The Securities and Exchange Commission is offering a reward to the whistleblower that revealed a scheme at First Mortgage Corporation that involved several of the company’s senior executives lying about the performance of the mortgages the company originated, re-securitizing them, and defrauding investors out of $7.5 million – if in fact there is one.
Earlier this year, the SEC fined First Mortgage and the company’s chairman and CEO, president, and chief financial officer, and other executives a total of $12.7 million for pulling current, performing loans out of Ginnie Mae mortgage bonds by falsely claiming the mortgages were delinquent in order to sell them at a profit into newly-issued residential mortgage-backed securities.
Claimed performing mortgages were delinquent, resold them into new pools
Several senior executives at First Mortgage Corporation lied about the performance of the mortgages the company originated so they could pull the mortgages out of mortgage-backed securities guaranteed by Ginnie Mae,then turn right back around and sell the mortgages back into new mortgage bonds, defrauding investors out of $7.5 million, the Securities and Exchange Commission said Tuesday.
According to the SEC, six senior executives at California-based First Mortgage, including the company’s chairman and CEO, president, and chief financial officer, pulled current, performing loans out of Ginnie Mae mortgage bonds by falsely claiming the mortgages were delinquent in order to sell them at a profit into newly-issued RMBS.
In a release, the SEC stated that from March 2011 to March 2015, First Mortgage and its senior-most executives “orchestrated a scheme” to make the mortgages appear delinquent, by delaying depositing customers’ payments on their mortgages, making it seem like the customers were behind on their payments.
Treasury looking at impact of backdating letters allegation.
Ocwen Financial (OCN) is still under the gun – and investigation – but they’re still punching through the latest round.
The New York Department of Financial Services has put the kibosh on any bulk purchases of MSRs after it killed their deal with Wells Fargo (WFC), so the nonbank has turned its gaze to 1,705 delinquent Federal Housing Administration-insured loans with a principal balance of $253.1M from Ginnie Mae pools.
Ocwen is already the servicer on the portfolio.
Ocwen’s Ginne Mae buyout program got underway back in the first quarter of 2014.
“We expect to execute more such purchases in the next few months, as long as market conditions are favorable,” says Ocwen CIO John Britti.
Ginnie Mae is getting greener.
The only issuer of government-backed mortgage bonds, announced today it is moving away from paper-based issuer applications to an all-electronic system.
As of September 1, all applicants will be required to file electronically, via the Application Connection.
Ginnie Mae will not accept paper-based (hard copy) applications after July 31, 2014.
“We want to do everything that we can to ensure that our process is smooth, efficient and responsive for all parties,” said Ginnie Mae President Ted Tozer in a statement. “This includes creating a more efficient application process, becoming more responsive to applicant concerns and helping prospective Issuers clearly understand our issuer eligibility criteria and what it means to become a participant in our program.”
Ginnie Mae’s MBS portfolio reaches $1.5 trillion
Ginnie Mae’s mortgage-backed securities portfolio has reached a record level. Just four years after Ginnie’s portfolio reached $1 trillion, the corporation’s portfolio now stands at more than $1.5 trillion.
That marks an extraordinarily rapid growth, considering that it took 42 years — from the corporation’s founding in 1968 to 2010 — to reach $1 trillion in unpaid principal balance.
Ginnie Mae President Ted Tozer said that the rapid growth demonstrates the effectiveness of Ginnie’s “unique” business model. “Our role is critical because our unique business model – a public/private partnership – provides a safe, effective and government-backed channel for the flow of capital for U.S. mortgages, significantly limiting risks to the taxpayer and providing much needed capital for the government,” Tozer said.
Ginnie Mae Nixes Bank of America Mortgage Servicing Transfer Because the Bank is Missing Documents
Ginnie Mae has halted the transfer of mortgage servicing rights from Bank of America (BAC) to a nonbank servicer because the bank is missing documents such as recorded mortgages and title policies on the underlying home loans.
Ted Tozer, the president of Ginnie Mae, says he has held up the transfer of servicing rights by B of A “for an extended period” because the bank is not complying with agency’s guidelines that require all mortgage documents be delivered to custodians in a timely manner.
“Issues are coming up now because documents are missing,” Tozer said Tuesday. “It’s a new phenomenon with the major banks getting out of the servicing business. We don’t want to transfer the risk to a new servicer.”
It is unclear how widespread the problem of missing documents is in the transfers of mortgage servicing, Tozer says, and he does not want to single out B of A.