On October 13, the FHFA directed Fannie Mae and Freddie Mac to implement a four-point policy framework to address deficiencies in the foreclosure process. The framework provides that: (i) mortgage servicers must review their procedures and verify that all documents are in compliance with legal requirements, (ii) when a deficiency has been identified, it must be remediated in an appropriate and timely way and must be sustainable, (iii) servicers meet legal reporting obligations regarding suspicious activity, and (iv) in cases where alternatives have been unsuccessful and the borrower has stopped payment, foreclosure should proceed without delay. FHFA Release.
Month: October 2010
Attorneys General Foreclosure Investigation
On October 13, the National Association of Attorneys General announced that the attorneys general from all 50 states have joined a coordinated effort to investigate foreclosure practices throughout the country. The multistate group has begun inquiring whether individual mortgage servicers improperly submitted affidavits or other documents in support of foreclosures. NAAG Release.
Rating Agency Developments
On October 6, Fitch published an exposure draft on counterparty criteria for covered bonds. Fitch anticipates reviewing the covered bond ratings of programs affected by the final criteria over a six month period after the publication of the final criteria. Fitch Release. Fitch Exposure Draft.
On October 4, Fitch updated its EMEA auto residual value ABS criteria. Fitch Release. Fitch Criteria.
Treasury Releases Report on TARP
On October 5, Treasury announced the release of a “Two-year Retrospective” report on TARP. The report provides an overview of the steps that Treasury took under TARP, which was created to recapitalize the financial sector and restart the credit markets. According to the report, in light of the recently announced AIG restructuring and when valued at current market prices, Treasury now estimates that the total cost of TARP will be about $50 billion. Treasury Release. TARP Report.
Congressional Request for Mortgage and Foreclosure Investigation
On October 4, representatives of the California Democratic Congressional Delegation (including Rep. Pelosi) sent a letter to U.S. Attorney General Holder, Fed Chairman Bernanke, and Acting Comptroller of the Currency Walsh urging an investigation into possible violations of law or regulations by financial institutions in their handling of delinquent mortgages, mortgage modifications, and foreclosure. Congressional Letter. Case Examples.
SEC Proposed Rules on Reps and Warranties
On October 4, the SEC issued a proposed rule related to representations and warranties for ABS offerings as required by the Dodd-Frank Act. The proposed rule would require that: (i) “securitizers” disclose fulfilled and unfulfilled repurchase requests across all transactions and (ii) NRSROs include information regarding representations, warranties, and enforcement mechanisms in any report accompanying a credit rating (including a preliminary credit rating) issued in connection with an offering. SEC Release. SEC Proposed Rule.
Rating Agency Developments
On September 27, Moody’s released its individual loan analysis (“MILAN“) methodology for rating Korean RMBS. Moody’s Release.
Note: Free registration is required for Moody’s releases and reports.
High-Cost Loan Limit Extension
On September 29, the House and Senate each passed a continuing resolution which includes provisions to extend the current HECM, GSE, and FHA loan limits for high-cost areas through September 30, 2011. The loan limit caps are currently set to expire at the end of this year. President Obama signed the continuing resolution on September 30. Continuing Resolution. Summary of Continuing Resolution.
CFTC ANPR on Agricultural Swaps
On September 28, the CFTC issued an advance notice of proposed rulemaking and request for comment on the conditions, restrictions, or protections to be included in a regulation governing the trading of agricultural swaps. Under the Dodd-Frank Act, swaps in an “agricultural commodity” are prohibited unless they are entered into pursuant to a regulation to be adopted by the CFTC. Comments must be received on or before October 28. CFTC ANPR.
House Committee Hearing on GSE Reform
On September 29, the House Financial Services Committee held a hearing on the future of housing finance. Participants testified regarding proposals to address the market structure and transition for the GSEs. HFS Testimony and Archived Webcast. Hearing Webcast.