The Federal Housing Finance Agency’s proposed tightening of rules for private mortgage insurers that do business with Fannie Mae and Freddie Mac is a “thoughtful effort,” but “modest changes” are required, conclude a trio of economists in a paper issued last week. Moody’s Analytics’ Mark Zandi and Chris deRitis and the Urban Institute’s Jim Parrott said that the FHFA’s Private Mortgage Insurance Eligibility Requirements “should succeed” in ensuring that private MI are strong counterparties to the GSEs, while serving as “a much improved bulwark against excessive risk” in the system.
Although Freddie Mac’s official watchdog found the GSE’s review process of servicer reimbursement claims to be “generally effective,” some tens of millions of dollars could be saved by scrutinizing servicer payments for costs incurred on loan defaults. According to an audit issued last week by the Federal Housing Finance Agency’s Inspector General, Freddie reimbursed 460 of its servicers $1.4 billion in 2013 but identified and denied $126 million in what the IG calls “erroneous” claims. The IG noted that Freddie’s top 10 servicers, relative to total reimbursements, accounted for 87 percent of all reimbursements made by Freddie in 2013.
Bank of America this week launched an appeal to overturn a jury verdict that found it liable for thousands of bad mortgages sold by Countrywide leading to a $1.27 billion judgment. U.S. District Court Judge Jed Rakoff levied the judgment in July after a New York jury last fall found the Charlotte, NC-based bank liable for fraud over a Countrywide program known in the industry as “the Hustle.”
The Mortgage Bankers Association is pushing back against proposed “costly and expensive” recommendations by the Federal Housing Finance Agency’s official watchdog that would likely not done much to prevent a multi-billion fraud scheme against the GSEs. The report by the FHFA’s Inspector General said regulators, counterparties and investigators missed the swindle perpetrated by the now-defunct Taylor, Bean & Whitaker Mortgage because they ignored various red flags.
HSBC Holdings is headed for trial later this month, absent a deal, after a New York federal judge rejected a last ditch effort by HSBC and Nomura Holdings to toss their mortgage-backed securities suit brought by the Federal Housing Finance Agency. U.S. District Judge Denise Cote’s ruling reaffirmed earlier rulings that the Housing and Economic Recovery Act of 2008 extended the time that the FHFA could file claims against a host of big banks.
Fannie Mae’s and Freddie Mac’s regulator has proposed tougher GSE affordable housing goals for purchase mortgages in low-income areas. Issued last week by the Federal Housing Finance Agency, the proposal would increase some of the benchmark levels for Fannie’s and Freddie’s affordable housing goals through 2017, while also establishing new housing subgoals for low-income multifamily properties.
Fannie Announces Plans to Sell DC Headquarters, Office Consolidation. Fannie Mae told its employees last week that it plans to sell its iconic headquarters in Northwest Washington, DC, and consolidate its five area office locations into one over the next two to three years. Fannie, a ward of the government for six years, owns its headquarters at 3900 Wisconsin Ave., but leases other locations in the area. It also occupies 4000 Wisconsin Ave. The company has offices in Virginia, Texas and California. Employees outside of the Washington area will not be affected, a spokesman clarified.
Production of conventional mortgages – those eligible for sale to Fannie Mae and Freddie Mac as well as jumbo loans – grew at a faster rate than the government-insured market during the second quarter of 2014, according to a new Inside Mortgage Finance analysis. Origination of conventional-conforming mortgages increased by 24.4 percent from the first quarter, climbing to an estimated $153.0 billion. While that continued to account for the biggest chunk of new business – 52.1 percent – the biggest proportional increase in new lending came in the jumbo mortgage sector, where new originations jumped 34.1 percent during the second quarter. Production of government-insured mortgages, including FHA, VA and rural housing loans, increased...[Includes two data charts]
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