Fannie Mae and Freddie Mac

Changes Proposed to CAS and STACR Programs

 

On May 8, 2017, Fannie Mae and Freddie Mac announced that they are considering certain changes to the structure of their CAS and STACR note programs in order to widen the investor base for the notes through which they transfer credit risk to the private sector. The proposed changes to CAS and STACR will also require certain changes to the tax structure of Fannie and Freddie MBS issuances. The intention is, despite the changes to the MBS tax structure, to preserve TBA eligibility of the MBS.

As proposed, a REMIC tax election will be made on mortgage loans purchased by Fannie and Freddie and put into their MBS. As a result, the MBS would, for tax purposes, represent ownership interests in REMIC regular interests rather than in mortgage loans. The CAS/STACR notes would also represent ownership of REMIC regular interests issued by new CAS/STACR trusts, which will make the CAS and STACR notes more attractive to REITs and foreign investors. The new structure would also eliminate Fannie and Freddie counterparty risk in the credit risk transfer programs.

Fact Sheets and FAQs are linked to the Press Releases. Press Release (Fannie). Press Release (Freddie).

FHFA Issues Proposed Rule on Fannie Mae and Freddie Mac Duty to Serve Underserved Markets

On December 15, 2015, the Federal Housing Finance Agency issued a proposed rule that would require Fannie Mae and Freddie Mac to provide specific services relating to manufactured housing, affordable housing preservation and rural markets.  The proposed rule would also require Fannie Mae and Freddie Mac to address financing concerns in very low- to moderate-income families in those areas. Press release.

FHFA Report Details Progress on the 2014 Strategic Plan for Fannie Mae and Freddie Mac Conservatorships

On March 16, the  FHFA issued a Progress Report on the initiatives outlined in the 2014 Strategic Plan for the Conservatorships of Fannie Mae and Freddie Mac and the 2014 Conservatorship Scorecard.  The Progress Report describes activities Fannie Mae and Freddie Mac undertook in 2014 to further FHFA’s conservatorship goals: Maintain, Reduce, and BuildReleaseReport.

FHFA Updates Requirements for Freddie and Fannie Sales of Non-Performing Loans

On March 2, FHFA announced changes to requirements for sales of non-performing loans (NPLs) by Freddie and Fannie to reduce the number of severely delinquent loans held in their inventories and to transfer risk to the private sector.  The requirements are expected to encourage broad participation by potential investors and provide for future publication of aggregate data about borrower outcomes.  ReleaseFact Sheet.

Court Declines to Vacate Jury Verdict in Countrywide FIRREA Lawsuit

On February 3, Judge Jed S. Rakoff of the United States District Court of the Southern District of New York denied Bank of America Corporation’s and Rebecca Mairone’s motion for judgment as a matter of law, or, in the alternative a new trial. The jury found Bank of America and Mairone liable under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) for the sale of mortgage loans to Fannie Mae and Freddie Mac before the financial crisis. Judge Rakoff found that the jury’s October 23, 2013 verdict was supported by sufficient evidence.  Order.

FHFA Proposes Minimum Financial Eligibility Requirements for Fannie and Freddie Seller/Servicers

On January 30, the Federal Housing Finance Agency (FHFA) today proposed new minimum financial eligibility requirements for Fannie Mae and Freddie Mac Seller/Servicers.  The proposed minimum financial requirements include net worth, capital ratio and liquidity criteria for the Enterprises’ Seller/Servicers.  FHFA is releasing the proposed criteria to provide greater transparency, clarity and consistency to industry participants and other stakeholders, and anticipates finalizing these requirements in the second quarter of 2015Release.

FHFA Director Testifies in Front of the U.S. House of Representative Committee on Financial Services

On January 27, 2015 the  FHFA Director, Melvin L. Watt, testified in front of the U.S. House of Representatives Committee on Financial Services.  Director Watt’s testimony provided, amongst other items, an update on the financial condition of Fannie Mae and Freddie Mac and the financial condition of the Federal Home Loan BanksRelease.

FHFA Issues 2015 Scorecard for Fannie, Freddie and Common Securitization Solutions

On January 14, FHFA released the 2015 Scorecard​ outlining specific priorities for Fannie Mae, Freddie Mac and their joint venture, Common Securitization Solutions, LLC.  The Scorecard assesses Fannie and Freddie’s performance under FHFA’s Strategic Plan for Fannie and Freddie and furthers the goals outlined thereunder, including building a new single-family securitization infrastructure for use by the Enterprises.  ReleaseScorecardStrategic Plan.

Court Finds FHFA Claims Against Nomura Are Not Time-Barred

On November 18, Judge Denise Cote of the United States District Court for the Southern District of New York granted the Federal Housing Finance Agency’s motion for partial summary judgment on the statute of limitations defense asserted by Nomura and related entities.  FHFA, as conservator for Fannie Mae and Freddie Mac, alleges that Nomura made materially false statements in offering documents for RMBS between 2005 and 2007 in violation of Sections 11 and 12(a)(2) of the Securities Act of 1933.   Judge Cote found that Fannie and Freddie did not have sufficient information by September 2007 to determine whether the offering documents contained misstatements, and that a reasonably diligent investor in their position would not have investigated the offering documents or discovered the misstatements by that date.  As a result, the Court held that FHFA’s claims were not barred by the statute of limitations.  Opinion & Order.

Goldman Reaches Settlement with FHFA

On August 22, Goldman Sachs and FHFA announced a US$3.15 billion settlement of claims brought by FHFA against Goldman in two separate lawsuits related to RMBS purchased by Fannie Mae and Freddie Mac between 2005 and 2007.  FHFA, as conservator for Fannie Mae and Freddie Mac, asserted claims for violations of federal and state securities law on the basis of alleged material misrepresentations or omissions in the offering documents for the RMBS sold to Fannie Mae and Freddie Mac.  As part of the settlement, Goldman is repurchasing most of the RMBS at issue.  Goldman did not admit any liability or wrongdoing as part of the settlement.  Fannie Mae AgreementFreddie Mac Agreement.