and Freddie Mac merge into a single enterprise. The IMF discussed ideas that it said could help stabilize the mortgage finance system in a working paper published late last month. The global Washington, DC-based organization said the GSEs should combine forces “as quickly as possible.” And, “Until this happens they should be forbidden to compete for business on the basis of price.” “The GSE regulator should be tasked with monitoring the enterprises to ensure consistency on this basis,” said the author of the paper, Richard Koss. He believes that the housing finance system is unnecessarily complicated, with Fannie and Freddie having selling guides of 1,408 and 2,303 pages, respectively.

There is good news for GSE lenders and servicers, as a recent court ruling found that Nevada’s super-priority lien law cannot be used to foreclose on government-owned mortgages. In Berezovsky v. Moniz, the court ruled that the Federal Foreclosure Bar, part of the Housing and Economic Recovery Act of 2008, preempted state law and banned a homeowners association from being able to eliminate a GSE’s interest and foreclose on a property. The court rejected arguments that the Federal Foreclosure Bar did not apply in the Nevada HOA context. Attorneys with Bradley Arant Boult Cummings said, “The Berezovsky decision represents a resounding win for lenders and servicers of Freddie Mac and Fannie Mae loans.”

Freddie Mac recently announced its largest sale of reperforming loans with a $983 million structured sale transaction. Although Freddie has been securitizing RPLs since 2011, the seasoned loan structured transaction has a slightly different twist and helps to expand the RPL program. Assets in Freddie’s seasoned loan offerings are comprised primarily of loans repurchased out of the GSE’s single-family participation certificates, generally after a loan has become at least four months delinquent.Freddie announced its first RPL structured sale transaction of 2017 in May after a successful pilot program. The program has grown from the pilot sale amount of $199 million.

In anticipating a green light for the proposal to restructure its credit-risk transfer offerings as real estate mortgage investment conduits, Fannie details additional considerations ahead of the change. The GSE said that there have been no significant concerns raised, so far, and expects to close the feedback period soon. To help expand the CRT investor base, several months ago both GSEs announced a proposal to restructure Fannie’s Connecticut Avenue Securities and Freddie’s Structured Agency Credit Risk programs. This would also help attract a different kind of investor base that includes real estate investment trusts and help boost liquidity. The REMIC structure will help...

An audit of the Federal Housing Finance Agency’s privacy program led the FHFA Office of Inspector General to make recommendations to address several weaknesses. The program was designed so the FHFA can implement privacy and data protection procedures governing its collection, use, sharing, disclosure, transfer, storage and security of information in an identifiable form related to employees and the public. Kearney & Company performed the audit and found that the FHFA had not effectively met three out of nine privacy requirements and controls.The report made several recommendations to make sure the agency adequately identifies, monitors, and protects the complete inventory of its personally identifying information (PII) holdings and appropriately approves and documents privileged user access.

Trade groups continue to rally to prevent the Federal Housing Finance Agency from adding a language-preference question to loan applications. They said the suggestions, designed to assist borrowers with limited English proficiency, require more examination, but they don’t want it to delay implementation of the new Uniform Residential Loan Application.The FHFA extended the deadline for the comment period several times. It closed on Sept. 1. When the input period was extended in August, the FHFA updated the request for input with a presentation that describes the results of testing various language questions on the Uniform Residential...