On October 7, the FHFA announced that the joint venture between Fannie Mae and Freddie Mac to build and create a new common securitization platform has reached certain milestones, including the filing of a certificate of formation for the legal entity created by the joint venture as well as leasing office space. FHFA Release.
Fannie Mae
FHFA Input on Freddie Mac and Fannie Mae Multifamily Businesses
On August 9, the FHFA announced that it is seeking public input on strategies to reduce Fannie Mae and Freddie Mac‘s presence in the multifamily housing market and is seeking input on various proposed alternatives. Input must be received within 60 days or not later than October 8. FHFA Release and Proposal.
UBS Reaches Settlement with the FHFA
On July 25, the FHFA announced that it had settled its claims against UBS AG concerning mortgage-backed securities that UBS sold to Fannie Mae and Freddie Mac between 2004 and 2007. UBS agreed to pay a total of $885 million. The settlement covers federal and state securities claims concerning 33 separate RMBS securitizations that FHFA asserted against UBS in four separate lawsuits filed in 2011. The settlement also provides that the FHFA will not bring putback claims in connection with certain other securities covered by the agreement. UBS did not admit any liability in connection with the settlement. Release and Agreement.
Shareholders Allege Improper Takeover of Fannie and Freddie by the Government
Can shareholders of a government-sponsored enterprise successfully challenge the constitutionality of a government takeover of the entity? Shareholders of Fannie Mae and Freddie Mac will try to do so in a $41 billion class action filed against the United States in the Court of Federal Claims on June 10. Plaintiffs allege that even though the Federal Housing Finance Authority’s 2008 takeover of the mortgage giants benefited the nation as a whole, it harmed the companies’ shareholders and violated their constitutionally protected private ownership rights. For more information on this suit and to visit our Securities Litigation blog, please click here.
Citi Settles FHFA’s $3.5B RMBS Suit
On May 28, the FHFA, acting on behalf of Fannie Mae and Freddie Mac, dismissed its lawsuit against Citigroup Inc. and certain of its affiliates and employees after reaching a settlement with defendants. The lawsuit related to over $3.5 billion in RMBS that Fannie Mae and Freddie Mac allegedly purchased from Citigroup. The suit was one of 18 cases filed by the FHFA against a number of investment banks between July and September 2011. In this case, as in the others, the FHFA asserted a number of state and federal securities claims alleging that Citigroup made material misrepresentations and omissions in the offering documents for the RMBS at issue. This is the second of the 18 cases, along with the case against General Electric, in which the FHFA has reached a settlement. Stipulation.
Extension of Loan Modification Programs
On May 30, Treasury and HUD announced an extension of the Making Home Affordable Modification Program (HAMP) through December 31, 2015. In addition, on May 30, the FHFA announced that it has directed Fannie Mae and Freddie Mac to extend the HAMP modification program and the streamlined modification initiative through year-end 2015. HAMP eligibility was originally scheduled to sunset in December 2013, and the streamlined modification initiative was originally expected to end in August 2015. Treasury Release. FHFA Release.
FHFA Limit on Fannie and Freddie Loan Purchases to Qualified Mortgages
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.
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.
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.