HUD has been criticized by consumer advocates who feel the agency's NPL auctions have unfairly benefitted private equity firms and hedge funds at the expense of troubled borrowers.
Lender buybacks of mortgages sold to Fannie Mae and Freddie Mac may never completely disappear, but they are shrinking fast – especially when compared to soaring new business volume at the two government-sponsored enterprises. A new Inside Mortgage Trends analysis reveals that lenders repurchased, or made other indemnification, some $250.1 million of loans during the second quarter of 2016. That was the lowest quarterly ... [Includes two data charts]
While Fannie Mae has mopped up virtually all of the buyback disputes on loans more than a few years old, Freddie Mac still has a stubborn supply of legacy repurchase demands on its hands. A new Inside The GSEs analysis of repurchase activity disclosures for the second quarter of 2016 reveals that 39.6 percent of Freddie’s pending and disputed buyback claims involved loans that were securitized prior to 2008. At Fannie, such loans accounted for just 0.7 percent of unresolved buyback demands as of the end of June. Freddie did make progress during the second quarter, however. In fact, 34.8 percent of the seller repurchases or indemnifications made during the...
The GSEs recently introduced a new loan dispute procedure that lenders should use prior to engaging a third-party arbitrator. Fannie Mae and Freddie Mac launched their independent dispute resolution process early in the year as the final piece to the representation-and-warranties framework to help prevent buybacks.This process uses a neutral third-party arbitrator to determine a final, binding decision about whether there was a loan violation.However, the new impasse and management escalation process, announced last week, is intended to serve as an intermediary between the normal loan dispute appeal process and the final IDR process for seller/servicers.
Fannie Mae and Freddie Mac will implement a new high loan-to-value refinance option in October 2017 to replace the Home Affordable Refinance Program but lenders say it’s too early to know what to expect. While HARP was set to expire at the end of the year, the Federal Housing Finance Agency extended it to Sept. 30, 2017, so there is no gap in refinance offerings. The new high loan-to-value streamlined refinance option has not been named yet, but targets borrowers who are current on their mortgage loans, but have not been able to refinance through traditional programs because of high loan-to-value ratios.
A high profile shareholder’s request to access Freddie Mac’s corporate records was shot down in a case dismissal last week as a federal court ruled that all shareholder rights were transferred to the Federal Housing Finance Agency during the conservatorship. In Timothy J. Pagliara v. Federal Home Loan Mortgage Corporation, plaintiff Tim Pagliara, chief executive of CapWealth Advisors and the executive director of Investors Unite, a GSE shareholders group, filed a lawsuit in court in March to gain access to Freddie’s records, as an individual stockholder. He owns approximately 346,000 shares of Freddie’s junior preferred stock, according to court documents.
The GSE credit risk-transfer program should expand and take into consideration what role it will play in the greater financial system, according to the authors of a new white paper published late last week by the Urban Institute. UI’s Laurie Goodman, Jim Parrott and Ellen Seidman, along with Moody’s Analytics Mark Zandi, said although the credit risk-transfer effort has come a long way in the three years since it was implemented, it still has a long way to go to reaching its full potential. The authors’ primary criticism is that the credit risk-transfer process is too limited. They said it focuses almost exclusively, on how various risk- sharing structures might effectively reduce the current risk to Fannie Mae and Freddie Mac.
One former GSE executive lost his severance package case and another settled in a long-standing civil fraud lawsuit. Both cases came to a conclusion last week. Anthony Piszel, former chief financial officer at Freddie Mac, appealed a judgment from the U.S. Court of Federal Claims dismissing his complaint that Freddie owed him payment for his “golden parachute” compensation after he was terminated without cause at the start of the conservatorship. The question came down to whether or not a government prohibition on making golden parachute payments to terminated Freddie employees was illegal or not. Piszel was terminated two weeks after...
The Federal Housing Finance Agency issued a proposed rule last week that would reduce the amount of approval the Federal Home Loan Banks would need from the regulator before engaging in new business activities. This comes after the FHLBanks wrote the FHFA in 2013 following a request for public comment on existing regulations. The agency said this was done to help improve the banks’ effectiveness and reduce their burden. The agency announced the rule modifying part of its regulations regarding requirements for the FHLBanks’ new business activity in the Aug. 23, 2016, Federal Register.
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