What started as a battle between investors has spread to include lenders, borrowers and servicers. Proponents of plans to use eminent domain for principal reduction warn that the government-spon-sored enterprises and lenders could be subject to redlining and other consumer protection regulations for opposing the evolving scheme. No county or municipality has implemented a wide-scale eminent domain plan, though a number of areas are considering the option. Non-agency mortgage-backed security investors have strongly opposed eminent domain proposals, claiming they are unconstitutional, among other issues. “This unprecedented use of eminent domain law, if successful, would...
Fannie Mae will retain an “equity interest” in the nearly 700 real estate owned properties the government-sponsored enterprise has sold off to be managed as rentals as part of the pilot program to move GSE-held foreclosures off the books. The Federal Housing Finance Agency this week announced the first winning bidder in its REO pilot initiative. San Diego-based Pacifica Companies LLC paid $12.3 million for a share in a joint-venture with Fannie for 699 properties in Florida, resulting in an estimated transaction valuation to Fannie of $78.1 million or 95.8 percent of the properties’ estimated value, according to the transaction summary. “Fannie Mae sold...
The Federal Housing Finance Agency incorrectly piggybacked and failed to independently verify Fannie Mae’s and Freddie Mac’s mandated assurances or “covenants” that the GSEs were in compliance with the Treasury Department’s terms in exchange for taxpayer support during conservatorship, according to a recent report by the FHFA’s official watchdog. The FHFA’s Office of Inspector General noted a “gap” in the Finance Agency’s compliance with the terms of the preferred stock purchase agreement with the Treasury.“Until June 2012, FHFA did not provide Treasury with a certification that the enterprises’ filings and related documents were free of materially false or misleading statements,” said the OIG report, issued in August.
Fannie Mae and Freddie Mac are obligated to comply with recently enacted Massachusetts law requiring creditors to take “commercially reasonable steps to avoid foreclosure,” according to a letter to the GSEs’ conservator from state Attorney General Martha Coakley. The AG’s Aug. 23 letter to Federal Housing Finance Agency Acting Director Edward DeMarco puts the agency on notice about a law signed Aug. 3 by Gov. Deval Patrick, D, “An Act to Prevent Unnecessary and Unreasonable Foreclosures,” which mandates loan modifications “when they make economic sense.”
The GSEs continued to reduce their footprint in global debt markets during the second quarter of 2012, with new issuance and debt outstanding down from the previous quarter and from the same period a year ago. Fannie Mae, Freddie Mac and the Federal Home Loan Banks issued a combined total of $622.3 billion in new debt during the second quarter, a 12.1 percent decrease from the first quarter and a 14.3 percent decline from the second quarter of 2011. GSE debt outstanding at $1.942 billion fell 14.7 percent from the first quarter and was down 10.4 percent from the same period a year ago.
The Federal Housing Finance Agency is suing a unit of Deutsche Bank demanding the bank repurchase loans backing now toxic mortgage securities. Acting as conservator to Freddie Mac, the FHFA filed suit on Aug. 24 in New York State Supreme Court in Manhattan against DB Structured Products Inc. The Finance Agency alleges that DBSP breached promises about loans that were pooled and securitized and failed to repurchase the loans as required, according to the agency’s court filing.
The average fee charged by Fannie Mae and Freddie Mac to lenders rose last year, while payments collected on the Home Affordable Refinance Program dropped off, according to the Federal Housing Finance Agency.The fourth-annual FHFA study found that the average total guaranty fee charged by Fannie and Freddie on single-family mortgages was 28 basis points in 2011, compared to 26 bps in 2010. When HARP and flexible refinance loans were excluded, the FHFA said the total average g-fee increased to 26 basis points in 2011 from 24 basis points in 2010. “That change reflects increases in both the average ongoing fee and the average upfront fee,” the FHFA report said.
Given that Fannie Mae and Freddie Mac were a “primary cause” of the housing crisis, the two GSEs should be “wound down in size and scope,” according to the Republican party platform. Unveiled last week during the GOP convention in Tampa where former Massachusetts Governor Mitt Romney was confirmed as the party’s presidential nominee, the platform made mention of the Republican position on principal reduction, noting that “taxpayer dollars should not be used to bail out borrowers and lenders by funding principal write-downs.”
The Federal Housing Finance Agency has failed to implement its initiative to dispose of GSE and government-held real estate-owned properties in an “open and transparent manner” in the Golden State, according to the California Association of Realtors. Two weeks ago CAR renewed its vocal opposition to the FHFA’s implementation of an REO bulk sales pilot initiative in California, accusing the Finance Agency of advancing the program in a “highly secretive manner” despite the “negative economic impact” the trade group says it will have on the state’s housing market.
Fifth Third Bank received the highest ranking among servicers ranked by Fannie May during the first half of 2012, the GSE recently announced. In 2011, Fannie rolled out its Servicer Total Achievement and Rewards (STAR) program, designed to encourage customer service improvements and better foreclosure prevention outcomes for homeowners by rating servicers on their performance in those areas.
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