A much-anticipated Senate vote on the nomination of Carol Galante as FHA commissioner and assistant secretary of housing with the Department of Housing and Urban Development failed to materialize this week, reportedly due to the continuing Republican efforts to block her appointment. Word spread that a vote would take place after Senate Majority Leader Harry Reid, D-NV, and Senate Minority Leader Mitch McConnell, R-KY, last week tentatively agreed to vote on the nomination sometime this week. But that has not happened. Both positions have been vacant since ...
Despite intense lobbying and political pressure from the Obama administration and Congressional Democrats, the Federal Housing Finance Agency announced this week it will hold fast to its original conclusion and not agree to Treasury Department requests to allow Fannie Mae and Freddie Mac to offer principal forgiveness modifications. Despite the incentives offered by Treasury to pay the government-sponsored enterprises to write down principal under the Home Affordable Modification Program using Troubled Asset Relief Program funds, FHFA Acting Director Edward DeMarco concluded the benefits of implementing HAMP’s Principal Reduction Alternative did not outweigh the risks to the taxpayer-backed GSEs. “Given our multiple responsibilities to conserve the assets of Fannie Mae and Freddie Mac, maximize assistance to homeowners to avoid foreclosures, and minimize the expense of such assistance to taxpayers, FHFA concluded...
The investor group that had been seen as the most formidable opponent to Bank of America’s proposed $8.5 billion MBS settlement pulled out of the fight this week. Walnut Place submitted a motion to New York State Supreme Court Judge Barbara Kapnick, which she granted, to formally withdraw its objection to the BofA settlement. “Walnut Place respectfully requests that it be permitted to withdraw as an intervenor in this proceeding,” the investor group wrote to the judge. Walnut Place, which represents...
There appear to be no immediate plans to move the GSEs beyond conservatorship status but news this week that the Federal Housing Finance Agency is actively investigating the possibilities of receivership may be designed to attract the attention of thus far indifferent policymakers and snap official Washington into action, say industry experts. The FHFA this week confirmed that it has commissioned the consulting firm PricewaterhouseCoopers to create contingency plans for taking Fannie Mae, Freddie Mac and the Federal Home Loan Banks into receivership. A Finance Agency spokesman said the hiring of PwC, which was not officially announced, is just one of a number of “ordinary regulatory activities” that the FHFA is authorized and obligated to pursue under the authority granted the agency by the Housing and Economic Recovery Act of 2008.
The Federal Home Loan Bank system is one of three potential hosts for a proposed new refinance program unveiled this week by a Senate Democrat aimed at rescuing underwater homeowners without direct federal assistance. Oregon Sen. Jeff Merkley’s proposal – spelled out in a white paper titled “The 4% Mortgage: Rebuilding American Homeownership” – would create a temporary government-backed trust to purchase eligible mortgages issued by private lenders. The RAH Trust would be funded by the federal government’s sale of bonds to investors. The plan would allow underwater borrowers who are current on their mortgages to refinance at a lower interest rate.
A bill introduced in the House earlier this month would allow privately-insured credit unions access to the Federal Home Loan Bank system for the first time. H.R. 6105, introduced by Rep. Steve Stivers, R-OH, would amend the Federal Home Loan Bank Act to allow non-federally-insured credit unions to become members of one of the 12 FHLBanks. Currently, only federally insured credit unions can access the FHLBanks’ low-cost, secured funds, and certain requirements must be met.
The one-time funding vehicle of defunct and disgraced mortgage servicer Taylor, Bean & Whitaker Mortgage Corp. has asked a bankruptcy court for permission to investigate Freddie Mac and its regulator, the Federal Housing Finance Agency. According to documents filed earlier this month in U.S. Bankruptcy Court in Jacksonville, FL, Ocala Funding LLC wants to examine an $805 million transfer made to Freddie by TBW executives before the servicer collapsed with the goal of recovering assets for its creditors. TBW imploded in 2009 after federal authorities discovered that Taylor Bean defrauded Freddie, among others, to the tune of $3.0 billion. A number of TBW executives were convicted and sent to jail for their part in the fraud scheme, including former owner and CEO Lee Farkas, who was sentenced to 30-years in prison last year.
Fannie Mae is immune from punitive damage claims brought by a former staffer in her wrongful termination suit against the company as long as the GSE is under the conservatorship of the Federal Housing Finance Agency, a federal judge ruled last week. The ruling in the U.S. District Court for the District of Columbia is a major setback for Caroline Herron, a former Fannie vice president who left in 2007 but returned as a consultant in 2009. Herron filed suit against the GSE in June 2010, claiming she was wrongly fired for reporting what she said was Fannie’s mismanagement of the Obama administration’s housing rescue initiatives and grossly wasting public funds.
California remains the top source of new single-family mortgages for Fannie and Freddie, even as Fannie remains the dominant GSE in terms of production through the first half of the year, according to an Inside The GSEs analysis. A total of $132.2 billion of home loans on Golden State properties were securitized by the two GSEs during the first six months of 2012, accounting for 22.9 percent of their total business for the half year. That was up 46.7 percent from total California production during the first six months of 2011 as the overall GSE market rose 38.8 percent from a year ago.
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