On May 31, HUD announced Green Refinance Plus, a program between FHA and Fannie Mae to allow owners of existing affordable rental housing properties to refinance mortgages to fund energy- and water-saving upgrades and other needed property renovations. HUD Press Release.
Fannie Mae
GSE Alignment of Guidelines for Servicing Delinquent Mortgages
On April 28, the FHFA directed Fannie Mae and Freddie Mac to align their guidelines for servicing delinquent mortgages that they own or guarantee in four key areas: (i) borrower contact; (ii) delinquency management practices; (iii) loan modifications and foreclosure alternatives; and (iv) foreclosure timelines. The updated guidelines will also establish monetary incentives and penalties for servicer performance. FHFA Release.
FHFA Extends HARP
On March 11, the FHFA announced a one-year extension of the Home Affordable Refinance Program (HARP), a program administered by Fannie Mae and Freddie Mac, to June 30, 2012. In addition, Freddie Mac will exempt HARP loans from their recently announced price adjustments and Fannie Mae will conform their eligibility date to May 2009. FHFA Release.
Geithner Testimony on Housing Finance Market Reform
On March 15, Treasury Secretary Geithner testified before the Senate Committee on Banking, Housing and Urban Affairs to discuss the Administration’s plan for reforming the housing finance market, which entails: (i) reducing the government’s role in the mortgage market and winding down Fannie Mae and Freddie Mac in a responsible manner; (ii) addressing fundamental flaws in the mortgage market; (iii) improving access to a wider range of affordable housing options; and (iv) setting out ways to structure government support in the housing finance market in the future. Geithner Testimony.
Housing Finance Reform: House Hearing and Administration Proposal
On February 9, the House Financial Services Committee held a hearing on GSE reform with a focus on immediate steps to protect taxpayers and end the bailout. On February 11, the Obama administration released a white paper on housing finance reform, outlining its plan to: (i) reduce government support for housing finance and wind down Fannie Mae and Freddie Mac on a responsible timeline; (ii) address fundamental flaws in the mortgage market to protect borrowers, ensure transparency, and increase the role of private capital; and (iii) target the government’s support for affordable housing in a more effective and transparent manner. The proposal also sets forth longer-term reform choices for structuring the government’s future role in the housing market. Congressional Hearing Link. Treasury Release. White Paper. HFS Testimony and Archived Webcast.
FHFA Proposed Rule on Private Transfer Fee Covenants
On February 1, the FHFA released a proposed rule which would limit Fannie Mae, Freddie Mac, and the Federal Home Loan Banks from dealing in mortgages with certain private transfer fee covenants and in certain related securities. The rule would generally apply only to private transfer fee covenants created on or after the date of publication of the proposed rule. Regulated entities will be required to comply with the final rule within 120 days of its publication. Comments on the proposed rule must be submitted within 60 days after publication in the Federal Register. FHFA Release. FHFA Proposed Rule.
Ally Financial Inc. and Bank of America Settle with Fannie Mae and Freddie Mac
On December 27, 2010, Ally Financial Inc. announced that its residential mortgage unit, Residential Cap, LLC, paid $462 million to settle repurchase demands from Fannie Mae regarding mortgage-backed securities. On January 3, 2011, Bank of America also announced that it recently reached a settlement agreement with Fannie Mae and Freddie Mac., pursuant to which it paid $1.28 billion to Freddie Mac and $1.52 billion to Fannie Mae to resolve “outstanding and potential mortgage repurchase and make-whole claims” arising from any alleged breaches of representations and warranties made by Countrywide in loan sales. BoA Press Release. Ally Press Release.
FHFA Rules and ANPR for GSEs
On December 22, the FHFA issued three final rules and one Advance Notice of Proposed Rulemaking for Fannie Mae, Freddie Mac and the Federal Home Loan Banks. The final rules pertain to Fannie Mae and Freddie Mac portfolio holdings, minority and women inclusion, and Federal Home Loan Bank housing goals. The ANPR pertains to membership in Federal Home Loan Banks. FHFA Release.
Fannie, Freddie Agreements with Ally and BofA
On January 3, the FHFA approved agreements between Fannie Mae and Freddie Mac with Ally Financial and Bank of America to resolve claims related to mortgages sold to the GSEs. Each agreement covers a different book of business and has different limitations. The agreements do not address representations and warranties with regard to mortgage servicing or foreclosure processing. For more information, see below. FHFA Release.
FHFA Framework for Foreclosure Process Deficiencies
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.