For the first time, individual shareholders have brought a suit against the Federal Housing Finance Agency alleging that the Treasury profit sweep was illegal and accused the agency of violating the Housing and Economic Recovery Act. The May lawsuit was filed in the U.S. District Court for Northern Iowa by three individual shareholders who owned stock in Fannie Mae and Freddie Mac prior to the Third Amendment.Thomas Saxton owns shares in the Z series of Freddie preferred stock and he owns shares of Freddie common stock with Ida Saxton.The pair own common stock both jointly and individually and acquired their shares in 2008. The third plaintiff is Bradely Payner, who owns shares of Fannie common stock.
With just six months lefts to meet the new private mortgage insurer eligibility requirements, Genworth U.S. Mortgage Insurance is making moves to ensure it will be in compliance by the end of the year. “We did disclose a gap of $500 to $700 million, but at the same time we said we will fulfill that gap with a combination of reinsurance and cash. We are working at a very aggressive pace to make sure that we meet that standard sooner than later,” said Rohit Gupta, Genworth’s president and CEO. In addition to reinsurance and working on payment plans, Rohit said last month the company sold 14 percent of its Australian mortgage insurance business on the Australian...
As mortgage insurers rally around the call for expanded risk sharing, the Federal Housing Finance Agency confirmed this week that it’s exploring the possibility of pilot testing risk-sharing through deeper mortgage insurance coverage. The U.S. Mortgage Insurers trade group said that deeper MI coverage would reduce risks to taxpayers while allowing the GSEs to lower their fees. “And with lower GSE fees, this approach would reduce costs to borrowers. In addition, MI can be used to provide front-end risk sharing on loans with down payments greater than 20 percent,” it said. A prudently underwritten 5 percent down payment loan with MI actually reduces taxpayer exposure below a comparable 20 percent down payment loan without MI, according...
Nevada Addresses ‘Super Lien’ Concerns. Nevada’s governor signed legislation last week addressing concerns raised by the FHFA regarding homeowners’ association liens. In September, the Nevada Supreme Court determined that an HOA super lien has priority lien status, which can trump the GSEs’ first lien status during foreclosure. Senate Bill 306 in Nevada aimed to address some of those issues by establishing a new limited right of redemption for lien holders after an HOA foreclosure sale, among other provisions. The FHFA has repeatedly noted it has an obligation to protect the GSEs’ rights, and will aggressively do so by bringing or supporting actions to contest HOA foreclosures that purport to extinguish GSE property interests in a manner
Refinance lending fueled the growth in mortgage originations during the first quarter of 2015, although new data suggest that the purchase-mortgage sector is taking hold. Mortgage lenders originated an estimated $221.0 billion of refi loans during the first quarter, an increase of 51.4 percent from a revised fourth-quarter production estimate of $146.0 billion. Inside Mortgage Finance refi and purchase-mortgage estimates for all four quarters of 2014 were revised to reflect just first-lien mortgage originations. Refi loans accounted...[Includes three data tables]
If Fannie Mae and Freddie Mac were privatized, they would likely have to increase their capital from current levels and face increased borrowing costs.
FSOC Advises Continued Collaboration on Nonbank Mortgage Servicers. The Financial Stability Oversight Council, of which the CFPB is a member, expressed continuing concern about the large share of mortgage servicing rights being handled by nonbank mortgage servicers these days, and urged continued collaboration between state and federal regulators in ratcheting up their oversight to strengthen such companies. “[N]onbank mortgage servicing companies, which in recent years have purchased large amounts of mortgage servicing rights from banks and thrifts, have grown to account for a material portion of the mortgage servicing market,” the report said. FSOC went on to note that in January of this year, the Federal Housing Finance Agency proposed new minimum financial eligibility requirements for mortgage seller/servicers that do ...
Fannie Mae and Freddie Mac have found deep investor appetite for credit-risk transfer transactions, but their exploration of new structures may not get to the front-end tradeoff of deeper mortgage insurance for reduced MBS guaranty fees. During a panel session at last week’s secondary market conference sponsored by the Mortgage Bankers Association, Kevin Palmer, a Freddie vice president, said the government-sponsored enterprises launched their credit-risk transfers to reduce taxpayer exposure and distribute risk more broadly in the mortgage finance system. Fannie and Freddie have...
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