Nondepositories now dominate FHA production after several large banks exited the government program due to growing concern over potential liability arising from federal lawsuits…
With Republicans looking to repeal the Dodd-Frank Act and pass new standards that will impact MBS and ABS, the Structured Finance Industry Group recently reviewed areas for reform along with how industry participants can push for changes. The review was completed by SFIG staff and Lewis Cohen, a partner at the law firm of Hogan Lovells. “It would be a mistake to assume that a simple repeal of Dodd-Frank would be sufficient to address many of the regulatory frictions that have impeded the use of securitization to provide funding and create growth in the real economy,” SFIG said. While MBS and ABS participants have long pushed for a loosening of the mandatory risk-retention requirements set by the DFA, SFIG said...
A federal appeals court has rejected government efforts to reverse a September ruling by Federal Claims Court Judge Margaret Sweeney ordering the government to turn over various memos, emails and presentations to investors in litigation involving the Fannie Mae and Freddie Mac net worth sweep. On Jan. 30, the U.S. Court of Appeals for the Federal Circuit ruled in favor of investors in the two government-sponsored enterprises, upholding Sweeney’s earlier decision, and ordered the government to release 48 of the 56 documents because they don’t merit privilege treatment. Eight of the documents were...
The Federal Reserve’s Open Market Committee, as expected, held the line on interest rates this week at its first meeting of 2017, but still presumably stayed on track for multiple increases later in the year. What’s new is a recent resurgence of talk about how the central bank will shrink its massive balance sheet and its huge portfolio of agency MBS and debt, perhaps as early as next year. “In view of realized and expected labor market conditions and inflation, the committee decided to maintain the target range for the federal funds rate at 1/2 to 3/4 percent,” the FOMC said. It added that committee members expect that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate. The Fed will...
Societe Generale has agreed to pay $50 million to the Department of Justice to settle civil charges alleging it misled investors by promoting and selling securities backed by badly underwritten mortgage loans. According to the DOJ, the French bank made false representations regarding SG Mortgage Securities Trust 2006-OPT2, a $780 million debt issue it organized more than 10 years ago. As part of the settlement, SocGen admitted that many of the loans in the deal were improperly underwritten and should not have been securitized. For example, the bank admitted...
The Department of Housing and Urban Development’s inspector general has recommended a recall of several major policy changes HUD has made over the last two years for review and clearance, including the agency’s defect taxonomy. The HUD IG said an audit found that the department had failed to review, approve and document FHA program directives as required when implementing changes to its programs, policies and operations from July 2014 through December 2015. The findings come just as President Trump ordered a freeze on new rules, policies, directives and notices pending a review by the incoming administration. Specifically, HUD distributed at least 15 documents and implemented significant policy changes without first completing departmental clearance, the IG said. At least three draft documents were posted for public comment without obtaining full departmental clearance, the ...
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