Facing a statute of limitations deadline, the Federal Housing Finance Agency filed lawsuits against 17 firms last week in an effort to recover losses the government-sponsored enterprises suffered on their investments in non-agency mortgage-backed securities. The FHFA claimed violations of securities laws, alleging that non-agency MBS prospectuses contained material false statements and omissions. The lawsuits relate to more than $196.2 billion in non-agency MBS purchased by the GSEs. The GSEs’ combined holdings of subprime and Alt A MBS have declined since at least the fourth quarter of 2007 when they totaled $217.2 billion, according to an analysis by Inside Nonconforming Markets,. ...

Goldman Sachs has been ordered to retain an independent consultant to review foreclosure proceedings initiated by its former subsidiary, Litton Loan Servicing LP, under a formal enforcement action announced by the Federal Reserve Board last week. The firm was also required to provide financial remediation to affected borrowers. Additional monetary penalties are likely to be announced shortly. The Fed said it was acting against Goldman Sachs “to address a pattern of misconduct and negligence relating to deficient practices in residential mortgage loan servicing and foreclosure processing” involving Litton. Goldman sold...

Ginnie Mae in a conference call with its MBS issuers said it is going to be focusing its attention on new definitions related to data collection, and urged industry participants to provide feedback. Currently, the loan-to-value ratio definition stands as the ratio of the current unpaid principal balance amount to the appraised value, estimated value or purchase price of the property, and that value must include the upfront mortgage insurance premium. Under the new definition, however, the LTV ratio would be based on the original principal balance, said Ginnie officials. This includes any mortgage insurance premium to lower the sale price or...

The securitization market needs less uncertainty and a great deal more transparency in order to restore investor confidence and lure back private capital, industry executives told members of the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises. Witnesses testifying before the subcommittee, which held a field hearing in New York City, said the state of the securitization market remains uncertain, not just due to government subsidies crowding out any private sector action but also because hesitant investors do not yet see much improvement in the opaque environment that led to the...

Experts agree that the federal government plays too big a role in the housing market, but panelists at a Federal Reserve conference last week said there is little consensus on how to fix it. FHA is “not our silver bullet,” observed Janis Bowdler, a director at the National Council of La Raza. “Surely, it’s stepping in while we are in a tight credit market. But it’s no long-term solution.” One problem with FHA is that lenders aren’t required to offer it, which means entire communities are left “credit-starved,” Bowdler said. “This leaves them in the same vulnerable position to predatory lenders that they were in five or six or 10 years ago,” she...

The Federal Housing Finance Agency this week defended its massive legal action against many of the nation’s largest financial institutions on behalf of Fannie Mae and Freddie Mac over the government-sponsored enterprises’ losses on non-agency mortgage backed security purchases. The Finance Agency contends that 17 financial institutions sold Fannie and Freddie some $196 billion of MBS, mostly between 2005 and 2008, that caused losses to the GSEs for which there should be compensation. Filed late last week in federal and state courts in New York and in federal court in Connecticut, the lawsuits seek damages and civil penalties under... [Includes one data chart]

Iowa Attorney General Tom Miller this week sought to allay concerns of the New York congressional delegation, denying that Empire State’s attorney general was ousted from an executive committee negotiating a nationwide foreclosure settlement with major banks to silence legitimate opposition. Responding to a letter from NY House Democrats, Miller said New York AG Eric Schneiderman was invited to join the core negotiating team of state AGs in June but refused. Miller, who is leading the negotiations, said Schneiderman “voluntarily” walked away from the negotiating table to “pursue another path.” Miller said Schneiderman was asked to...

Senate Republicans’ commitment to block the confirmation of any nominee to the Consumer Financial Protection Bureau will prevent the agency from deploying all of its supervisory and enforcement powers – at least as far as nonbanks are concerned – and that’s infuriating Senate Democrats. Partisan squabbling was on full display this week as the Senate Banking, Housing and Urban Affairs Committee considered President Obama’s nomination of Richard Cordray, currently chief of enforcement for the CFPB, to be the first director for the fledgling agency. “The purpose of today’s hearing should be to consider whether Mr. Cordray is qualified for that job. Instead...

In a not unexpected development, PMI Mortgage Insurance has become the second mortgage insurer in less than a month to be suspended by Fannie Mae and Freddie Mac as an approved GSE mortgage insurer after the company announced state regulators placed PMI under a supervisory order.Mortgages insured by PMI Mortgage Insurance or its affiliates PMI Mortgage Insurance Co. (MIC) and PMI Insurance Co. (PIC) with notes before May 19, 2011, or after Sept. 16, 2011, will no longer be purchased or securitized by Fannie or Freddie, the GSEs announced separately last week.

The Federal Housing Finance Agency has issued an interim final regulation with a request for comments on changes to its existing Privacy Act regulations.