The Federal Housing Finance Agency will make across the board reductions to Fannie Maes and Freddie Macs conforming loan limits that affect all markets, but the industry will have ample time to plot necessary course corrections, according to FHFA Acting Director Edward DeMarco. During remarks this week at a conference sponsored by Zillow and the Bipartisan Policy Center, DeMarco said he will announce his loan limit decision in late November the traditional timing of the announcement.
Countrywide Financial Corp. committed fraud when it sold questionable mortgages to Fannie Mae and Freddie Mac prior to the financial crisis, a New York federal jury determined this week. Bank of America acquired CFC in 2008 and is liable for the fraud. The jury also found that Rebecca Mairone, a former chief operating officer for CFCs subprime division, Full Spectrum, is liable for fraud for her role in leading its Hustle loan program, which was designed by Countrywide to speed up approvals for unqualified borrowers.
More than two years after it first filed its massive legal action against some of the nation’s largest financial institutions, the Federal Housing Finance Agency is demanding a high-cost exit fare before it will let two big banks off the hook. The FHFA reportedly is in separate talks with JPMorgan Chase and Bank of America to pay billions to quiet claims that the firms sold faulty mortgage-backed securities prior to the 2008 mortgage market meltdown.
Although Fannie Mae has been pushing certain thinly capitalized nonbanks to its cash window for loan sales, it also wants to know why others that have the capital and approvals arent issuing mortgage-backed securities. A Fannie spokesman had this to say on the matter: If not, why not? Maybe its time for us to have a conversation with them.
Building on both GSEs recent risk-sharing transactions to achieve the Federal Housing Finance Agencys $30 billion 2013 Conservatorship Scorecard target, the head of the FHFA said this week to expect more of the same as well as additional risk-sharing innovations. In a speech at the Bipartisan Policy Center, FHFA Acting Director Edward DeMarco said that Fannie Mae and Freddie Mac, in concert with the Finance Agency, are planning for the scope and depth of risk-sharing transactions to continue and expand.
The Federal Housing Finance Agency should think twice, then disregard any plans to further cut the multifamily business of Fannie Mae and Freddie Mac, according to the ranking member of the House Financial Services Subcommittee on Capital Markets and GSEs. In a letter to the FHFA earlier this month, Rep. Carolyn Maloney, D-NY, noted that since the Finance Agency implemented an arbitrary 10 percent cut in GSE multifamily business for 2013, an additional reduction further depresses the housing market nationwide, reduces the availability of rental housing, and actually harms the financial stability of Fannie and Freddie by limiting proven revenue-generating opportunities.
The Federal Housing Finance Agency moved this week to formalize an anti-fraud initiative it rolled out some 16 months ago that requires Fannie Mae, Freddie Mac and the Federal Home Loan Banks to notify the agency forthwith of fraudulent activity by a GSE-associated individual or company. The interim final rule published in the Oct. 23 Federal Register generally codifies the procedures under the FHFAs existing Suspended Counterparty Program, established in June 2012, with a request for public comment.
The law firm that pursued a nearly decade-long class-action fraud lawsuit on behalf of investors against Fannie Mae and their former auditor, KPMG LLP, until its settlement in May say they are entitled to a piece of the $153 million payout, plus expenses. In papers recently filed with the U.S. District Court of the District of Columbia, the firm of Markovits, Stock & DeMarco of Cincinnati is seeking attorneys fees in the amount of $29.1 million or 22 percent of the settlement amount, plus $15.3 million in out of pocket expenses incurred in the nine years of pursuing the class action.
The incredibly shrinking refinance market helped continue the shift in the mix of single-family mortgages securitized by Fannie Mae and Freddie Mac in the month of September, according to a new Inside The GSEs analysis. Fannie and Freddie issued $78.6 billion in single-family mortgage-backed securities in September, a 20.0 percent decline from August, but a 7.0 percent rise for the first nine months of 2013. [Includes one data chart.]
Roughly 4,100 people have registered to attend the annual convention of the Mortgage Bankers Association, which launches Sunday night in Power City USA.