The Department of Housing and Urban Development has reportedly offered to release major servicers from some liability related to FHA mortgages as part of a pending settlement related to foreclosure problems. While the offer may sweeten the deal for banks to settle with state attorneys general and federal regulators, observers say it’s not a total game changer. The complex negotiations have lasted more than a year, stemming from servicing practices that include robo-signing of foreclosure documents and poor communication with borrowers. A key sticking point has been...

The Federal Housing Finance Agency this week issued a final rule that would establish the conditions and procedures for Federal Home Loan Banks to merge, but experts say it’s unlikely any of the FHLBanks will do so voluntarily. The final rule, published in the Nov. 28 Federal Register, was based on governance practices common under corporate law, disclosure practices required under federal securities laws and merger approval standards in federal banking laws, the FHFA said. Although the Housing and Economic Recovery Act of 2008 allowed for FHLBank mergers, until...

Documenting mortgage lender and broker compliance with the Federal Reserve’s loan originator compensation rule will be just as important as actually complying with it, according to top industry attorneys and state regulators. “Compliance policies and procedures are really not enough” to satisfy the LO comp rule, Richard Andreano, a partner in the Washington, DC, office of the Patton Boggs law firm, told participants in a webinar sponsored this week by Inside Mortgage Finance. “The ability to document compliance will be very important, and people will need to maintain very...

California’s Attorney General has reportedly issued subpoenas to Fannie Mae and Freddie Mac seeking details of the government-sponsored enterprises’ mortgage lending and foreclosure practices, possibly as a way to cajole the Federal Housing Finance Agency to overcome its resistance to principal reductions for GSE loans. The subpoenas seek information about how Fannie and Freddie are handling thousands of foreclosed properties, as well as details about the GSEs’ mortgage-servicing and home-repossession practices. According to published reports, State AG Kamala Harris, a Democrat, also is looking into how...

The Department of Housing and Urban Development is pondering its next move after a federal district court judge in Houston reversed a suspension order against Allied Home Mortgage Corp., an authorized FHA lender, and its chief executive officer, last week. In a Nov. 15 ruling, U.S. District Court Judge Melinda Harmon granted a motion by the Houston-based mortgage banker and its CEO, James Hodge, to temporarily stop HUD from enforcing a suspension of the plaintiffs’ authority to underwrite and originate FHA loans until a related lawsuit is resolved. On Nov. 1, the government intervened in a False...

The Federal Reserve Bank of New York will ask its primary dealers, as part of best practices, to raise their upfront cash collateral for MBS trades. A NY Fed spokesman denied that the change in collateral requirements was a reaction to the recent collapse of MF Global, a primary dealer. Since its last foray into the agency MBS business in 2010, the agency has been considering raising the margin for MBS deals, he said. The spokesman said a best practices guidance issued by the NY Fed’s Treasury Market Practices Group in September 2010 requires trading desks to consider...

The Federal Housing Finance Agency’s Office of Inspector General is attempting to grow the Finance Agency and the OIG itself into a larger-than-necessary entity, and that is a questionable objective given Fannie Mae and Freddie Mac’s “uncertain long-term future,” the FHFA head told lawmakers last week.FHFA Acting Director Edward DeMarco, testifying before the Senate Banking, Housing and Urban Affairs Committee, noted the OIG’s “recurring conclusion” in its recent reports “that the FHFA is understaffed and that it should be more directly engaged day-to-day in the enterprises’ business activities.” That would include independently repeating and validating Fannie and Freddie’s business decisions and calculations.

The Federal Housing Finance Agency earlier this month issued a proposed rule to require the Federal Home Loan Banks to “monitor and assess the eligibility” of each Bank member for access to long-term advances through compliance with the Community Reinvestment Act and the member’s first-time homebuyer standards.To maintain access to FHLBank long-term credit and community investment products, Bank members are required to submit a community support statement to the FHFA every two years to document their CRA performance and record of lending to first-time homebuyers.

ABS issuers are scrambling to get a handle on complex new rules to mitigate conflicts of interest in the structured finance market that are being developed by the Securities and Exchange Commission and federal banking regulators. “At the end of the day, we’ll spend lots of time figuring out how to comply,” said Bianca Russo, managing director and associate general counsel at JPMorgan Chase, during a seminar sponsored last week by the American Securitization Forum. “It’s going to be a challenge to comply, however the rules turn out.” Complexity and consistency are...

For an all too brief moment last week there was bipartisanship on Capitol Hill as exasperated Democrats and Republicans took turns questioning and berating the CEOs of Fannie Mae and Freddie Mac and their regulator surrounding the issue of executive compensation at the two GSEs.Federal Housing Finance Agency Acting Director Edward DeMarco was called before the Senate Banking, Housing and Urban Affairs Committee and the House Committee on Oversight and Government Reform to explain some $13 million in performance bonuses to Fannie CEO Michael Williams and Freddie CEO Charles Haldeman and eight other senior executives at the taxpayer-subsidized firms.