Will investors in GSE stock sue the federal government for "sweeping" earnings out of Fannie Mae and Freddie Mac? Meanwhile, PennyMac worries about its "Countrywide" problem.
Fannie Mae and Freddie Mac will no longer purchase loans that are interest-only, loans with 40-year terms or loans with points and fees exceeding the thresholds of the Consumer Financial Protection Bureau’s “ability to repay” rule, the Federal Housing Finance Agency announced this week. The FHFA said it is directing the GSEs to limit their future mortgage acquisitions to loans that meet the requirements for a qualified mortgage, including those that meet the special or temporary qualified mortgage definition, and loans that are exempt from the CFPB’s “ability to repay” requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Fannie Mae and its former auditor KPMG LLP have agreed to pay $153 million to resolve a long-simmering class action lawsuit brought by investors seeking to recover damages, according to an announcement Tuesday by Ohio Attorney General Mike DeWine. Two Ohio pension funds – the Ohio Public Employees Retirement System and the State Teachers Retirement System of Ohio – filed suit in 2004 related to a $6.3 billion overstatement of earnings against Fannie and three former GSE executives, including then-CEO Franklin Raines.
Fannie Mae is set to "give back" $50.6 billion to the U.S. Treasury by June 30, thanks to stellar earnings and accounting treatment of deferred tax assets.
Most mortgage industry observers expect the Federal Housing Finance Agency to raise Fannie Mae and Freddie Mac guaranty fees by about 20 basis points this year, but many are convinced that the impact on market practices may be bigger than the magnetic effect on private capital. The FHFA has said it wants to raise g-fees to the point that private capital comes into the market, according to Paul Mullins, a senior vice president and interim head of single-family at Freddie Mac. During remarks at the secondary market conference sponsored by the Mortgage Bankers Association this week, he said “The odds are reasonably good you will see higher guaranty fees.” Already around 50 bps and twice their historic level, the fees charged...
New York Attorney General Eric Schneiderman announced this week that he plans to file lawsuits against Bank of America and Wells Fargo for failing to comply with servicing standards included in the $25 billion national servicing settlement. Other states appear likely to join the action, though the litigation might not have much of an impact on the servicers, according to industry analysts. “My office has received a significant number of complaints regarding the flagrant violations by Bank of America and Wells Fargo of the loan modification timeline requirements contained in [the settlement],” Schneiderman said in a letter to the committee monitoring the settlement. BofA and Wells, along with Ally Financial, Citigroup and JPMorgan Chase, have had to comply...
The three percent points-and-fees cap for qualified mortgages under the Consumer Financial Protection Bureau’s ability-to-repay rule is likely to push the private mortgage insurance industry away from products that emphasize upfront premiums and towards products built on monthly premiums. As the rule stands now, borrower-paid, non-refundable upfront MI premiums would be included in the points-and-fee calculation, but borrower-paid monthly MI premiums would not. There are two caveats: lenders may also exclude...
Fannie Mae and Freddie Mac this week reported a combined $63.3 billion in net income during the first quarter of 2013, which represents a huge dividend to taxpayers on the total $189.4 billion capital infusion they received since going into conservatorship. Together, the two government-sponsored enterprises will have paid $131.6 billion to the Treasury by the end of the second quarter, when the government “sweep” of excess net worth takes place. Under the terms of their bailout, the GSEs never pay down their Treasury draws, regardless of how much they pay in preferred stock dividends or net-worth sweeps. But Fannie and Freddie are...
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