Entries in Fannie Mae (11)


Bank of America Agrees to $10B Settlement with Fannie Mae

Jin Lee/Bloomberg via Getty Images(NEW YORK) -- Bank of America agreed on Monday to pay Fannie Mae billions to settle claims stemming from the housing crisis.

The Charlotte, N.C.-based bank will pay more than $3 billion in cash and buy back an additional $7 billion worth of mortgages sold between 2000 and 2008.  Fannie Mae said the loans were flawed and it accused Bank of America and its subsidiary, Countrywide, of misrepresenting their quality.

Since Bank of America bought Countrywide, it has been responsible for $40 billion in costs.  The bank's chief executive called this agreement "a significant step" in resolving mortgage issues.

Copyright 2013 ABC News Radio


Fannie Mae CEO Michael Williams to Resign

Mark Wilson/Getty Images(WASHINGTON) -- Fannie Mae announced Tuesday that CEO Michael J. Williams will step down.  He became president and CEO of Fannie Mae in April 2009.

“As CEO, I have focused the company on providing the necessary funding to support sustainable homeownership and quality affordable housing; creating the solutions needed to stabilize the market and help homeowners in distress; and building a strong new leadership team that can move the company and the industry forward,” said Williams.  “For the past three years, we have executed on this important mission, while making fundamental changes to prepare housing finance for a better future.  I decided the time is right to turn over the reins to a new leader.  As I told our employees today, I am extremely proud of what we have achieved together, and I am confident that they will continue to make a positive difference.”
Along with other executives at Fannie Mae and Freddie Mac, he recently came under criticism for receiving multimillion-dollar salaries and bonuses, while the giant housing agencies still owe the U.S. government bailout funds.
The agencies have been blamed by some for irresponsibly promoting homeownership and contributing to the housing bubble.

Williams will remain in his post as CEO until the company's board of directors names a successor.

Copyright 2012 ABC News Radio


Foreclosure Law Firm That Mocked Victims Closing

iStockPhoto/Thinkstock(BUFFALO, N.Y.) -- One of the major law firms handling foreclosures in the U.S. is closing its doors after being banned by Fannie Mae and Freddie Mac from receiving new work from lenders and servicers. It's the same firm that threw a Halloween party last year where its employees dressed up as foreclosure victims, mocking people who had lost their homes.

The photos from the party leaked on the Internet, but law firm Steven J. Baum P.C., one of the largest foreclosure law firms in New York state, was also implicated in the robo-signing scandal where landers seeking to foreclose had filed phony paperwork to speed the process.

The firm announced its closure on Monday. Baum handled 40 percent of all foreclosures statewide, according to the Buffalo News.

The firm had been denounced by consumers and consumer advocates for its work on behalf of lenders even before the "robo-signing" controversy thrust it into the middle of a nationwide crisis over the legitimacy of many foreclosures, according to the Buffalo News. The controversy broke nationwide in October 2010, when bank workers or lenders were accused of indiscriminately signing foreclosure documents.

Steven Baum law firm directed ABC News to its spokesman, Earl Wells, who didn't return a request for comment.

"Disrupting the livelihoods of so many dedicated and hardworking people is extremely painful, but the loss of so much business left us no choice but to file these notices," Steven J. Baum, who owns the firm, said in the statement.

Last month the firm agreed to pay a $2 million fine and change its practices to settle a federal investigation by the U.S. Justice Department that it filed misleading legal papers to expedite foreclosures.

Rep. Elijah Cummings, D-Md., and ranking member of the House Oversight and Government Reform Committee, launched an investigation into the Baum firm, and wrote to the firm to request documents, according to the Buffalo News.

Daren Blomquist, spokesman for RealtyTrac, said the closing of the firm and others has put the spotlight on shoddy practices and a lack of transparency in the foreclosure industry.

"It's good that these questionable practices are coming to light," Blomquist said. "The problem is the foreclosure industry brought this on itself in a way."

One large problem is that it is slowing down the path to a housing recovery, he said.

"It's delaying foreclosure activity that needs to take place for market to reset itself," he said. "It's a good thing that these practices are coming to light, but it's going to mean the markets are going to be bogged down before we can truly recover."

Brad German, Freddie Mac spokesman, said he could not divulge the reasons why the agency told services on Nov. 10 to stop referring new business on its new files to the firm.

A spokesman for Fannie Mae, the Federal National Mortgage Association, confirmed that the federal agency suspended new referrals to the Baum firm on Nov. 15 but said he could not share why. On Monday, the agency distributed broader authorization to transfer existing foreclosure filings to other counsel.

Fannie Mae has processed 960,000 loan workouts, such as modifications and other foreclosure prevention solutions, since 2009. The agency has also opened 12 mortgage help centers across the country, most recently in Washington, D.C. to assist homeowners in trouble.

The average time to close a foreclosure is 336 days, according to RealtyTrac. New York state already has the longest process of any state, with an average of 986 days, which Blomquist says "almost unbelievable."

As a comparison, nationwide in 2007 when the country had a "normal market" the average time to foreclose was 140 days.

Copyright 2011 ABC News Radio


Obama to Announce Help for Struggling Homeowners

Hemera/Thinkstock(WASHINGTON) -- President Obama will announce Monday a new proposal to alleviate the pressure on homeowners who are under water, as he travels to Nevada, the ground zero of the housing bust.

From the front porch of a Las Vegas home, which has one the highest foreclosure rates in the country, the president will promote a plan that would allow struggling homeowners who are backed by federal mortgages to refinance without getting a new appraisal or a full credit check. It also eliminates some risk-based fees for borrowers.

The changes are being spearheaded by the Federal Housing Finance Agency, which oversees government-sponsored Fannie Mae and Freddie Mac. The plan falls under the Home Affordable Refinance Program, which, the agency estimates, has helped 894,000 families.

While administration officials say it will help thousands of homeowners, the program has its caveats. Only those homeowners whose mortgages are backed by Fannie Mae and Freddie Mac will be eligible for refinancing. They must have good credit and must have kept up with their mortgage payments, with no late payment in the past six months and no more than one late payment in the past 12 months. Additionally, the mortgage must have been sold to the agencies before May 31, 2009, and not been refinanced previously under the Home Affordable Refinance Program. The loan-to-value ratio has to be greater than 80 percent.

The changes come as the housing market, which is central to economic recovery, continues to struggle despite record-low interest rates and government programs to help homeowners. As of September, more than 2 million U.S. homes are in foreclosure while more than 4 million homes have delinquent payments, according to real estate services firm LPS.

Copyright 2011 ABC News Radio


Fannie Mae, Freddie Mac Credit Ratings at Risk, Says S&P

Mark Wilson/Getty Images(NEW YORK) -- Standard & Poor's Ratings Services may lower the AAA ratings of Fannie Mae and Freddie Mac.

The home loan guarantors, placed under government conservatorship in 2008, depend heavily on the U.S., which is also under review for a possible downgrade.  S&P said Friday in a statement that this "direct reliance on the U.S. government" jeopardizes Fannie and Freddie's credit status.

On Thursday, S&P announced the U.S. government is on CreditWatch, and could have its credit rating lowered if Congress and the Obama Administration failed to reach an agreement concerning the nation's debt.

Standard & Poor's also said Friday that AAA-rated Federal Home Loan Banks along with 126 debts guaranteed by the Federal Deposit Insurance Corp. has been placed on CreditWatch.

Copyright 2011 ABC News Radio


SEC Investigating Former Fannie Mae CEO

Mark Wilson/Getty Images(NEW YORK) -- The former chief executive of Fannie Mae announced that he is being investigated by the Securities and Exchange Commission after receiving a Wells Notice - notification of impending charges.

Daniel Mudd, who ran Fannie Mae from 2004 to 2008, when the government took control of the mortgage giant, could be charged with misleading investors on subprime mortgages.

Since his dismissal, Mudd has served as CEO of the New York-based hedge fund Fortress Investment Group.

Copyright 2011 ABC News Radio


Government to Wind Down Backing of Freddie Mac, Fannie Mae

Photo Courtesy - Mark Wilson/Getty Images(WASHINGTON) -- The U.S. Treasury introduced its plans Friday to do away with troubled mortgage giants Fannie Mae and Freddie Mac.

The two firms have been the primary driving force behind the expansion of American homeownership since Fannie was founded in 1938.

Today they provide a secondary market for nine of 10 American mortgage loans, buying up the paper from issuing banks, packaging them and selling them to investors as guaranteed mortgage securities.

During the 2008 financial crisis they collapsed into government conservatorship as a massive number of loans in its vast $5.6 trillion portfolio started to fail.

“This is a plan for fundamental reform of the housing market,” said Treasury Secretary Tim Geithner.

The Treasury’s plan is committed to winding Fannie and Freddie down over a term of five-to-seven years, putting in place new regulations which will allow the private sector to replace the government involvement in the housing market.

The authors offered up three distinct “options” for how the future housing might work -- a government “re-insurance” program to backstop private investors, a limited “re-insurance” program that scales up during recessions, or no government backstop at all.

Treasury and White House officials will begin the process of working with Congress to build consensus around one of the three options and bringing legislation to the floor for reforms, “…in the next couple of years.”

Copyright 2011 ABC News Radio


Poll: Most Americans Feel Now Is a 'Good Time' to Buy a Home

Photo Courtesy - Getty Images(PRINCETON, N.J.) -- Results from a recent Gallup poll show that 67 percent of Americans feel that now is a "good time" to buy a home.  These results are similar to previous polls: 72 percent in April 2010 and 71 percent in 2009. 

Gallup says that historically low interest rates and home prices, along with the huge supply of unsold homes and record high number of foreclosures, suggest bargains could continue to get better as the year unfolds, giving Americans "good reason" to think now is a good time to buy a house.

But Gallup also notes that today's housing market conditions may not be in favor of all home buyers.  The pollster says the housing finance system currently works in favor of cash buyers and buyers with perfect credit.  Due to the federal takeover of Fannie Mae and Freddie Mac, the market is limited to potential buyers who can meet their more restrictive loan requirements or those who can buy without a loan.

"As a result," the Gallup report states, "although many feel this is a good time to buy, relatively few can take advantage of the situation."

Copyright 2011 ABC News Radio 


Geithner Says Financial Recovery Amounts to 'Fraction' of Estimated Cost

Photo Courtesy - Darren McCollester/Getty Images(WASHINGTON) -- Treasury Secretary Timothy Geithner told a congressional oversight panel Thursday morning that the cost of the federal financial rescue program will ultimately be only a “fraction” of the cost originally estimated by the Congressional Budget Office.

“We have brought stability to the financial system and the economy at a fraction of the expected costs,” Geithner said in prepared remarks for the hearing.

Recently, the CBO estimated that the TARP program will cost the government $25 billion, far lower than the original estimate of $350 billion, and Geithner suspected that the $25 billion estimate might be “too high.”  Geithner further said the combined costs of efforts by the Federal Reserve and FDIC coupled with TARP and the losses inflicted by Fannie Mae and Freddie Mac will amount to less than one percent of the GDP.

Geithner defended the TARP program calling it “one of the most effective crisis response programs ever implemented.”

“The American financial system today is in a much stronger position than it was before the crisis.  There's been a very dramatic restructuring of our financial system.  The weakest parts of the system no longer exist today.”

But the panel’s chairman, Sen. Ted Kaufman, pointed out that Americans still feel the stress of the financial crisis despite the recovery of large financial institutions, comparing it to a “let them eat cake” situation.

“Many people simply feel their lives have not gotten better during this period, even as the financial system has stabilized and banks have returned to profitability,” Kaufman said. “The problem we have out there now is people don't have jobs, and people can't borrow money.”

Geithner assured the panel that the government will continue to invest in programs to bring greater relief to individuals while also attempting to stave off any future financial collapse.

“We have to worry how to clean up this mess for the future, make sure we don't get into this kind of mess in the future again,” Geithner said.  “Our overwhelming preoccupation now is, what can we do to make sure that  we're helping people stay in their homes who can afford to, and make sure we get through the damage remaining, at least risk to the innocent people that have suffered so much in this crisis.”

Copyright 2010 ABC News Radio


Small Businesses Stoke Anti-Incumbent Fever

Photo Courtesy - ABC News(NEEDHAM, Massachusetts) -- Massachusetts resident Frederick Muzi says he doesn't believe in government bailouts and hopes his vote against incumbent Rep. Barney Frank, a fixture in the House for nearly 30 years, expresses that.

Muzi, whose family has owned a Chevrolet and Ford car dealership in Needham, Massachusetts for 75 years, even opposed the federal government's bailout of General Motors last year. He would have preferred GM enter bankruptcy without government sponsorship.

"They made mistakes, let them pay for it," said Muzi about General Motors. "It would have hurt us as a Chevy dealer, but we would have dealt with it."

For the closely-watched Massachusetts congressional race, Muzi is voting for Republican Sean Bielat against Democrat Frank. Muzi believes Frank, chair of the financial services committee, is responsible for the crash of the economy because of his support of the auto-bailout and the government takeover of Fannie Mae and Freddie Mac to shore up the soured mortgage markets.

Muzi is one of many business owners who say too much government and the auto and financial bailouts have only exacerbated the economy. "If the economy goes, then our business and our family will go," said Muzi. "It's up to us to cope with whatever economic conditions there are, but it's a lot better when the economy is right."

The troublesome economy is why some small business owners are voting against incumbent politicians and ushering in new, conservative faces, often backed by local Tea Party groups.

The National Federation of Independent Businesses, a lobbying association, decided to endorse Bielat over Frank because of his voting record on what it believes are key issues for small businesses.

"Mr. Frank opposes us on all major issues," said Lisa Goeas, vice president for political operations of the Federation. These issues include healthcare and the Employee Free Choice Act, which Goeas said would force small business owners to recognize unions without a secret ballot. "And he's for 'cap and trade' and President Obama's healthcare reform bill, which represents billions of new taxes and fees by small business owners."

Goeas said the Federation has about 800 members in Rep. Frank's district who will most likely be voting for Bielat instead because he has been "very vocal on tax and spend issues" and a "more user-friendly tax code."

"He has a very influential position but he hasn't chosen to use it to the advantage of small business," she said.

Copyright 2010 ABC News Radio

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