The Federal Reserve last week fined Wells Fargo & Co. $85.0 million, alleging that a non-bank subsidiary of Wells steered prime borrowers to subprime mortgages. The consent order is the first formal enforcement action taken by a federal bank regulatory agency to address alleged steering of borrowers into high-cost subprime mortgages. The civil money penalty is also the largest the Fed has assessed in a consumer-protection enforcement action. In addition to the civil money penalty, the order requires that Wells compensate more than ...

The Federal Housing Finance Agency this week filed a lawsuit against UBS Americas alleging misstatements and omissions on non-agency mortgage-backed securities purchased by Fannie Mae and Freddie Mac. FHFA Acting Director Edward DeMarco warned that further action against other non-agency MBS issuers is likely. “From the issuance of 64 subpoenas last year to the filing of this lawsuit and further actions to come, we continue to seek redress for the losses suffered by ...

An increasing number of non-agency mortgage-backed security investors have opposed Bank of America’s proposed $8.5 billion settlement related to buybacks and servicing. The proposed settlement announced last month was seen as a precedent for the sector, though final approval remains far from certain. MBS investors have raised concerns about the settlement price, conflicts of interest and second liens, among other issues. If approved, the settlement would apply to all investors in the 530 Countrywide Financial securities in question, not just to the 22 large firms represented by ...

Ocwen Financial has posted impressive results with a shared appreciation modification program that recently received broad regulatory approval. The servicer noted that the mods, which include principal reduction, benefit borrowers and mortgage investors.Ocwen launched a SAM pilot program in August and announced this week that it hopes to expand the program nationwide. Ocwen CEO Ronald Faris said 79.0 percent of borrowers that have been offered the mods have accepted and the pilot program had a ...

Funds participating in the Public-Private Investment Program suffered large decreases in their net returns due to the significant decrease in non-agency mortgage-backed security prices in the second quarter of 2011. Pricing during the quarter was negatively impacted by the Federal Reserve’s sales of non-agency MBS from the Maiden Lane II portfolio. All eight of the Public-Private Investment Funds experienced a decrease in their net internal rates of return in the second quarter of 2011 compared with the previous quarter, according to the Treasury Department. And seven of the PPIPs experienced a ... [includes one data chart]

Bank of America agreed this week to fully participate in a principal reduction modification program in California, according to the California Housing Finance Agency. BofA had participated in the program on a pilot basis since February. Qualifying borrowers are eligible for up to $100,000 in principal reduction via the “Keep Your Home California” program. Mortgage holders are required to match dollar-for-dollar the amount of ...

The Federal Reserve fined Wells Fargo $85 million last week over high-pressure compensation policies in the firm’s finance company that allegedly led to steering of prime borrowers to more lucrative non-prime mortgages. The $85 million fine is the largest ever levied by the Federal Reserve in a consumer enforcement case. Wells has since shut down Wells Fargo Financial, its subprime subsidiary that was the focus of the Fed’s charges. CEO John Stump said in a statement the “alleged actions” were “committed by a relatively small group of team members.” The Fed said Wells Fargo Financial’s incentive compensation and sales quota programs fostered ... [includes one data chart]

Equipment and automotive ABS issuance may flirt with new record highs this year or next as the 2008 market collapse fallout dissipates and the benefits of solid underwriting continue to accrue, some leading industry executives said this week. Equipment ABS has rebounded substantially, according to Julie Schlueter, who is responsible for issuance of structured products and unsecured bonds at Case New Holland Global, a major manufac-turer of agricultural and construction equipment, and its captive finance subsidiary, CNH Capital. In 2007, new issuance in the sector exceeded ...

Federal Reserve Chairman Ben Bernanke this week endorsed the reduction in high-cost conforming loan limits set to be implemented in October. The Mortgage Bankers Association, meanwhile, called for an extension of the existing loan limits through the end of 2012. Major banks and other non-agency players are eagerly anticipating the decline in the top loan limit from $729,750 to $625,500. A number of banks have indicated that they are ready and willing to make non-agency jumbos. In separate testimony this week before two committees of Congress, Bernanke said lowering ...

New Penn Financial is offering mortgages with balances of up to $2.0 million along with a number of other non-agency lending options, the firm revealed this week. Shellpoint Partners, a specialty finance company, recently acquired New Penn, which previously focused predominantly on agency offerings. “There is a large segment of credit-worthy borrowers who cannot qualify for financing due to overly restrictive agency and government guidelines,” said Bob Wexler, vice president of New Penn’s financial services division. “We’re a portfolio lender focused on ...