Federal Housing Finance Agency

FHFA Sues Wells Fargo Regarding Underwriting of RMBS

 

On June 3, the Federal Housing Finance Agency (FHFA), as conservator for the Federal Home Loan Mortgage Corporation (Freddie Mac), filed a lawsuit in the United States District Court for the Southern District of New York against Wells Fargo Securities, LLC (Wells Fargo) (as successor to Wachovia Capital Markets, LLC (Wachovia)), alleging a violation of Section 11 of the Securities Act. FHFA’s lawsuit alleges losses resulting from Wachovia’s underwriting of two NovaStar securitizations purchased in 2006. FHFA alleges that Freddie Mac was misled about the quality of the loans in the bond deals, and that Wachovia, which Wells Fargo acquired in 2008, participated in drafting the registration statements at issue. These registration statements allegedly contained material misstatements and omissions. FHFA further alleges that its claims are timely because of various tolling agreements entered into between FHFA, Freddie Mac and Wells Fargo. The two deals at issue in FHFA’s Complaint are among six securitizations subject to a $165 million class-action settlement between investors and underwriters, including Wells Fargo, from 2017. FHFA has made multiple unsuccessful bids to be excluded from the settlement, including an appeal that the Second Circuit denied in January of this year, where it argued that the settlement would infringe on the agency’s statutorily-authorized conservatorship powers. FHFA has since filed another appeal, which the agency contends permits it to pursue the claims in this Complaint against Wells Fargo.

Agencies Approve Amendments to Swap Margin Rule

 

On September 21, the Farm Credit Administration, the FDIC, the Federal Housing Finance Agency, the Federal Reserve and the OCC approved final amendments to swap margin requirements to conform with recent rule changes that impose new restrictions on certain qualified financial contracts of systemically important banking organizations. These amendments established minimum margin requirements for swaps and security-based swaps that are not cleared through a clearinghouse. The margin requirements are designed to help ensure the safety and soundness of swap entities and reduce risks to the stability of the financial system associated with non-cleared swaps activity. Rule.

FHFA Announces Maximum Conforming Loan Limits for 2018

 

On November 28, 2017, the Federal Housing Finance Agency (“FHFA“) announced the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2018. In most of the U.S., the 2018 maximum conforming loan limit for one-unit properties will be increased to $453,100, from $424,100 in 2017.  In addition, for areas in which 115% of the local median home value exceeds the baseline conforming loan limit, the maximum loan limit will be higher than the baseline loan limit. The new ceiling loan limit for one-unit properties in most high-cost areas will be $679,650, or 150% of $453,100. Release.

FHFA Requests Public Input on Duty to Serve Program

 

On January 18, 2017, the Federal Housing Finance Agency (the “FHFA“) announced its request for public comment on (i) proposed chattel loan pilot initiatives for Fannie Mae and Freddie Mac and (ii) the expectations and evaluation criteria the FHFA should use in relation to Fannie Mae and Freddie Mac’s effectiveness in fulfilling its duty to assist very low, low and moderate income families in the manufactured housing, affordable housing preservation and rural housing categories (pursuant to the Duty to Serve provisions in the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended by the Housing and Economic Recovery Act of 2008). Release.

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

On December 13, 2016, the Federal Housing Finance Agency (FHFA) issued a final rule implementing the Duty to Serve provisions mandated by the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended by the Housing and Economic Recovery Act of 2008 (HERA).  The statute established a duty for Fannie Mae and Freddie Mac to serve three underserved markets: manufactured housing, affordable housing preservation and rural housing.  The intent of the provisions is to increase the liquidity of mortgage investments and improve distribution of investment capital available for mortgage financing for very low-, low- and moderate-income families in the manufactured housing, affordable housing preservation and rural housing markets. Press Release. Final Rule.

 

FHFA Further Adjusts Multifamily Lending Caps for Fannie Mae and Freddie Mac

 

On August 18, 2016, the Federal Housing Finance Agency (“FHFA”) announced an additional increase to the 2016 multifamily lending caps for both Fannie Mae and Freddie Mac. The caps for both Fannie Mae and Freddie Mac were raised from $35 billion to $36.5 billion, effective immediately. Press release.

Agencies Finalize Rule Exempting Certain Commercial and Financial End Users from Initial and Variation Margin Requirements

On August 1, 2016, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency and the Farm Credit Administration announced a final rule that contains certain exemptions for “certain commercial and financial end users from margin requirements for certain swaps not cleared through a clearinghouse.”  The rule implemented without any changes the interim final rule from November 2015. Press Release. Press Release. Press Release. Press Release.

New York Court Dismisses Repurchase Claims Against UBS as Untimely

On July 27, 2016, Justice Marcy Friedman of the New York Supreme Court for New York County, in accordance with other recent decisions (covered here and here) dismissed an action against UBS Real Estate Securities, Inc.  The case was initially brought by Federal Housing Finance Agency (“FHFA”), as conservator of an RMBS certificateholder.  It was then pursued by the trustee after the limitations period expired.  Because FHFA lacked standing to bring claims for breaches of loan-level representations and warranties, the Court held that the trustee’s claims do not “relate back” to the date of FHFA’s initial filing for statute of limitations purposes.  The court will permit briefing on the viability of claims for failure to notify the trustee of alleged breaches of representations and warranties.  Decision.

FHFA Requests Input on Credit Risk Transfer Transactions

On June 29, 2016, the Federal Housing Finance Agency published a report outlining its perspective on the credit risk transfer programs of Fannie Mae and Freddie Mac as well as providing an overview of upfront CRT transaction structures. The FHFA also announced that it is seeking input on a number of CRT policy issues and related questions. Input is due no later than August 29, 2016. Report.