Goldman Sachs last week announced it has agreed to a $5.1 billion settlement, the largest regulatory penalty in the firm’s history, concluding an investigation brought by the Residential MBS Working Group of the U.S. Financial Fraud Enforcement Task Force. The agreement in principle is poised to resolve actual and potential civil claims by the U.S. Department of Justice, the New York and Illinois attorneys general, the National Credit Union Administration (as conservator for several failed credit unions) and the Federal Home Loan Banks of Chicago and Seattle. At issue are...
Nonbanks gained more ground in Fannie/Freddie mortgage servicing during the fourth quarter of 2015, according to a new Inside The GSEs analysis of agency mortgage-backed securities disclosures.Non-depository institutions provided the servicing for some $1.327 trillion of Fannie and Freddie single-family MBS outstanding as of the end of last year. That was up 3.8 percent from the third quarter and represented a hefty 10.1 percent gain from the end of 2014. Banks, thrifts and credit unions were still the dominant GSE servicers, accounting for 67.9 percent of the market at the end of December 2015. But their $2.803 trillion of Fannie/Freddie servicing was down 1.2 percent from...
The final rule issued last week banning captive insurance companies from joining the Federal Home Loan Banks ruffled feathers in the mortgage industry and has some pointing to Congress for future guidance on the issue. FHLBank members that joined the system by way of their captive insurers before the Federal Housing Finance Agency’s proposed rule issued in September 2014 have five years to relinquish their membership. Many are real estate investment trusts that would otherwise be ineligible for membership if it weren’t for finding a loophole in the system. Captive insurance members that obtained membership after the FHFA announced the proposed rule have a year to exit the system and unwind their advances.
Redwood Trust, which a few years back branched out into buying GSE loans, announced this week that it was throwing in the towel on that business, cutting 25 percent of its workforce in the process.Although it will no longer buy Fannie Mae and Freddie Mac mortgages from correspondent originators, it will remain a buyer of jumbo product. As one source close to the company noted: Redwood “just couldn’t make the math work” in that line of business. At Sept. 30, the publicly traded real estate investment trust employed 221 full-time workers. The layoff will claim roughly 54 jobs, most of them in Denver where its GSE acquisition initiative was based.
Trade groups concerned about privacy violations in the proposed collection of data in the National Survey of Existing Mortgage Borrowers voiced their concerns to the Federal Housing Finance Agency last week. The FHFA has been seeking comments on the proposed voluntary survey of borrowers who have a first mortgage loan secured by a single-family home. Everything from the borrower’s name and address to financial records, mortgage and credit card information and race and household composition will be addressed in the approximately 80-question survey. While the 10 trade groups, including the American Bankers Association, Housing Policy Council, Independent Bankers of America and Mortgage Bankers Association, agree with...
Although Fannie Mae and Freddie Mac share the same types of risks, the lack of reliable data provided in risk assessments makes it impossible to compare and monitor risk exposures between the two, according to the Federal Housing Finance Agency’s Office of the Inspector General. The OIG said that the GSEs’ regulator, the FHFA, has come up short in measuring the risks associated with Fannie Mae and Freddie Mac. The FHFA typically uses a risk-based framework to determine whether or not the GSEs are meeting their goals. In the semi-annual OIG report issued earlier this month, it said that the FHFA’s...
Fannie Mae and Freddie Mac have implemented a new appraisal sharing feature in the Uniform Collateral Data Portal to help correspondent lenders. When it launches Feb. 7, correspondent lenders will be able to share appraisal information with their aggregators within the portal so they can get real-time results for their correspondents’ appraisals. The GSEs said this ensures that they will have the most up-to-date appraisal information when selling a loan to aggregators.The correspondent will be able to share individual appraisals with specific aggregators and delve into more details when they retrieve the appraisal. The aggregator can access the status, funding and submission summary report for the correspondent-shared appraisals.
Fannie Mae and Freddie Mac “unquestionably qualify” as systemically important financial institutions, according to the American Enterprise Institute. In a recent letter, AEI’s Alex Pollock and Thomas Stanton wrote that while the Financial Stability Oversight Council designated three nonbanks as SIFIs, it failed to do so for Fannie and Freddie. They argue that the GSEs qualify under both the statutory and FSOC definitions, and under any “objective assessment of their financial importance.” The AEI wants to make sure that the protective capital and regulatory standards applying to SIFIs can be applied to Fannie and Freddie. “Indeed, the failure of the GSEs revealed only some of the problems caused by lack of accurate information (and consequent pricing) with...
After the Federal Housing Finance Agency filed a motion in November to dismiss a case introduced by two GSE shareholders over the summer, the shareholders have opposed the motion to dismiss and are demanding a jury trial. The original complaint stated that with Fannie chartered under Delaware law and Freddie under Virginia’s jurisdiction, the preferred stock of a corporation cannot be given a cumulative dividend right equal to all the net worth of the corporation “in perpetuity.” In a nutshell, shareholders David Jacobs and Gary Hindes argue that the net worth sweep in which Treasury takes the bulk of the GSEs’ profits is illegal under state law.
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