Daily Archives: November 25, 2015

It’s official: Obama signs bill limiting Fannie, Freddie CEO pay

In what has become a complete and total rebuke of an effort put forth by Federal Housing Finance Agency Director Mel Watt to award $3 million raises to the CEOs of Fannie Mae and Freddie Mac, President Obama signed into a law a bill that caps the salaries of Fannie Mae CEO Timothy Mayopoulos and Freddie Mac CEO Donald Layton.

According to the White House, President Obama signed the Equity in Government Compensation Act of 2015 on Wednesday.

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Wall St. Faces Mounting Criticism From Regulators


Despite the fallout from the 2008 financial crisis, Wall Street still has a tendency to dismiss as frivolous some of the ethical issues it faces daily.

But at a Nov. 5 symposium on ethics at the Federal Reserve Bank of New York — the second on the topic two years — regulators suggested that Wall Street executives who continue to ignore the various cultural flaws at their firms do so at their own peril.

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Citigroup subsidiary to pay settlement to state of Colorado

DENVER BUSINESS JOURNAL – Citigroup Global Markets Inc. has agreed to pay $35,000 to the state of Colorado after an investigation revealed some members of the firm were not licensed to trade stock.

Citigroup Global Markets Inc. is a registered broker-dealer firm that is a subsidiary of New York-based Citigroup, Inc. The stipulation for the consent order notes that the company fully cooperated with the investigation and has made changes to its process. The company agreed to pay the fine without admitting or denying the findings of fact or conclusions of law contained in the order, which was signed Nov. 20 by Colorado Securities Commissioner Gerald Rome.

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Pimco, others sue Citigroup over billions in mortgage debt losses

Pacific Investment Management Co and other investors have sued Citigroup Inc over the bank’s alleged failure to properly monitor toxic securities backed by more than $13.8 billion of mortgage loans, resulting in $2.3 billion of losses.

According to a complaint filed Tuesday night in a New York state court in Manhattan, Citigroup breached its duties as trustee for the 25 private-label trusts dating from 2004 to 2007 by ignoring “pervasive and systemic deficiencies” in how the underlying loans were underwritten or being serviced.

The investors said Citigroup looked askance at the loans’ “abysmal performance” out of fear it might “jeopardize its close business relationships” with loan servicers including Wells Fargo & Co and JPMorgan Chase & Co, or prompt them to retaliate over its own problem loans.
Read more at Reutershttp://www.reuters.com/article/2015/11/25/us-citigroup-pimco-lawsuit-idUSKBN0TE2MC20151125#Bk9vqKEToqdG55gP.99

Whistleblower Attempts to Revive RMBS Suit Against Wells Fargo

Elizabeth Jacobson, a former subprime loan officer from Wells Fargo Bank, has attempted to revive herwhistleblower suit against the bank in the Second Circuit Court of Appeals.

Jacobson, who originally filed her suit in 2012, claims that Wells Fargo knowingly packaged and sold toxic mortgage-backed securities to investors and that those securities did not qualify for a tax exemption under law. Wells Fargo claims the securities qualify as real estate mortgage investment conduits, which made them eligible for both city and state tax exemptions in New York. The law states that nearly all mortgages in a securities bundle must be qualified mortgages—defined by a lower court as being secured by real property.

The lawsuit, filed by Jacobson on behalf of both the city and the state of New York, claims that Wells Fargo engaged in the scheme to gain the both city and state tax exemptions by falsely qualifying the mortgage-backed securities as REMICs. Jacobson claims the tax exemptions saved the bank more than $1 billion.

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Announcement: Moody’s: Master servicing transfer to Bank of America, N.A from Countrywide Home Loan, Inc. has no negative ratings impact on two US RMBS transactions

Global Credit Research – 23 Nov 2015

New York, November 23, 2015 — Moody’s Investors Service (“Moody’s”) stated today that the transfer of master servicing from Countrywide (“CHL”) of two transactions to Bank of America, N.A. (“BANA”) will not, in and of itself and at this time, result in a reduction or withdrawal of the current ratings on the securities issued by these transactions.

BOA requested that Moody’s provide its opinion on whether the ratings on the securities issued by the affected transactions would be downgraded or withdrawn as a result of the transactions having their loan master servicing transferred to BANA from CHL. The transfer of these loans is scheduled around November 30, 2015. As the new master servicer, BANA will own the servicing rights to the loans that are transferred from CHL.

Moody’s view on the master servicing transfer is based primarily on its opinion that BANA’s servicing strategy will not be negatively impact the performance of the loans as these loans are serviced on the same servicing platform since the BANA/CHL acquisition.

Moody’s opinion addresses only the current impact on Moody’s ratings, and we do not express an opinion as to whether the transfer of master servicing rights has or could have any other effects that investors may or may not view positively. The determination was made without regard to any applicable Certificate Insurance Policy, with respect to Insured Certificates.

The methodology used in assessing the credit impact of the servicing transfer was “US RMBS Surveillance Methodology” published in November 2013. Other methodology includes “Moody’s Methodology For Assessing RMBS Servicer Quality (SQ)” published in January 2013. Please see the Credit Policy page on http://www.moodys.com for a copy of these methodologies.

Affected Transactions:

CWHEQ Revolving Home Equity Loan Trust, 2007-E

CWHEQ Revolving Home Equity Loan Trust, 2007-G

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Three Atlanta metro counties sue Bank of America for ‘hundreds of millions’

Three metro Atlanta counties claim in a lawsuit that Bank of America and related companies resorted to abusive mortgage lending practices that targeted black and Latino homeowners.

They seek “hundreds of millions of dollars” in damages to offset lost tax revenue and other public costs they claim stemmed from the practices.

The lawsuit, filed in U.S. District Court in Atlanta, is one of several such suits across the nation that counties and cities have filed against major banking companies since the 2007-2009 real estate crash.

Fulton, DeKalb and Cobb counties allege that the bank and its subsidiaries, Countrywide Financial and Merrill Lynch, steered borrowers into high-cost “subprime” mortgages, stripped them of their equity with high fees and interest charges, and drove them into foreclosure. The lawsuit said the actions, some still ongoing, violate the federal Fair Housing Act.

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