On May 6, the FHFA announced that it is directing Fannie Mae and Freddie Mac to limit future mortgage acquisitions to loans that fall under the requirements for a qualified mortgage. Starting on January 10, 2014, Fannie and Freddie will no longer be able to purchase a mortgage loan that is subject to the “ability to repay” requirements under the Dodd-Frank Act if the loan: (i) is not fully amortizing; (ii) has a term of longer than 30 years; or (iii) includes points and fees in excess of 3% of the total loan amount (or such other limits for low balance loans as set forth in the rule). FHFA Release. Fannie Mae Letter. Freddie Mac Letter.
Tag Archives: FHFA
FHFA GSE Viability Reports
On May 3, the FHFA released reports prepared by Fannie Mae and Freddie Mac on their multifamily businesses which conclude that without government guarantees, the multifamily businesses of Fannie and Freddie have little inherent value. FHFA Release. Fannie Mae Report. Freddie Mac Report.
FHFA Common Securitization Infrastructure
On April 30, the FHFA issued its progress report on the steps being taken to establish a common securitization infrastructure for MBS. The FHFA is encouraging interested parties to provide written input on the progress report, and input must be received by June 30. FHFA Release. FHFA Project Report.
Second Circuit Affirms Denial of UBS’s Motion to Dismiss FHFA Complaint
On April 5, the United States Court of Appeals for the Second Circuit affirmed the decision of the district court denying UBS’s motion to dismiss the complaint brought by the FHFA. FHFA sued UBS as conservator of Fannie Mae and Freddie Mac, alleging fraud and misrepresentation in connection with the sale of $6.4 billion in RMBS. The court held that the action was timely because it commenced within three years after FHFA was appointed conservator of Freddie Mac and Fannie Mae. The court also held that FHFA had standing to bring the action, rejecting UBS’s argument that the appointments of the FHFA’s Acting Directors were unconstitutional because the Directors had not been confirmed by the Senate. Decision.
FHFA HARP Extension
On April 11, the FHFA announced that Fannie Mae and Freddie Mac will extend the Home Affordable Refinance Program (HARP) by two years until December 31, 2015. The program was set to expire on December 31 of this year. FHFA Release.
Court Denies in Part Motions to Dismiss FHFA’s Claims Against Countrywide and Various Underwriters
On March 15, Judge Mariana Pfaelzer of the United States District Court for the Central District of California denied in part motions to dismiss brought by Countrywide, various individuals and various underwriters in connection with an amended complaint brought by the Federal Housing Finance Agency in connection with the sale of $26.6 billion in RMBS. Countrywide and its affiliates are alleged to have acted as issuer, originator and depositor in connection with the securitizations. The court held that FHFA plausibly alleged that the offering documents concerning the sale of the RMBS contained material misrepresentations and omissions regarding loan-to-value ratios, underwriting guidelines and credit ratings of the RMBS, but dismissed FHFA’s allegations involving owner-occupancy data. The court dismissed claims of negligent misrepresentation and aiding and abetting fraud as to all defendants, claims under Washington, D.C.’s blue sky law and Section 12(a)(2) of the Securities Act of 1933 against subsidiaries of Countrywide that were depositors, successor liability claims against Bank of America and claims under Section 11 of the Securities Act of 1933 against the Individual Defendants. Among the claims that survived the motions to dismiss are claims under Sections 11 and 12(a)(2) against the underwriter defendants and a common law fraud claim against the Countrywide defendants. Defendants initially had filed first-stage motions to dismiss FHFA’s claims on timeliness and legislative jurisdiction grounds, which the court denied last year. Order.
FHFA Streamlined Modification Initative
On March 27, the FHFA announced that Fannie Mae and Freddie Mac will offer a new streamlined loan modification initiative. Beginning July 1, servicers of Fannie and Freddie mortgage loans will be required to offer modifications to borrowers who are at least 90 days delinquent. FHFA Release. Fannie Mae Guidance. Freddie Mac Guidance.
FHFA Update on GSE Conservatorships
On March 19, Edward J. DeMarco, acting director of the FHFA, gave an update on the GSE conservatorships before the U.S. House Committee on Financial Services. Mr. Demarco discussed: (i) the goals of the FHFA as conservator; (ii) the FHFA’s approach to preparing for increased private market participation in housing finance; and (iii) the activities that the FHFA has undertaken during the past year to further its conservatorship goals. FHFA Update.
FHFA Outlines 2013 Goals for Fannie and Freddie
On March 4, the FHFA released the 2013 Conservatorship Scorecard for Fannie Mae and Freddie Mac. The Scorecard details specific priorities for the GSEs in 2013 that build upon the strategic goals announced in 2012, including: (i) build a new securitization infrastructure; (ii) contract the GSEs’ dominant presence in the marketplace; and (iii) maintain foreclosure prevention activities and credit availability. FHFA Release.
Joint Rule on Appraisals for Higher-Priced Mortgage Loans
On January 18, the Fed, CFPB, FDIC, FHFA, NCUA and OCC issued a joint final rule, effective January 18, 2014, which establishes new appraisal requirements for “higher-priced mortgage loans”. For these loans, the rule requires creditors to: (i) use a licensed or certified appraiser who prepares a written appraisal report based on a physical visit of the interior of the property and (ii) disclose to applicants information about the purpose of the appraisal and provide consumers with a free copy of any appraisal report. Joint Release. Final Rule.