More than a year after it was issued under court-ordered duress, the Federal Housing Finance Agency has withdrawn its proposed rule concerning Fannie Mae and Freddie Mac underwriting standards related to mortgages affected by Property Assessed Clean Energy programs. Local governments use the PACE Program, which is part of the American Recovery and Reinvestment Act of 2008, to provide financing secured by a priority lien on the property to homeowners for the purchase of energy-related home improvements. While 27 states and the District of Columbia have legislation in place to permit PACE financing for “green” homes, in July 2010 Fannie and Freddie stopped purchasing PACE-related mortgages that had automatic first-lien priority over previously recorded mortgages.

The Federal Housing Finance Agency announced last week it has reached a settlement with UBS Americas for nearly $900 million to cover claims of alleged violations of federal and state securities laws regarding non-agency residential mortgage-backed securities purchased by Fannie Mae and Freddie Mac. Under the terms of the agreement, the Swiss bank will pay some $885 million divided roughly in half between the two GSEs. UBS will pay Fannie approximately $415 million and $470 million to Freddie to settle claims related to residential MBS offerings between 2004 and 2007. “The satisfactory resolution of this matter provides greater clarity and certainty in the marketplace and is in line with our responsibility for preserving and conserving Fannie Mae’s and Freddie Mac’s assets on behalf of taxpayers,” said FHFA Acting Director Edward DeMarco.

A federal district court in Illinois did not err in dismissing a lawsuit by investors against a hedge fund over nearly $7 million lost in Freddie Mac stock before the GSE was forced into conservatorship, according to a recent ruling by the Seventh Circuit Court of Appeals. The appeals court agreed with the lower court that the plaintiffs failed to present any valid cause of action.

The House Financial Services Committee this week reported out a legislative package of housing finance system reforms, including measures designed to reduce FHA’s role in the mortgage marketplace, strengthen lender oversight and avoid a potential taxpayer bailout. The bill, Protecting American Taxpayers and Homeowners Act (H.R. 2767), passed by a vote of 30 to 27 despite mixed responses from industry experts, academics, financial trade associations and consumer advocates. Critics called for changes. Offered by Rep. Jeb Hensarling, R-TX, chairman of the Financial Services Committee, the bill proposes ...

FHA officials, industry groups and consumer advocates appear to be leaning more towards a Senate FHA reform bill that is moderate and far less ambitious than legislation approved by the House Financial Services Committee this week. Introduced by Senate Banking Committee Chairman Tim Johnson, D-SD, and Ranking Minority Member Mike Crapo, R-ID, the FHA Solvency Act of 2013 “focuses on the right issues, not like the House bill, which tries to dramatically alter the program and affect borrower eligibility,” said an industry observer. Testifying as the sole witness at a Senate Banking Committee hearing on FHA solvency this week, FHA Commissioner Carol Galante said ...

The FHA is trailing Fannie Mae, Freddie Mac and the Department of Veterans Affairs in the disposition of real estate-owned properties, according to a new study from the Government Accountability Office. The study found that FHA’s net proceeds from REO sales from January 2007 through June 2012 were about 4 to 6 percentage points lower than Fannie’s and Freddie’s returns. The differences in combined returns between FHA and the government-sponsored enterprises persisted at an estimated 2 to 5 percent even after controlling for differences in value, location, market conditions and other relevant factors. In addition, the FHA took about ...

The Department of Housing and Urban Development has updated its lender requirements for preforeclosure sale (short sale) and deed-in-lieu of foreclosure for implementation on Oct. 1 this year. The short sale or deed-in-lieu of foreclosure are the last options available to a distressed borrower if home-retention options, such as special forbearance, loan modification, partial claim, and FHA’s Home Affordable Modification Program are not successful. A short sale allows the borrower to avoid foreclosure by selling the home for less than the loan balance. The lender recovers the remainder from ...

The Federal Housing Finance Agency and the Treasury Department illegally implemented the so-called sweep amendment last summer that altered Fannie Mae’s and Freddie Mac’s preferred stock purchase agreements to seize nearly all the two GSEs’ profits, in direct violation of the 2008 conservatorship legislation, according to investors’ lawsuits filed in federal court last week. Unlike the initial litigation filed by investors last month that challenges the entire 2008 government takeover of Fannie and Freddie, the separate suits filed by hedge-fund Perry Capital and by Fairholme Capital Management claim that Treasury’s August 2012 amendment to the preferred stock purchase agreements violated the Housing and Economic Recovery Act of 2008, which placed the GSEs in conservatorship.

The Federal Housing Finance Agency has wrongfully denied Fannie Mae and Freddie Mac permission to uphold their statutory duty under the Housing and Economic Recovery Act of 2008 to make contributions to the National Housing Trust Fund, according to a lawsuit filed by the National Low Income Housing Coalition. Fil0ed last week in the U.S. District Court for the Southern District of Florida, the suit by the NLIHC – along with the Right to City Alliance and four other individual plaintiffs – calls on the FHFA to make good on the GSEs’ obligations to make contributions into the trust fund. The fund was set up under HERA to provide subsidies to rehabilitate and fund low-income housing, but Fannie’s and Freddie’s payment obligations to the trust fund were suspended when the GSEs were placed into government conservatorship in September 2008.

A Manhattan federal judge earlier this month dismissed a class-action lawsuit against Standard & Poor’s Financial Services after finding no evidence that the rating agency defrauded investors when it gave a favorable rating to Fannie Mae stock prior to the financial crisis.The suit, filed in December 2012 on behalf of potentially hundreds of thousands of investors who bought stock in an offering by Fannie in May 2008, four months before the GSE was taken over by the government, alleged that S&P knowingly misrated Fannie’s stock. Valued at about $25 per share when it was issued, the stock dropped to about $3 per share after Fannie’s government conservatorship began in September 2008.