The Treasury Department this week finished winding down its holdings of Fannie Mae and Freddie Mac MBS, claiming a positive return of $25 billion for the U.S. taxpayers from a market stabilization initiative launched in the teeth of the 2008 financial market meltdown. Treasury’s holdings of MBS issued by the two government-sponsored enterprises peaked at $197.6 billion in December 2009. “These MBS purchases helped preserve access to mortgage credit during a period of unprecedented market stress,” the agency said. The Federal Reserve agency MBS investment program was far bigger, peaking at $1.12...

In a development that ultimately could affect legions of homeowners who couldn’t get a permanent loan modification, the U.S. Court of Appeals for the Seventh Circuit recently gave the go-ahead to a borrower class action against a mortgage servicer for not providing a permanent loan modification under the Home Affordable Modification Program. “We believe this affects hundreds of thousands of people, if not more – not just at Wells Fargo, but also with respect to other banks – who haven’t been able to get their loan modifications like they should have, given their compliance with their trial plans...

The feds aren’t done cracking down on mortgage servicers and before the smoke clears, more than a half dozen companies are going to be facing fines that have been pending since federal regulators announced their servicing consent decrees last April, an official from the Federal Reserve told members of Congress this week. Last month, the Fed announced it had assessed monetary sanctions totaling $766.5 million against Ally Financial, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo for failing to appropriately oversee their subsidiaries’ mortgage loan servicing and foreclosure processing...

Regulatory streamlining is absolutely essential if smaller mortgage lenders are going to survive the threat they face from their enormous regulatory burdens, two industry trade groups told the Consumer Financial Protection Bureau recently. “Currently, the industry is dealing with several new rules, including those under the Secure and Fair Enforcement Act for Mortgage Licensing and the Truth in Lending Act, and faces an unprecedented wave of additional rules required under Dodd-Frank Wall Street Reform and Consumer Protection Act,” said the Consumer Mortgage Coalition ...

Federal Housing Finance Agency.FHFA Office of Inspector General. FHFA’s Supervision of Freddie Mac’s Controls over Mortgage Servicing Contractors Faulted. The Federal Housing Finance Agency’s Office of Inspector General found some areas in which the Finance Agency could improve its supervision of Fannie Mae’s and Freddie Mac’s controls over its mortgage servicing contractors. “FHFA has not clearly defined its role regarding oversight of servicers, sufficiently coordinated with other federal banking agencies about risks ...

The Treasury Department announced last week that it will restore Home Affordable Modification Program incentive payments previously withheld from Bank of America and JPMorgan Chase. The move was prompted by the servicers agreeing to participate in the proposed $25.0 billion servicing settlement and not necessarily by improved HAMP performance. In fact, the consent judgments filed against BofA and Chase specifically cite deficiencies in the servicers’ HAMP performance. “The United States contends that it has certain civil claims based on conduct of the company and its affiliated entities in servicing of mortgage loans,” the complaint against each servicer states, later citing implementation of the Making Home Affordable Program and all of its components, among other deficiencies ...

Failure by the five largest FHA mortgage servicers to establish effective controls and to comply with FHA foreclosure procedures resulted in improper servicing practices that may have exposed them to liability under the False Claims Act, the Department of Housing and Urban Development’s Office of the Inspector General concluded in separate, recently released audits. The HUD-OIG audits of the top five FHA servicers – Bank of America, Ally Financial, Wells Fargo, CitiMortgage and JPMorgan Chase – revealed a variety of questionable foreclosure practices involving the use of foreclosure “mills” and robo-signing of sworn documents in thousands of foreclosures throughout the country. The audits were ...

Dividend payments paid by Fannie Mae and Freddie Mac to the U.S. Treasury for its continued financial support held down the two government-sponsored enterprises during the fourth quarter as Freddie would have otherwise posted a profit, while Fannie narrowed its losses during the final three months of 2011. Freddie actually reported $619 million in net income during the fourth quarter of 2011, compared to the third quarter’s net loss of $4.4 billion, before having to repay $1.7 billion in preferred stock dividends to the government. Under the terms of the GSEs’ purchase agreement, the Treasury is entitled...

Bank of America and JPMorgan Chase will once again receive servicer incentives for modifying loans after more than seven months during which these payments were withheld by the Treasury Department for unsatisfactory performance in the Home Affordable Modification Program. The two banks will also get all the withheld incentives as part of the multistate foreclosure settlement. In June 2011, Bank of America, JPMorgan and Wells Fargo were all called to the carpet by the Treasury for their HAMP performance following a 10-month audit of participating servicers. The main issue was timeliness – while mods...

The extension of the Home Affordable Modification Program announced in late January was coupled with changes, including the new eligibility of investor-owned properties. While the expansion of the program could allow for a half million more participants, there are complaints that it is no more than a taxpayer bailout of speculators. Timothy Massad, the assistant secretary for financial stability at the Department of Treasury, said the inclusion of investor-owned properties will help low- to moderate-income renters, because the foreclosure of investor-owned properties disproportionately affects them. An advocate for...