Fannie Mae, Freddie Mac: Shareholders File Lawsuit In Delaware

Another lawsuit has been filed against the federal government by two GSE shareholders alleging that the Net Worth Sweep is illegal under Delaware and Virginia corporate law. The write-up in Politico Pro (subscription paywall) noted that while the GSEs are “are chartered under federal law, investors are pointing out state bylaws apply to their corporate governance practices and procedures.” Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) is charted under Delaware law and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) falls under Virginia’s jurisdiction.

According to the complaint:

“Under Delaware and Virginia corporate law, preferred stock of a corporation cannot be given a cumulative dividend right equal to all the net worth of the corporation in perpetuity. The Net Worth Sweep represents an unlawful confiscation of the entire economic value of the Companies and their other classes and series of stock. The Net Worth Sweep is an illegal term for any preferred stock instrument, whether or not held by the federal government.”

As a result of the “unprecedented agreement” between the U.S. Treasury and the Federal Housing Finance Agency to implement the sweep (in violation of federal law, we might add), the complaint notes that “Treasury will receive – in perpetuity – any and all profits that Fannie Mae and Freddie Mac earn.”

Read on.

Fannie, Freddie Regulator Leaves Affordable-Housing Targets Little Changed

Fannie Mae’s and Freddie Mac’s regulator won’t push the mortgage companies to direct additional lending resources to low-income borrowers, a blow to affordable housing advocates.

On Wednesday, the Federal Housing Finance Agency announced new target goals for the percentage of the mortgage companies’ business that must go to less well-off borrowers. Under the new goals, which are effective from this year to 2017, 24% of Fannie’s and Freddie’s mortgages to buy homes will be expected to go to families with incomes no higher than 80% of their areas’ median income, up one percentage point from 2014.

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You can now review every federal agency (even the CFPB) on Yelp

Thanks to a new agreement between the federal government and Yelp (YELP), anyone can now rate and post a review of any federal agency on the consumer review-driven website and app, and maybe even get a response too.

The agreement was announced yesterday in a post onYelp’s official blog called “How Many Stars Would You Give the TSA? Review Federal Agencies on Yelp…and Maybe Get a Response.”

The blog says that Yelp users are now “encouraged” to leave reviews for federal agencies, field offices, national parks, or even TSA checkpoints.

Under the terms of the agreement, government agencies can now claim their page on Yelp, read and respond to the unfiltered reviews, and even “incorporate that feedback” into improvements to its services.

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Texas AG Re-Indicted In Securities Fraud Case

Law360, Los Angeles (August 18, 2015, 7:24 PM ET) — Texas Attorney General Ken Paxton was re-indicted Tuesday in state court, three weeks after the Lone Star State’s top attorney was charged with three violations of state securities laws, including two first-degree felony counts alleging omissions to investors, according to the county district court site.

The case is split into three, one for each charge, and the new indictments appear in the two securities fraud cases, according to Collin County records. The third charge, for failing to register as an investment adviser representative, was unchanged Tuesday…

Source: Law360

Connecticut couple goes missing days after setback in foreclosure case

ASTON, Ct. — A Connecticut couple has disappeared days after losing their latest appeal in a multimillion-dollar foreclosure case, a disappearance that a local police chief said appears increasingly suspicious though the pair’s family said it may be unrelated to their financial woes.

Jeffrey and Jeanette Navin of Easton, Connecticut, were last seen on Tuesday, August 4, at the refuse company they own in Westport, according to Easton Police Chief Tim Shaw.

In late July, Jeffrey Navin was denied his latest appeal in an ongoing eight-year battle over a mortgage on the family’s second home in central Connecticut, according to court documents.

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Citigroup to return $4.5 million more in fee overcharges

Citigroup Global Markets Inc (CGMI), a unit of Citigroup Inc, has agreed with the New York attorney general to return $4.5 million in account management fees charged on some 15,000 frozen accounts.

As a result of the agreement, a total of more than $20 million will be refunded to Citi customers for overcharges in an investigation initiated by New York Attorney General Eric Schneiderman.

In October, CGMI agreed return some $16 million to more than 31,000 customers who paid higher advisory fees than they had negotiated.

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SNL: Big-Bank Settlement Tab Climbs Past $132B

According to data compiled by SNL Financial, big settlements with regulators have become a rarer sight as the banking credit crisis fades further into memory. The tally for credit crisis and mortgage-related settlements now stands at $132.15 billion for the six largest bank holding institutions by total assets. The figure marks an additional $3.72 billion since SNL’s previous analysis in August 2014.

Most recently, on July 31, Goldman Sachs agreed to pay nearly $270 million to settle a lawsuit led by the NECA-IBEW Health & Welfare Fund of Illinois concerning crisis-era residential mortgage-backed security investments. Goldman recently raised its cost estimate for current legal proceedings to approximately $5.9 billion in excess of reserves, up from its previous estimate of $3.8 billion, according to the company’s August 3 Form 10-Q.

In contrast, Wells Fargo only marginally boosted its expected litigation costs, noting in its second-quarter Form 10-Q that the high end of its range for probable and estimable losses related to legal matters was $1.4 billion, compared to $1.2 billion for the previous quarter.

Morgan Stanley received the brunt of recent settlement costs, agreeing to pay $2.6 billion to resolve claims by the U.S. Justice Department and U.S. Attorney’s Office for the Northern District of California in February. According to a Form 8-K filed that month, the event ultimately caused Morgan Stanley to increase legal reserves for this settlement and “other legacy residential mortgage-backed securities matters” by approximately $2.8 billion and revise its operating income from continuing operations for fiscal 2014 downward by $2.7 billion.

According to an April 19 Wall Street Journal report, Morgan Stanley is also involved in a potential settlement with New York Attorney General Eric Schneiderman that could reportedly see the company pay out at least $500 million to settle claims related to mortgage securities.

JPMorgan Chase was hit with more than $969 million in documented fines in 2015. The company’s most recent settlement was announced July 17 for $388 million and concerned residential mortgage-backed securities that were offered during 2007. On May 27, Judge Laura Swain approved JPMorgan with a $500 million settlement from a class-action suit that accused Bear Stearns of selling nearly $18 billion in faulty mortgage-backed securities. In addition, the company settled claims with Dexia SA in relation to $1.6 billion in mortgage-backed securities, although terms of the settlement were not disclosed.

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