Federal courts and a state attorney general have been busy this past week churning out decisions and announcing settlements on a number of cases involving legacy non-agency MBS, Wall Street financial institutions and pension funds. A hearing on a proposed $272 million cash settlement of two class-action lawsuits against Goldman Sachs involving legacy MBS will be held on April 13, 2016, at 10 a.m. in U.S. District Court for the Southern District of New York. Attorneys for the plaintiffs, NECA-IBEW Health & Welfare Fund and the Police and Fire Retirement System of the City of Detroit, sent out...
Investors in Fannie Mae and Freddie Mac stock haven’t had a lot of success challenging the federal government’s quarterly earnings sweep at the two government-sponsored enterprises, but they’re looking for better results in the two states where the GSEs are chartered. The plaintiffs, David Jacobs and Gary Hindes on behalf of themselves and other shareholders, said state law prohibits the preferred stock of a corporation from getting a cumulative dividend right equal to all the net worth of the corporation. Their lawsuit is pending in the state supreme courts of Delaware, where Fannie is chartered, and Virginia, Freddie’s corporate domicile. The filing pointed...
Fitch Ratings will allow for differences in third-party due diligence practices when rating various types of residential MBS, granting concessions to risk-sharing transactions from the government-sponsored enterprises. The firm released revised master-rating criteria late last week. Among the changes compared with criteria that were released in October was an allowance for differences among non-agency MBS backed by recent originations, transactions related to the GSEs and non-agency MBS backed by seasoned loans. While most jumbo MBS issued in recent years have included third-party due diligence reviews of 100 percent of the loans in a deal, the GSEs’ much larger risk-sharing transactions have been...
The plaintiffs argue that state law prohibits the preferred stock of a corporation from getting a cumulative dividend right equal to all of a company's net worth...
The Department of Veterans Affairs has issued guidance to help VA lenders understand better the agency’s interim final rule on a borrower’s ability to repay and qualified mortgages. The guidance was published in a frequently asked questions (FAQs) format to clarify and explain both the VA’s ATR and QM standards. The VA interim final rule became effective on May 9, 2014, the date it was published in the Federal Register. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires residential mortgage lenders to make a reasonable and good faith determination that the consumer has a reasonable ability to repay the loan according to its terms. The statute directed the Consumer Financial Protection Bureau to develop and implement an ATR/QM rule. Under the CFPB’s final rule, a qualified mortgage is a category of loans that have certain, more stable features that ...
The Department of Veterans Affairs and the U.S. Department of Agriculture Rural Housing Service have issued 2016 guidelines for lending to borrowers who have gone through a bankruptcy, foreclosure or a short sale. Under VA guidelines, borrowers emerging from a previous Chapter 7 bankruptcy may apply for a VA loan two years after the bankruptcy discharge. Borrowers with a Chapter 13 bankruptcy may qualify for a new VA loan if they have made at least 12 months of payments and the lender concludes that they have reestablished satisfactory credit. Before the bankruptcy-tainted borrower applies for a VA loan, however, the trustee or the bankruptcy judge must approve the new loan. The lender may put in a good word on behalf of the borrower provided the latter has met all requirements for a new loan. Borrowers may apply for a VA loan two years after a foreclosure or a short sale. In the case of ...
The FHA flood insurance requirements could make it difficult or more risky for lenders to originate FHA loans in states with significant flood risk or where flood maps may not accurately reflect the current flood risks, the Mortgage Bankers Association warned. Testifying during a recent hearing on private flood insurance, Steven Bradshaw, executive vice president of Standard Mortgage and MBA representative, warned that FHA’s current requirement for lenders to secure flood insurance on properties only if it is located within a high flood-risk zone has had some unexpected adverse impact, particularly in the wake of hurricane-related catastrophes. Bradshaw noted that many homes that were destroyed by Hurricane Katrina were not located in special flood-hazard areas (SFHA) and therefore were not required to have flood insurance. “Sadly, these borrowers were often uninsured and the ...
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