Although additional defendants sued by the Federal Housing Finance Agency are expected to sooner or later cut deals to settle fraud charges over the sale of non-agency MBS to Fannie Mae and Freddie Mac, banks with larger exposures may calculate that their best bet is to let it play out in court, according to a new report by Fitch Ratings. Fitch noted that the FHFA’s announcement last month that UBS Americas will pay some $885 million to settle claims concerning MBS that UBS sold to the two government-sponsored enterprises is a significant event as other defendants crunch the numbers before deciding whether to proceed with a lengthy and expensive trial or to cut their losses. “Although not necessarily setting a formal precedent, the high settlement costs to UBS relative to the outstanding portfolio amount could lead...
Fannie Mae will lower its maximum LTV. Mortgage insurance firms are not happy. Meanwhile, NAMB blames shrinking application volumes on summer vacations.
Fannie Mae and Freddie Mac are eliminating or tweaking certain servicing initiatives, the two GSEs announced last week in separate bulletins. Effective Aug.1, the two enterprises have eliminated the complete Borrower Response Package and Delinquency Improvement Performance Standard, and the related incentive and compensatory fee structure.
The Federal Housing Finance Agency is ready, willing and able to use its big stick as regulator of the GSEs to play hardball against municipalities that move forward with proposed efforts to seize underwater mortgages via local government eminent domain powers, say industry observers. One year ago nearly to the day after the FHFA warned “action might be necessary” to protect the GSEs, the Finance Agency released a legal memorandum outlining a number of steps it could take in response to an eminent domain action to restructure mortgages. The FHFA reiterated its “significant concerns” as conservator of Fannie Mae and Freddie Mac, as well as regulator of the 12 Federal Home Loan Banks, that widespread seizures of the loans and their subsequent refinancing “presents a clear threat to the safety and sound operations of the GSEs.”
The Federal Housing Finance Agency may pursue a fraud lawsuit against Ally Financial despite the bankruptcy status of Ally’s Residential Capital mortgage unit, a Manhattan federal judge ruled this week. U.S. District Court Judge Denise Cote denied Ally’s request to stay the FHFA’s litigation, a typical motion by bankrupt debtors to defer litigation as they seek to reorganize. In 2011, the FHFA filed 18 lawsuits alleging that Ally and other large financial institutions misrepresented the quality of non-agency mortgage-backed securities sold to Fannie Mae and Freddie Mac before the 2008 financial crisis.
Fannie Mae and Freddie Mac, at the direction of the Federal Housing Finance Agency, are developing a standardized dataset to support the Consumer Financial Protection Bureau’s yet-to-be finalized consolidated closure disclosure forms, the GSEs recently announced. The GSEs’ new Uniform Closing Dataset is a component of the FHFA-mandated Uniform Mortgage Data Program, which is designed to standardize the way loan data is defined, captured and delivered. “The UMDP is a multifaceted, ongoing program in which the GSEs develop and implement mortgage data standards for the single-family loans we purchase and/or securitize,” Freddie said. “Capturing consistent and accurate data is essential to our ability to effectively assess risk on the mortgages we purchase and will create efficiencies for all industry participants.” In conjunction with the uniform appraisal data standards, Freddie said it has worked with Fannie on a joint appraisal data delivery portal, the Uniform Collateral Data Portal, for the electronic capture of appraisal data.
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