A new report from the House Financial Services Committee staff accuses CFPB Director Richard Cordray of misleading Congress about the bureau’s probe of the unauthorized account creation scandal at Wells Fargo, rushing into a settlement without doing the requisite leg work, and agreeing to a paltry settlement when he could have slammed the company for at least $10 billion in fines. As a part of its investigation into the Wells Fargo fraudulent account scandal, the committee said it has obtained a crucial new document – the “Recommendation Memorandum” – that was presented to and approved by Cordray.“The Memorandum shows that the CFPB estimated that the bank was potentially liable for a statutory monetary penalty exceeding $10 billion,” said the committee. “This ...
Mortgage lenders that sell loans to Fannie Mae and Freddie Mac saw a modest increase in the volume of loans they repurchased from the GSEs during the second quarter of 2017, according to a new Inside The GSEs analysis of disclosure reports filed with the Securities and Exchange Commission. During the second quarter, lenders repurchased or made indemnifications on $244.44 million of single-family loans pooled in Fannie and Freddie mortgage-backed securities. That was up 2.5 percent from the first three months of the year. On a year-to-date basis, seller buybacks totaled $483.01 million, a 14.5 percent drop from the first six months of 2016.
Fifteen industry trade groups and other organizations sent a letter to Treasury Secretary Steve Mnuchin and GSE regulator Mel Watt late this week, reminding them that Fannie Mae and Freddie Mac should be reformed through legislation and not some type of recapitalization plan where Congress is cut from the equation.“We are increasingly concerned about efforts to derail comprehensive reform,” they write. “We urge both Treasury and Federal Housing Finance Agency to focus on continuing to work with Congress to end conservatorship through comprehensive, bipartisan, legislative reforms.” No specifics are provided regarding the derailment comment. Presently, there are no viable bills before Congress where a consensus on GSE reform might be reached.
Despite reports showing that many homeowners lack required flood insurance policies, Fannie Mae and Freddie Mac said data show that most of their loans do have the appropriate coverage. Recent hurricanes in Houston and Florida revealed that borrowers either never had coverage or let their policies lapse. Flood insurance is a requirement for GSE loans in designated flood areas and the mortgage giants say that servicers are responsible for enforcing the policies. Nevertheless, getting to the root of the disconnect is complicated. Although the GSEs said it’s up to servicers to evaluate whether loans meet flood insurance requirements, they said they also have their own systems in place to help ensure compliance.
Investors Unite, an advocacy group for GSE shareholders, criticized the Mortgage Bankers Association’s plan for GSE reform and stated that the trade group is promoting too-big-to-fail banks. The comments come after MBA President and CEO David Stevens blogged about the nine-year anniversary of the conservatorship earlier this month, and touted the benefits of MBA’s proposal for GSE reform. The group’s plan replaces the implicit government guarantee of Fannie Mae and Freddie Mac with an explicit guarantee. “In our plan, private capital would assume more risk, which would lessen the exposure of taxpayers during any economic headwinds,” he said. Stevens also went on to praise...
Fannie Mae’s most recent reperforming loan sale of 10,700 loans went to Goldman Sachs subsidiary, MTGLQ investors. It was the GSEs’ fourth reperforming loan sale transaction of 2017. The loans were divided into three pools and totaled $2.4 billion in unpaid principal balance. MTGLQ won all three pools and is expected to close on Oct. 26. The largest pool consisted of 4,482 loans with an unpaid principal balance of $9.9 billion and average loans size of $220,626. Another pool had 4,200 loans with a UPB of $9.8 billion and average loan size of $234,433. And, the last included 2,001 loans with an aggregate UPB of $4.6 billion and an average loan size of $230,751.
Freddie Mac has decided to buy mortgages with appraisals made by trainee appraisers. The GSE made the announcement in a recent bulletin updating appraisal requirements. Freddie said it made the change in response to seller inquiries. “We are also specifying that an unlicensed or trainee (or similar classification) appraiser may perform a completion report as long as a supervisory appraiser also signs the completion report,” said Freddie. The Loan Product Advisory tool has already been updated to reflect the change. The appraisal shortage likely played a role in that decision as Realtors and lenders complained about a lack of qualified appraisers and out-of-town appraisers not familiar with local market conditions incorrectly valuing homes.
Inspector General recently released a paper about the need for continued oversight of activity in the growing GSE multifamily market. Combined, Fannie Mae and Freddie Mac purchased $112 billion in multifamily mortgages last year. The paper noted that while much of the reform discussion has focused on single-family housing, the GSEs’ role in the multifamily market is a critical aspect of the housing finance system. Market-wide multifamily originations, along with Fannie and Freddie purchases of multifamily mortgages, have grown to record levels in recent years, said the OIG. But multifamily mortgages are more complex to underwrite than single-family loans. “Underwriters of multifamily loans must understand the business and...
Bank and thrift members of the Federal Home Loan Bank system had outstanding advances of $565.7 billion at June 30, a quarterly increase of 8 percent, according to an analysis by Inside The GSEs. Year-over-year numbers are also up, with the second quarter of 2017 now 4 percent higher than the $545.6 billion reported in the first quarter of 2016. In fact, the number reported in the second quarter represented the largest volume of advances for the past 12 months. However, the top three advance users were all down for the quarter. Although JPMorgan Chase continues to lead among borrowers with $68.5 billion in advances, it was down some from the $74.3 billion...
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