The Structured Finance Industry Group this week proposed the first in a planned long line of standards aimed at increasing transparency for non-agency MBS investors and boosting new issuance. The first edition in the SFIG’s series of “green papers” covers certain representations and warranties, triggers for repurchase, due diligence and communication with investors. Richard Johns, SFIG’s executive director, said about 200 individuals from about 50 organizations involved in the non-agency MBS market have participated in Project RMBS 3.0. “The goal here is...
Fannie Mae and Freddie Mac are expected to pay some $5.6 billion to taxpayers based on “normal” second-quarter earnings that were not bloated by big-ticket tax breaks or large litigation settlements, the two government-sponsored enterprises announced this week. Once the two GSEs have made the latest Treasury payment in September, Fannie and Freddie will have returned about $218 billion to taxpayers for the approximately $188 billion in financial support the two firms received after being placed in government conservatorship in September 2008. Under the revised conservatorship agreement announced two years ago this month by the Federal Housing Finance Agency and the Treasury Department, any GSE net worth exceeding $3.0 billion is impounded...
The Federal Reserve Bank of New York is rolling out a one-year pilot program for a limited number of firms that do not meet the minimum capital requirement for primary dealers to function as counterparties in agency MBS operations it runs for the System Open Market Account portfolio. The FRBNY said its intent is to explore ways to broaden access to open market operations, and to determine the extent to which firms beyond the primary dealer community can augment the FRBNY’s operational capacity and resiliency in its monetary policy operations. “This pilot will allow...
Mortgage trustees are still awaiting state court approval of a $4.5 billion settlement with JPMorgan Chase in relation to faulty residential MBS issued by the bank and the now-defunct Bear Stearns between 2005 and 2008. If approved by the New York State Supreme Court, the agreement would resolve representation and warranty claims as well as servicing claims related to loans in 330 mortgage securitization trusts, as well as claims over document delivery. In addition, the bank agreed to change its servicing procedures with respect to mortgage loans in the trusts. The proposed settlement does not resolve...
Lender profit margins appear set to stop declining, according to a new survey by Fannie Mae of senior executives at 181 institutions. Industry participants suggest that increased demand from borrowers along with operational efficiencies will help steady profit margins. Doug Duncan, senior vice president and chief economist at Fannie, said the significant decline in volume in recent quarters put pressure on profit margins. “That would be expected to ease somewhat ...
A federal judge in Manhattan last week ordered Bank of America to pay a $1.27 billion penalty for losses suffered by Fannie Mae and Freddie Mac from Countrywide Financial’s “Hustle” program for pumping dubious Alt A loans to the GSEs. The bank also is reportedly nearing a settlement with the Justice Department over other charges. Last October, the DOJ and the Securities and Exchange Commission successfully proved in court that Fannie Mae and Freddie Mac lost some $850 million from thousands of loans acquired through Countrywide’s “high-speed swim lane” program – known as HSSL or “Hustle.”
Less than a week before its deadline, the Federal Housing Finance Agency announced last week that it is extending the comment period for guaranty fees charged by Fannie Mae and Freddie Mac. In June, the FHFA issued a call for public comment on how the GSEs should calculate g-fees and whether the Finance Agency should proceed with a 10 basis point g-fee hike announced last year. In one of his first acts as FHFA Director in January, Mel Watt ordered the g-fee hike postponed pending further study.
Mortgage buybacks and indemnifications may be off their peak in terms of volume, but they are widely expected to continue for the foreseeable future, especially for Fannie Mae and Freddie Mac loans, according to experts during a webinar sponsored by Inside Mortgage Finance Publications last week. Amanda Raines, a partner in the Washington, DC, office of the BuckleySandler law firm, told webinar participants that more buybacks are definitely on the way. On the Fannie /Freddie front, the attorney pointed out that despite recent settlements, the Federal Housing Finance Agency’s Office of Inspector General encouraged the continued pursuit of buyback claims and repurchase rights.
It could cost Goldman Sachs between $800 million and $1.25 billion to resolve government claims that it sold faulty mortgage-backed securities to Fannie Mae and Freddie Mac leading up to the financial crisis, according to recent reports. Goldman Sachs is currently negotiating with the Federal Housing Finance Agency, which has recovered approximately $16.1 billion in agreements with other banks with respect to legacy MBS sold to the GSEs.In September 2011, the FHFA filed 18 separate lawsuits against some of the nation’s biggest banks, accusing them of misrepresenting some $180 billion in toxic subprime MBS.
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