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Mortgage Crisis Watch Business and legal issues affecting: loan repurchases | mortgage-backed securities | mortgage insurance

Category Archives: Fannie Mae/Freddie Mac

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Buyback and Indemnifications: The New Dangers

On Thursday, July 31, I will be speaking as part of a panel of business professionals during a live webinar about the continuing repurchase and indemnification risk surrounding mortgage buybacks. This panel will assist mortgage professionals in determining where the greatest exposure of risk lies, and will offer some insightful tips on how best to… Continue Reading

Main Street Cashes $3.1 Billion in Checks from Wall Street

With the mortgage crisis almost a decade in the rear-view mirror, some harmed homeowners are just now starting to see reparations for the transgressions of the country’s largest financial institutions. Beginning in January 2013, thirteen banks—including Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo—settled 2011 and 2012 actions instituted by… Continue Reading

OIG Urges FHFA To Sue Over Force-Placed Insurance

The Office of Inspector General (“OIG”) for the Federal Housing Finance Agency (“FHFA”) is urging the FHFA to sue its servicers and lender-placed insurance (“LPI”) providers because Fannie Mae and Freddie Mac have suffered considerable financial harm in the LPI market, possibly as much as $158 million in 2012 alone from excessively priced insurance coverage. FHFA has been… Continue Reading

FHFA’S 2013 Report Shows Record Income for Fannie Mae and Freddie Mac, But Earnings Are Likely to Fall

On Friday, Federal Housing Finance Agency (FHFA) released its 2013 Report to Congress, revealing recent GSE milestones but anticipating future problems. The annual report is statutorily-required under the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended by the Housing and Economic Recovery Act of 2008 and the Dodd-Frank Wall Street Reform… Continue Reading

Massachusetts Sues Fannie and Freddie for Blocking Home Buybacks

Earlier this month, Massachusetts Attorney General Martha Coakley initiated an action against Fannie Mae, Freddie Mac and the Federal Housing Finance Agency for allegedly illegally impeding non-profit foreclosure buyback programs. These buyback programs purchase properties in foreclosure and then resell the properties to the prior owners at an affordable price, helping low-income residents keep their homes…. Continue Reading

FHFA Announces Reversal of Plans to Wind Down Fannie Mae and Freddie Mac

Early last week, recently-appointed director of the Federal Housing Finance Agency (FHFA) Melvin L. Watt, announced plans to keep GSEs Fannie Mae and Freddie Mac going strong. This new strategy is in stark contrast to the express goals of his predecessor Edward J. DeMarco, White House officials and other proposed legislation, such as the Housing… Continue Reading

Can Fannie and Freddie Cope Under Pressure?

Last week, the Federal Housing Finance Agency (FHFA) put Freddie and Fannie to the test, and the results were grim. Dodd-Frank mandated “stress tests,” designed to evaluate a financial institution’s ability to withstand an economic downturn, revealed that in a severe recession Fannie and Freddie could require bailouts of as much as $190 billion, a… Continue Reading

Recently Unveiled “HOME Forward” Housing Act May Signal the End of Fannie and Freddie

Momentum in housing-finance reformation picked up speed last month as the House Financial Services Committee unveiled the proposed Housing Opportunities Move the Economy (HOME) Forward Act of 2014. The proposed HOME Forward Act was introduced by Rep. Maxine Waters, who stated that the Act provides “an opportunity to address some of the fundamental flaws of the… Continue Reading

New Bill Poised to Revamp Fannie Mae, Freddie Mac

Following months of negotiations that involved collaboration between Republicans and Democrats, Senators Tim Johnson (D-SD) and Mike Crapo (R-ID) announced Tuesday that the Senate Banking Committee had reached an agreement on the framework to revamp Fannie Mae and Freddie Mac. Since the financial meltdown, the future of the agencies has largely remained uncertain. A full… Continue Reading

First Horizon Reaches Mortgage Loan Settlement With Freddie Mac

There is now yet another settlement in the mortgage loan industry to report. First Horizon National Corp. announced last week that it has entered into a definitive resolution agreement with Freddie Mac regarding loan repurchase issues. The agreement purportedly settles all representation and warranty claims related to loans sold by First Horizon to Freddie Mac from… Continue Reading

FHFA Says Fannie and Freddie Still Take on Risky Mortgages

Fannie Mae and Freddie Mac have continued to spend billions of dollars on questionable mortgage loans despite previous alerts to potential issues with their appraisals, the Federal Housing Finance Agency’s Office of Inspector General said Thursday. According to a new report, the mortgage giants ignored warnings from the FHFA’s data portal about underwriting violations, such… Continue Reading

FHFA Mortgage Repurchase Lawsuit Against Credit Suisse Dismissed For Failing To Allow Time For Cure

Rejecting an all-too-common strategy among mortgage investors of “shoot first, talk later,” New York state judge Eileen Bransten has dismissed several mortgage repurchase lawsuits originally filed by the Federal Housing Finance Agency (“FHFA”) against a Credit Suisse affiliate, ruling that the suits were filed before Credit Suisse had an opportunity to repurchase the subject loans or otherwise… Continue Reading

New FHFA Head Will Delay Proposed Mortgage Fee Hike

Former North Carolina congressman and the new head of the Federal Housing Finance Agency (FHFA), Mel Watt, has given the public a sneak peek of how he will lead the FHFA. On December 20 he released a statement expressing his intentions to delay the Agency’s earlier announced plan to increase mortgage fees on loans borrowers seek that… Continue Reading

FHFA Announces $1.9 Billion Settlement With Deutsche Bank

On December 20, 2013, the Federal Housing Finance Agency (“FHFA”), as conservator of Fannie Mae and Freddie Mac, announced that it will receive settlement payments of $1.925 billion from Deutsche Bank AG in connection with claims of alleged violations of federal and state securities laws related to private-label, residential mortgage-backed securities purchased by Fannie Mae… Continue Reading

Forced-Place Insurance Policies May Soon Be Tamed

In an article in today’s DBR by John Pacenti, I weigh in on forced-place insurance policies. The article addresses the new restrictions by the Federal Housing Finance Agency that aim to prohibit mortgage services from being reimbursed for expenses associated with captive reinsurance arrangements. Pacenti also quotes a prior blog post that I co-authored with… Continue Reading

Bank of America and Freddie Mac Settle Mortgage Loan Claims

Add yet another major settlement to the still-growing list of huge payouts by the nation’s largest banks to settle claims over toxic mortgage-backed securities. Bank of America has now agreed to pay $404 million to Freddie Mac to resolve all repurchase liabilities on home loans that it sold to the government-controlled mortgage company from 2000… Continue Reading

BofA $1.4 Billion Settlement Talks with Freddie Mac

Bank of America and Freddie Mac are currently attempting to resolve a mortgage repurchase dispute in which Freddie Mac claims that Bank of America should have to buy back more than $1.4 billion in mortgage loans it claims were defective. The Wall Street Journal has reported that Bank of America, which is still recovering from… Continue Reading

FHFA Restricts Forced-Placed Insurance Practices

We recently commented on JPMorgan Chase’s blockbuster agreement to resolve a class-action lawsuit for $300 million brought by more than a million homeowners nationwide. The dispute centered on allegations that Chase profited by collecting kickbacks from insurance companies for imposing force-placed insurance policies at excessive rates on properties that secured its loans where coverage had… Continue Reading

Wells Fargo Settles Mortgage Claims With FHFA For Close To $1 Billion

Add another mega-settlement to the rapidly growing list of huge payouts by the nation’s largest banks to federal agencies. Wells Fargo reportedly has now agreed to pay the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, close to $1 billion. The settlement payment will resolve claims that Wells Fargo sold toxic mortgage-backed… Continue Reading

FHFA’s $5.1 Billion Settlements With J.P. Morgan Chase

On October 25, 2013, the Federal Housing Finance Agency (“FHFA”), as conservator of Fannie Mae and Freddie Mac, announced that it will receive settlement payments of $5.1 billion with J.P. Morgan Chase & Co. in connection with claims of alleged violations of federal and state securities laws related to private-label, residential mortgage-backed securities purchased by Fannie… Continue Reading

BofA’s Countrywide Found Responsible For Defrauding Fannie Mae & Freddie Mac

A federal jury ruled yesterday that Countrywide, now owned by Bank of America, defrauded Fannie Mae and Freddie Mac by selling them defective mortgages in advance of the great financial crisis of 2008. A former Countrywide executive, Rebecca Mairone, was also found liable in the case. Whistleblower Exposed Countrywide’s “Hustle” Program The Justice Department lawsuit… Continue Reading

Wells Fargo Settles Mortgage Buyback Litigation with Freddie Mac for $869 Million

Under Threat of Having to Repurchase Thousands of Home Loans Sold to Freddie Mac Prior to January 1, 2009, Wells Fargo Agrees to Resolve all Remaining Claims in a Single $780-Million Cash Payment As of June 30 of this year, Wells Fargo & Co., this nation’s largest mortgage lender, had received demands to repurchase $1.4… Continue Reading

Housing Market Largely Escapes Damage From Government Shutdown, For Now

The mortgage market should only be minimally impacted by the recent government shutdown The federal government shut down at the stroke of midnight on September 30th as the Congress failed to pass a bill to continue funding the government. The repercussions are many, including preventing 800,000 Americans from getting paid, suspending various government services, and… Continue Reading

A Time for Reflection: the Fifth Anniversary of Lehman Brothers’ Collapse

Obama claims progress has been made Sunday, September 15, 2013, marked the fifth anniversary of Lehman Brothers’ bankruptcy, the largest in U.S. history. It is widely believed that Lehman’s meltdown set off a domino effect that led to the global financial crisis and proved to be a major contributing cause of the housing market collapse…. Continue Reading