Dodd-Frank News Center

OIG audit looks at how oversight can improve the real estate owned pilot program

This story appeared in Bank Digest.

The Federal Housing Finance Agency’s Office of Inspector General has issued the results of a performance audit that assessed the FHFA's oversight of Fannie Mae's policies, procedures, and practices with respect to the selection and administration of investors participating in the REO Pilot Program. OIG found that Fannie Mae's bidder qualification contractor did not fully comply with important provisions of the established process. Additionally, Fannie Mae did not always follow its contractor's scores and recommendations. FHFA also has not clarified several goals that are applicable to the REO Pilot Program. Specifically, FHFA has not clarified how the goals and objectives of the pilot program will be achieved, or how the agency intends to monitor and assess the performance of the pilot or any other future initiatives under the overall REO disposition program. In particular, FHFA has not prepared a program plan to guide its REO disposition-related initiatives. OIG indicated that such planning is important to provide the oversight needed to ensure proper disposition of Fannie Mae's extensive REO inventory.

FHA reserves shortfall prompts reaction from Congress

This story appeared in Bank Digest.

Reports that the Federal Housing Administration will require a $1.7 billion bailout this year prompted immediate reaction on the hill. Sen. Mike Crapo (R-Idaho), Ranking Member of the Senate Banking, Housing and Urban Affairs Committee, responded that such a request was "unacceptable," and that this failure of the FHA indicated the need for "broader housing finance reform." In July of this year, the Senate Banking Committee passed the FHA Solvency Act of 2013 (S. 1376), which would provide FHA with strengthened underwriting standards, enhanced lender accountability measures, and reforms to the FHA's reverse mortgage program. The measure has not come before the full senate.

OCC reports continued improvement in mortgage performance

This story appeared in Bank Digest.

 

The performance of first-lien mortgages serviced by large national and federal savings banks has continued to improve in the second quarter of 2013, according to a report released by the Office of the Comptroller of the Currency. The OCC Mortgage Metrics Report for the Second Quarter of 2013 indicates that the strengthening economic conditions, servicing transfers, home retention efforts, and home forfeiture actions contributed to improved performance of home mortgages in the second quarter of 2013. The report showed that 90.6 percent of mortgages were current and performing at the end of the quarter, compared with 90.2 percent at the end of the previous quarter and 88.7 percent a year earlier. Seriously delinquent mortgages decreased 15 percent from a year earlier, but early stage delinquencies increased 11.6 percent. Foreclosure activity fell to its lowest level since the inaugural OCC Mortgage Metrics Report in the first quarter of 2008. 

Fed issues two interim final rules on incorporating the Basel III regulatory capital reforms

This story appeared in Bank Digest.

The Federal Reserve Board has adopted two interim rules that are intended to clarify how the Basel III capital rules will affect bank and holding company stress tests and capital plans during the next cycle. The rules are necessary, the Fed says, because the Basel III capital reforms will take effect in 2014 and 2015, and the planning horizon for the next cycle runs through the end of 2015, resulting in an overlap. The capital plan process and stress test process are two tools used by the federal financial regulatory agencies to examine the capital adequacy of the institutions they regulate.

FHFA OIG releases reports on how enterprises can improve oversight

This story appeared in Bank Digest.

The Federal Housing Finance Agency Office of Inspector General has released two reports on how the "FHFA Can Improve Its Oversight of Fannie Mae/Freddie Mac's Recoveries from Borrowers Who Possess the Ability to Repay Deficiencies." The OIG assessed FHFA's oversight of the effectiveness of Fannie Mae/Freddie Mac's deficiency recovery process for borrowers who possess the ability to repay deficiencies. A deficiency exists when a foreclosure sale's proceeds are less than the borrower's mortgage loan balance. Fannie Mae/Freddie Mac, as the owners of the mortgage, typically have the right to pursue collection of that deficiency in order to reduce credit losses. The OIG believes that FHFA and Fannie Mae/Freddie Mac are in a position to improve vendors' ability to act within the time frames set by statutes of limitations, even those in the 10 states with the shortest statutes of limitation, by having vendors more quickly assemble documents and information needed (before and after foreclosure) to evaluate and pursue borrowers with the ability to repay deficiencies, particularly strategic defaulters.

FHFA adopts final rule on stress testing

This story appeared in Bank Digest.

The FHFA has adopted the final rule on "Stress Testing of Regulated Industries." The rule requires the Federal National Mortgage Association , the Federal Home Loan Mortgage Corporation, and each of the twelve Federal Home Loan Banks that have total consolidated assets of more than $10 billion to conduct annual stress tests to determine whether the companies have the capital necessary to absorb losses as a result of adverse economic conditions. The rule reflects the FHFA's supervisory judgment after considering public comments and is grounded in its regulatory and supervisory authority and obligation to ensure the safety and soundness of the regulated entities under the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, and Federal Home Loan Bank Act. The rule takes effect 30 days after publication in the Federal Register.

FHFA launches national HARP education campaign

This story appeared in Bank Digest.

The Federal Housing Finance Agency has  launched a nationwide campaign to inform homeowners about the Home Affordable Refinance Program (HARP). The campaign is designed to encourage homeowners who have been making their mortgage payments, but who owe more than their home is worth, to contact their current lender or any other mortgage lender offering HARP refinances to review their refinancing options. With mortgage rates still historically low and HARP eligibility requirements expanded, qualifying homeowners could reduce their monthly mortgage payments or increase their equity faster with a shorter term mortgage. As part of this campaign, FHFA has launched a new website, www.HARP.gov, and is working with mortgage companies across the Unites States and HGTV personality and star of Power Broker Mike Aubrey to help reach homeowners who may qualify.

 

Tarullo discusses macroprudential approach to regulating large financial institutions

This story appeared in Bank Digest.

Speaking at the Yale Law School Conference on Challenges in Global Financial Services, Federal Reserve Board Governor Daniel Tarullo discussed how the Fed was re-imagining the regulation and supervision of large financial firms in order to realize the "macroprudential objective of reducing systemic risk." Tarullo suggested five propositions to guide this project, explained some of the key steps already taken in this effort, and some steps that remain. He also reviewed the "evolving" idea of macroprudential policy.

CFPB orders Chase and JPMorgan Chase to pay $309 million refund for illegal credit card practices

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau ordered Chase Bank USA, N.A., and JPMorgan Chase Bank, N.A., to refund an estimated $309 million to more than 2.1 million customers for illegal credit card practices. This enforcement action is the result of work started by the Office of the Comptroller of the Currency (OCC), which the CFPB joined last year. The agencies found that Chase engaged in unfair billing practices for certain credit card "add-on products" by charging consumers for credit monitoring services that they did not receive.

Warren questions Treasury and Education on accountability for Sallie Mae rulebreaking and violations

This story appeared in Bank Digest.

In a letter to Treasury Secretary Jacob Lew and Education Secretary Arne Duncan, Sen. Elizabeth Warren (D-Mass) questioned their departments' ongoing relationship with Sallie Mae "despite Sallie Mae's pattern of breaking the rules and ignoring its contractual obligations." In light of recent Inspector General findings, Warren asked Lew and Duncan what actions they have taken to hold Sallie Mae accountable for its repeated failings, including the improper marketing of federal student loans and violations of contractual obligations regarding debt collection. Since 2009, the Sallie Mae has received federal government contracts worth hundreds of millions of dollars. "While the government has been quite tolerant of Sallie Mae's failings and helped Sallie Mae maintain its profitability, it is not nearly as generous when it comes to student borrowers," wrote Senator Warren. "For students who default on their federal loans, the accountability is relentless. ... Where is that kind of accountability for Sallie Mae?"