Before the CFPB’s new Home Mortgage Disclosure Act rules kick in, now would be a great time for the mortgage industry to take steps to improve the HMDA process, according to Kathleen Blanchard, president of Key Compliance Services. “As another HMDA season draws to a close, take some time to consider the HMDA process and how to make it better,” she advised in a recent online blog. “The HMDA Loan Application Register is an important document that is very labor intensive, with monetary penalties attached for inaccuracies. Take a project management approach and create a strong process to get it right.” Blanchard said she sees financial institutions scrubbing LARs at year end, making changes to applications and loans that should ...
Fannie Mae and Freddie Mac single-family business slowed in February as the purchase-mortgage sector faltered, and trends suggest the GSEs are losing share in their core market. The two enterprises issued $50.05 billion of single-family mortgage-backed securities last month, according to a new ranking and analysis by Inside The GSEs. That was down 11.5 percent from January and left Fannie and Freddie production for the first two months of 2015 12.2 percent behind the pace set last year. February’s new issuance was also the lowest monthly total for the GSEs since May 2014, when they produced $44.80 billion of single-family MBS. Purchase-mortgage volume followed seasonal patterns and sank 18.5 percent from...
Fannie Mae and Freddie Mac are private companies, according to a recent Ninth Circuit Court of Appeals case that dismissed an argument stating that the mortgage giants are federal instrumentalities as it relates to them being liable under the False Claims Act. Now some say this ruling may influence and stir up reaction about a case in Delaware involving GSE shareholders who argue that the Treasury sweep of the GSEs’ profits was illegal. In the United States ex rel. Adams v. Aurora Loan Services, Inc., et al., a whistleblower case, James Adams, on behalf of the government, named 16 banks, lenders and servicers as defendants in a FCA breach of representations-and-warranties lawsuit. It was alleged...
The Federal Housing Finance Agency released the 2015 Scorecard progress report for Fannie Mae and Freddie Mac on March 3. The agency detailed goals the GSEs met in 2015 and mentioned several initiatives for this year including the first public release of non-performing loan sales data in 2016. Because of the amount of time needed to transfer sold loans to a new servicer, evaluate borrowers for foreclosure prevention action and complete loan modification trial periods, the FHFA said it takes six to 12 months after the datew of an NPL sale to get any meaningful data. Once it has that data, it will begin to assess borrower outcomes of NPL sales going forward.
Freddie Mac has launched a project to correct some “operational deficiencies” in how it transfers money in and out of mortgage-backed securities trusts. The GSE said in its 2015 10-K filing that the issue has not had a material impact on its earnings or on investors in its MBS. Freddie explained that seller/servicers deposit various funds – such as mortgage principal and interest payments owed to MBS investors and guarantee fees due to the GSE – into custodial accounts for securitization trusts. The funds owed to the company are classified as restricted until they are transferred to an operating cash account. Management, however, determined that Freddie has not maintained detailed pool-by-pool records of funds in the custodial account...
The decline was largely based on a seasonal slump in purchase-mortgage activity. Looking forward, primary-market indicators point to a solid increase in consumer demand.
The GSEs will publicly release their non-performing loan sales data for the first time, conclude their assessment of various credit scoring models and the FHFA will issue a request for input on front-end credit risk transfer transactions.
The Ninth Circuit Court of Appeals has dismissed an argument in a whistleblower case, ruling that Fannie Mae and Freddie Mac are not “federal instruments” for the purposes of the False Claims Act, a federal statute that’s been used aggressively against FHA lenders. The FCA imposes liability on persons that defraud government programs and was originally enacted to penalize private parties that profited illegally in selling supplies to the U.S. Army during the Civil War. In the case of United States ex rel. Adams v. Aurora Loan Services, Inc., et al., the government argued...
Forty-five congressmen signed a letter addressed to the head of the Federal Housing Finance Agency on March 1 citing the need to reform the way nonperforming loan sales are conducted and singled out Lone Star Funds as a “bad actor” in the transactions. The letter, addressed to FHFA Director Mel Watt as well as Secretary Julian Castro of the U.S. Department of Housing and Urban Development, noted that there are improvements both agencies should take to better align the programs with the goals of stabilizing neighborhoods, alleviating the affordable housing crisis and working with organizations that have a track record of homeownership preservation.
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