Fannie Mae and Freddie Mac could repay the U.S. Treasury faster than previously forecast, according to updated projections of potential draws for the two government-sponsored enterprises issued last week by the GSEs’ conservator. According to the Federal Housing Finance Agency, Fannie and Freddie are expected to draw between $191 billion and $209 billion from Treasury by the end of 2015. This year’s “reduced and more stable” projection by the FHFA is lower than the previous estimate made only a year ago, which offered a range of between $220 billion and $311 billion for total support through the end of 2014. “The key drivers of those results include...

An auction last week for about $374.0 billion in mortgage servicing and the origination platform of bankrupt Residential Capital ended with Ocwen Financial and Walter Investment Management as joint winners – along with some drama. Walter appears to have been brought into Ocwen’s bid due to concerns about offshore servicing, while Nationstar Mortgage, the loser in the auction, claims the firms paid too much for the assets. Special servicers Ocwen and Walter won...

The Department of Justice’s recent civil lawsuit against Bank of America/Countrywide over allegedly defective loans sold to Fannie Mae and Freddie Mac is a clear sign of the government’s more aggressive use of the False Claims Act and the 1989 thrift bailout law to target not only participants in government loan programs but any lender who sold loans to the government-sponsored enterprises, according to industry lawyers. Filed last week by the U.S. Attorney for the Southern District of New York, the suit is another example of the government’s increasingly aggressive effort to recoup taxpayer losses from the financial meltdown and to remind potential violators of the significant whistleblower provisions in the FCA and the Financial, Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), noted the Washington, DC, law firm BuckleySandler. The DOJ is following...

Last week, the Department of Justice raised eyebrows in a $1 billion legal action against Bank of America as successor to Countrywide Financial by filing the first civil fraud suit alleging violations of the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act in the sale of mortgages to Fannie Mae and Freddie Mac. The federal government asserts that since the Treasury Department has had to bail out Fannie and Freddie, approximately $1 billion in losses suffered by the companies...

A weakened mortgage revenue bond market and the unreliability of its primary and pool credit enhancement structure has prompted the Wisconsin Housing and Economic Development Agency to turn to FHA and Ginnie Mae to finance its affordable housing program. Launched in December last year, WHEDA’s $100 million FHA Advantage program is still in its infancy, generating less than $1 million a month. Although marketing has not been aggressive as it should be, Geoff Cooper, WHEDA director of single-family operations, said the housing finance agency will soon announce ...

Investors are still a major hurdle for industry efforts to put Fannie Mae and Freddie Mac MBS on a more level playing field, while Ginnie Mae is beginning to weigh its options to address a major shift in the profile of its MBS business. Freddie’s share of new MBS production by the two government-sponsored enterprises has dropped significantly over the past few years. The company typically accounted for 42 percent to 45 percent of GSE issuance up until 2008, when it fell to 39.8 percent. Last year, Freddie captured just 35.4 percent of the GSE market, and in the first nine months of 2012 it’s down to 34.2 percent. Steven Abrahams, a managing director at Deutsche Bank, said...

Fannie Mae, Freddie Mac and Ginnie Mae officials pledged to continue efforts to build a better secondary market system while coping with the business challenges of dealing with an increasingly diverse universe of lenders delivering loans directly to the agencies. “Fannie Mae is a different company today,” said Timothy Mayopoulos, president and CEO of the firm, during a panel session at this week’s annual convention of the Mortgage Bankers Association. He said 80 percent of the government-sponsored enterprise’s upper management has been promoted to their roles or hired since the GSE went into conservatorship four years ago. Half of the company’s 7,000 employees have been hired since then. “The people of Fannie Mae today are...

It increasingly appears that the Consumer Financial Protection Bureau will come out with a qualified mortgage/ability-to-repay rule that will include a legal “safe harbor” for most mortgages – and a “rebuttable presumption” for the rest. Industry attorneys, lobbyists and consumer advocates indicate the CFPB is leaning towards granting a safe harbor for what will be defined as “prime” mortgages – presumably most of the loans that are backed by the federal government. “What we’re hearing is there could be...

The U.S. Attorney for the Southern District of New York opened a new battlefront in intense warfare over losses taken by investors and others in the collapse of the housing market. The government this week filed charges against Bank of America, as the party left liable for activities at Countrywide Home Loans, based on the False Claims Act, a federal law that provides for hefty treble damages and penalties. The FCA has been used in recent mortgage-related charges involving FHA loans, but the new filing attempts to expand the law to loans sold to Fannie Mae and Freddie Mac. In its filing, the government contends...

Recent efforts by the government-sponsored enterprises and the Federal Housing Finance Agency to offer clarity and consistency about repurchase demands may or may not bear fruit as neither agency officials nor industry observers can speak confidently as to its ultimate effectiveness. According to participants at an Inside Mortgage Finance webinar this week, the GSE representation and warranty framework unveiled by the FHFA last month and the GSEs’ new quality control guidelines announced last week are steps in the right direction but there are a lot of moving parts to take into account. “We tried the best we could to address...