The bank had more than 200 violations of a five-year limit for holding REO properties, according to a consent order. Citi was warned repeatedly of the violations before the OCC moved to fine the bank.
Legislation was passed earlier this year to curb abuses tied to VA rapid refis but lender violations remain an issue. At least, that’s how the VA sees it. Big audits may be in the works.
Not only is FHFA Director Mark Calabria homing in on a roadmap to end the conservatorship of Fannie and Freddie, he clearly believes the exit can take place before the two entities are fully capitalized.
Analyst Richard Bove thinks the new net worth sweep agreement is just a gimmick because the liquidation preference on Treasury’s preferred stock will offset any increase in the GSEs’ capital buffers.
Origination pipelines remain full and lenders, for the most part, are feeling optimistic about profits. Can it last? Probably, as long as rates remain low.
Fannie and Freddie can keep more of what they earn thanks to a new Treasury/FHFA edict, but buying stock in the two companies remains a dicey proposition.