Robert M. Siegel

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Recently Unveiled “HOME Forward” Housing Act May Signal the End of Fannie and Freddie

Momentum in housing-finance reformation picked up speed last month as the House Financial Services Committee unveiled the proposed Housing Opportunities Move the Economy (HOME) Forward Act of 2014. The proposed HOME Forward Act was introduced by Rep. Maxine Waters, who stated that the Act provides “an opportunity to address some of the fundamental flaws of the … Continue Reading

Wells Fargo Employee Admits Role in $40.8 Million Straw Buyer Scheme

Last Friday, a former Wells Fargo branch manager, sales manager and loan officer, Robert Serao, pled guilty to conspiracy to commit wire fraud. The charge stems from Serao’s involvement in a $40.8 million mortgage fraud scheme during his time at Wells Fargo. Allegedly working in concert with at least nine others, Serao used “straw buyers” … Continue Reading

Bank of America’s $8.5 Billion Settlement Will Not Be Delayed by AIG

Late last month, a New York state judge denied AIG’s request to delay approval of Bank of America’s $8.5 billion settlement with private investors in connection with certain mortgage-backed securities that had soured. Bank of America agreed to the settlement in June 2011 in order to resolve claims brought by institutional investors such as Black … Continue Reading

Wells Fargo Gives Subprime Borrowers Another Chance

Wells Fargo has announced that it plans to begin originating FHA-backed loans for borrowers with credit scores as low as 600. This new cut-off is 40 points below Wells Fargo’s current floor, and 20 points below what has traditionally been considered to constitute a “subprime” borrower. After the collapse of the housing market, faced with … Continue Reading

FHFA Says Fannie and Freddie Still Take on Risky Mortgages

Fannie Mae and Freddie Mac have continued to spend billions of dollars on questionable mortgage loans despite previous alerts to potential issues with their appraisals, the Federal Housing Finance Agency’s Office of Inspector General said Thursday. According to a new report, the mortgage giants ignored warnings from the FHFA’s data portal about underwriting violations, such … Continue Reading

Derivative Suit Filed Against JPMorgan Alleges Culture of Risk

Adding to JPMorgan Chase’s widely publicized recent legal woes, shareholder Bradley P. Miller filed a derivative suit against the bank and its directors in California federal court on January 23, 2014, as a result of the $20 billion in fines the bank paid last year for nearly a decade’s worth of alleged wrongdoing. “Defendants put … Continue Reading

Dodd Frank Act: The Arrival of the ‘Ability to Repay’ Lending Restrictions

The days of exotic mortgage programs like “no doc” and balloon loans may be over. Earlier this month, the long awaited (and by many lenders and experts, dreaded), lending restrictions codified in the Dodd Frank Act finally went into effect. The rules, promulgated by the Consumer Financial Protection Bureau (CFPB), attempt to constrain lenders’ abilities to … Continue Reading

Forced-Place Insurance Policies May Soon Be Tamed

In an article in today’s DBR by John Pacenti, I weigh in on forced-place insurance policies. The article addresses the new restrictions by the Federal Housing Finance Agency that aim to prohibit mortgage services from being reimbursed for expenses associated with captive reinsurance arrangements. Pacenti also quotes a prior blog post that I co-authored with … Continue Reading

FHA Announces Plans to Lower Mortgage Insurance Policy Caps

Last Friday, the Federal Housing Administration announced that it will reduce the maximum threshold for the high-price mortgages it is willing to insure. This change was called for by the Housing and Economic Recovery Act of 2008, but was delayed several times in response to continuing economic turmoil. Currently, in the highest cost areas, the … Continue Reading

Upcoming MBA Conference: November 20 in Boca Raton

I will be a panelist at the Mortgage Bankers Association’s (MBA) upcoming Accounting and Financial Management Conference 2013 in Boca Raton, Florida. I will participate in a session on November 20 at 4:15pm entitled “Managing and Accounting for Risk of Repurchases, Indemnifications and Compensatory Fees.” Brandon Coleman, CPA, a partner in Deloitte’s Accounting National Office, … Continue Reading

FHFA Restricts Forced-Placed Insurance Practices

We recently commented on JPMorgan Chase’s blockbuster agreement to resolve a class-action lawsuit for $300 million brought by more than a million homeowners nationwide. The dispute centered on allegations that Chase profited by collecting kickbacks from insurance companies for imposing force-placed insurance policies at excessive rates on properties that secured its loans where coverage had … Continue Reading

JPMorgan Chase Agrees to Settle Forced-Placed Insurance Class-Action Lawsuit for $300 Million

Forced-Place Insurance Business Surged Following the Housing Collapse JPMorgan Chase and Assurant Inc. recently agreed to settle a class-action lawsuit initiated in June 2012 for $300 million brought by a class of 1.3 million homeowners nationwide who claimed that they were overcharged for forced-placed insurance. The plaintiffs have also entered into a separate settlement for … Continue Reading

Wells Fargo Settles Mortgage Buyback Litigation with Freddie Mac for $869 Million

Under Threat of Having to Repurchase Thousands of Home Loans Sold to Freddie Mac Prior to January 1, 2009, Wells Fargo Agrees to Resolve all Remaining Claims in a Single $780-Million Cash Payment As of June 30 of this year, Wells Fargo & Co., this nation’s largest mortgage lender, had received demands to repurchase $1.4 … Continue Reading

City of Richmond, California Backs Plan to Use Eminent Domain to Seize Bad Mortgages

Richmond, CA is first municipality to use eminent domain on underwater mortgages Richmond, California’s leaders approved a controversial plan earlier this month to become the first municipality in the nation to use eminent domain to rid itself of underwater mortgages. The plan was approved by the Richmond city council 4-3 following a long and contentious public meeting … Continue Reading

Private Mortgage Insurers Return to Profitability after Housing Crisis

Best Quarter Posted in 6 years It should be no surprise that the private mortgage insurance industry was nearly decimated in the wake of the housing crisis. During that tumultuous time, the private mortgage insurers that survived lost a combined $20 billion. However, it appears that the tide has finally begun to turn. Diana Olick of … Continue Reading

Federal Criminal Investigation of JPMorgan

Preliminary conclusions suggest that JPMorgan may have broken federal laws with its sale of mortgage securities The civil division of the Justice Department has preliminarily concluded that JPMorgan broke federal laws in connection with its sale from 2005 to 2007 of subprime and Alt-A residential mortgage securities, and the bank is now under criminal investigation. Federal prosecutors are examining … Continue Reading

Obama Supports Legislation to Replace Fannie Mae, Freddie Mac

Investing in the housing market’s recovery President Obama officially threw his support behind a bipartisan push to replace beleaguered housing giants Fannie Mae and Freddie Mac during a speech to an Arizona crowd on Tuesday. “As home prices rise, we can’t just re-inflate another housing bubble,” Obama admonished.  Rather, government should invest in the housing market’s … Continue Reading

Proposed new rule under Dodd-Frank Act

Key exemptions in the Dodd-Frank Act allowed lenders to securitize risky mortgages In 2011, in an effort designed to prevent a repeat of the often times shoddy underwriting practices that were pervasive during the years leading up to the current mortgage crisis, the Federal Deposit Insurance Corporation and the Federal Reserve proposed a rule under … Continue Reading

Proposed Legislation Would Replace Fannie Mae, Freddie Mac

The Future of Housing Reform A bipartisan group of U.S. Senators recently proposed a bill that would replace Fannie Mae and Freddie Mac over the next 5 years. If passed by congress, the legislation would replace Fannie and Freddie with a newly created government reinsurer called Federal Mortgage Insurance Corporation (FMIC), modeled after the Federal … Continue Reading

Citigroup Resolves Mortgage Buyback Dispute with Fannie Mae

$968 Million Settlement During the aftermath of the financial crisis, Fannie Mae and Freddie Mac have been aggressively demanding that Wall Street and big bank aggregators repurchase millions of defaulted and distressed loans for alleged breaches of representations and warranties. In line with several recent blockbuster settlements with GSEs, Citigroup Inc. has agreed to pay … Continue Reading

Lehman Reaching Beyond the Grave

Lehman is demanding millions of dollars from non-profits As widely reported, in the latest Lehman bankruptcy “fundraiser,” managers of the Lehman estate are now demanding millions of dollars from non-profit retirement homes, colleges and hospitals.  Lehman claims that it was somehow “shortchanged” by multiple non-profit organizations that were forced to pay to exit derivatives that … Continue Reading

TBTF Servicing: Another Issue for Originators to Consider

Shocking Statistics from Foreclosure Review As widely reported recently, close to 1.2 million borrowers (about 30% of the more than 3.9 million households that faced foreclosure proceedings by the 11 leading financial institutions in 2009 and 2010), had to battle purported wrongful seizures of these properties. These battles were frequently waged despite the borrowers not … Continue Reading
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