On June 15, 2016, the Federal Housing Finance Agency’s “Report to Congress” for 2015 was released. The document, required under federal law, analyzes Fannie Mae, Freddie Mac and other entities under the Federal Housing Finance Agency’s purview. Release.
Federal Housing Finance Agency
Agencies Invite Comment on Proposed Rule to Prohibit Incentive-Based Pay that Encourages Inappropriate Risk-Taking in Financial Institutions
On May 16, 2016, six federal agencies – the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the Federal Reserve Board of Governors, the National Credit Union Administration, the Office of the Comptroller of the Currency and the Securities and Exchange Commission – requested public comments on proposed rule that would “prohibit incentive-based compensation arrangements that encourage inappropriate risks at covered financial institutions.” Comments must be submitted by July 22, 2016. Release.
The SEC is Seeking Comment on a Joint Agency Proposed Rule Relating to Incentive-based Compensation Arrangements
On May 6, 2016, the Office of the Comptroller of the Currency, Treasury (OCC), the Board of Governors of the Federal Reserve System (Board), the Federal Deposit Insurance Corporation (FDIC), Federal Housing Finance Agency (FHFA), the National Credit Union Administration (NCUA), and the U.S. Securities and Exchange Commission (SEC) issued and sought comment on a joint proposed rule to implement section 956 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) relating to the prohibition on and the disclosure of information of incentive-based compensation arrangements. The deadline for comments is July 22, 2016. Notice of Proposed Rulemaking and Request for Comment.
FHFA Increases 2016 Multifamily Lending Caps
On May 4, 2016, the Federal Housing Finance Agency announced that it increased its 2016 multifamily lending caps for Fannie Mae and Freddie Mac from $31 billion to $35 billion. The increase is based on growing estimates of the overall size of the multifamily finance market. Release.
Final Rule Issued to Establish Minimum Margin Requirements for Non-Cleared Swaps and Non-Cleared Security-Based Swaps
On December 3, 2015, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Farm Credit Administration, and the Federal Housing Finance Agency (collectively, “Agencies”) issued a final rule establishing capital requirements, as well as minimum requirements for the exchange of initial and variation margin, for covered swap entities with respect to non-cleared swaps and non-cleared security-based swaps. The purpose of the requirements is to offset the greater risk to such entities, and thus, the amount of margin required will vary based on relative risk. The final rule implements sections 731 and 764 of the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 and will take effect on April 1, 2016 – however, the minimum margin requirements will not phase-in until September 1, 2016. All swap counterparties must comply with the variation margin requirements by March 1, 2017, while swap counterparties with more than $3 trillion in outstanding swap activity must comply with both the initial and variation margin requirements by September 1, 2016. Press Release. Final Rule.
FHFA Proposes Minimum Financial Eligibility Requirements for Fannie and Freddie Seller/Servicers
On January 30, the Federal Housing Finance Agency (FHFA) today proposed new minimum financial eligibility requirements for Fannie Mae and Freddie Mac Seller/Servicers. The proposed minimum financial requirements include net worth, capital ratio and liquidity criteria for the Enterprises’ Seller/Servicers. FHFA is releasing the proposed criteria to provide greater transparency, clarity and consistency to industry participants and other stakeholders, and anticipates finalizing these requirements in the second quarter of 2015. Release.
Bank of America Settles RMBS Securities Claims for US$9.3 Billion
On March 26, Bank of America and the Federal Housing Finance Agency (FHFA), as conservator of Fannie Mae and Freddie Mac, announced a settlement of FHFA’s RMBS-related suits against the Bank. The Bank has agreed to pay approximately US$9.3 billion to settle allegations that it violated federal and state securities laws in connection with private-label RMBS purchased by Fannie Mae and Freddie Mac between 2005 and 2007. Pursuant to the agreement, approximately US$5.83 billion will be allocated by FHFA to settle all claims asserted in four lawsuits brought by FHFA against Bank of America, Countrywide, and Merrill Lynch, and the remainder will be allocated to repurchases by Bank of America of RMBS held by Fannie Mae and Freddie Mac. Bank of America Press Release. FHFA Press Release. Settlement Agreement.
Société Générale Agrees to $122M Settlement in RMBS Suit
On February 27, the Federal Housing Finance Agency (FHFA) announced that it reached a settlement with French bank Société Générale of an RMBS suit in the U.S. District Court for the Southern District of New York. FHFA alleged violations of federal and state securities law in connection with RMBS purchased by Fannie Mae and Freddie Mac in 2006. The settlement agreement contains no admission of liability or wrongdoing. Société Générale and four of its subsidiaries will pay $122 million dollars to the agency. Press Release.
Morgan Stanley and FHFA Reach RMBS Settlement
On February 4, Morgan Stanley disclosed in a regulatory filing that it has agreed, in principle, to a settlement for US$1.25 billion with the Federal Housing Finance Agency to resolve claims pending in the United States District Court for the Southern District of New York related to the sale of US$10.58 billion in RMBS between 2005 and 2007. The FHFA, as conservator for Fannie Mae and Freddie Mac, asserted claims for violations of federal and state securities laws on the basis of allegedly false and misleading statements and omissions in the registration statements and prospectuses of securities sold to Freddie Mac and Fannie Mae. Form 8-K. Complaint.
FHFA and Deutsche Bank Reach RMBS Settlement
On December 20, the Federal Housing Finance Agency announced it had reached a settlement for $1.925 billion with Deutsche Bank AG to resolve claims pending in the United States District Court for the Southern District of New York related to the sale of private-label RMBS between 2005 and 2007. The FHFA asserted claims for violations of federal and state securities laws on the basis of allegedly false and misleading statements and omissions in the registration statements and prospectuses of securities sold to Freddie Mac and Fannie Mae. Press Release.