On January 13, the Federal Housing Finance Agency (FHFA) announced that it will extend several loan origination flexibilities until February 28, 2021, that were set to expire on January 31, 2021. The extended flexibilities include alternative appraisals on purchase and rate term refinance loans, alternative methods for documenting income and verifying employment before loan closing and expanding the use of power of attorney to assist with loan closings. Release.
On December 29, the Federal Reserve announced it would extend the termination date of Main Street Lending program facilities to January 8, 2021. The extension will allow additional time for lenders to process and fund loans that were submitted to the Main Street lender portal on or before December 14, 2020. Release.
On October 30, the Federal Reserve Board (FRB) announced adjustments to the Main Street Lending Program in an effort to better support smaller businesses. The changes include reducing the minimum required loan size to $100,000 from $250,000 and adjusting the fees to encourage eligible lenders to provide these smaller loans. Release.
On September 11, the U.S. Securities and Exchange Commission (SEC) announced that it has adopted rules to update and expand the statistical disclosures that bank and savings and loan registrants provide to investors. The rules also eliminate certain disclosure items that are duplicative of other Commission rules and requirements of U.S. GAPP or IFRS. Release.
On March 30, the U.S. Department of the Treasury published guidance related to the CARES Act. The guidelines and application procedures published focus on payroll support for air carriers and requirements for loans to air carriers and other eligible businesses under the CARES Act. Release.
On September 6, 2016, following a 3-week long bench trial in May, U.S. District Judge P. Kevin Castel of the Southern District of New York held that he will appoint a Lead Master to determine whether there are “material breaches” in 9,300 loans at issue in putback litigation against UBS. In its 239-page post-trial decision, after addressing a number of issues and discussing 20 loans, the Court appointed a Lead Master to examine each loan on an individual basis and prepare recommended findings and conclusions on liability.
The Court outlined Plaintiff’s burden of proof for breach of underwriting guidelines, holding that the Plaintiff must demonstrate it is more likely than not that the loan was not originated in compliance with the relevant underwriting guidelines, unless an exception was actually exercised, in a reasonable manner, at the time of origination. Plaintiffs will then be required to prove a breach has a “material and adverse” effect at the time UBS’s repurchase obligation was triggered. The Court held this can be shown: (1) by proving an increased risk of loss to certificateholders; (2) with evidence that a breach resulted in altered loan terms; or (3) through a showing of layered risk and/or the cumulative effect of multiple breaches. The Court held that discovery of a breach cannot be based on constructive knowledge. Instead, Plaintiffs must show actual knowledge, which may be established by circumstantial evidence, or willful blindness. Memorandum and Court Order.
On August 22, 2016, Fitch issued an amended report outlining its Criteria for Rating Granular Corporate Balance-Sheet Securitizations. Report.
On August 22, 2016, Fitch issued a report titled: Global Bond Fund Rating Criteria. Report.
On August 19, 2016, Fitch issued a report titled: Global Consumer ABS Rating Criteria. Report.
On August 18, 2016, Fitch revised its criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions. Report.
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.
Chief Deputy Whip Patrick McHenry (R, NC-10), the Vice Chairman of the House Financial Services Committee, introduced H.R. 5724, the Protecting Consumers’ Access to Credit Act of 2016, which would reaffirm the longstanding legal precedent under the National Bank Act and the Federal Deposit Insurance Act that federal law preempts a loan’s interest if valid when made. The legislation was introduced to address one of the issues raised by the Second Circuit in Madden vs. Midland Funding. Legislation.
On October 10, the Bank of New York Mellon, suing as trustee for the J.P. Morgan Mortgage Acquisition Trust, Series 2006-WMC3 trust, filed a summons with notice in the Supreme Court for the State of New York against WMC Mortgage LLC, J.P. Morgan Mortgage Acquisition Corp., and JPMorgan Chase Bank. The trustee alleges that the defendants breached contractual representations and warranties and discovered such breaches during origination, due diligence, and servicing of the loans, but failed to adhere to their notice and repurchase obligations with respect to at least 334 of mortgage loans in the $959 million RMBS trust. Bank of New York Mellon also asserts that JPMorgan Chase Bank, as servicer, breached its servicing obligations through, among other things, ineffective collection activities, delays in foreclosure, and improper modifications. The trustee seeks damages of no less than $475 million related to the alleged contractual breaches, rescissory damages, an order of specific performance of repurchase, reimbursement of expenses, and pre- and post-judgment interest. Summons with Notice.
