Fitch Rates FREMF 2012-K19 and Freddie Mac Structured Pass-Through Certificates, Series K-019

NEW YORK–(BUSINESS WIRE)–

Fitch has rated FREMF 2012-K19 Multifamily Mortgage Pass-Through
Certificates and Freddie Mac Structured Pass-Through Certificates,
Series K-019 as follows:

FREMF 2012-K19 Multifamily Mortgage Pass-Through Certificates

–$193,450,000 class A-1 ‘AAAsf’; Outlook Stable;

–$885,000,000 class A-2 ‘AAAsf’; Outlook Stable;

–$1,078,450,000* class X1 ‘AAAsf’; Outlook Stable;

–$1,078,450,000* class X2-A ‘AAAsf’; Outlook Stable;

–$66,806,000 class B ‘Asf’; Outlook Stable;

–$31,813,000 class C ‘BBB+sf’; Outlook Stable.

Freddie Mac Structured Pass-Through Certificates, Series K-019

–$193,450,000 class A-1 ‘AAAsf’; Outlook Stable;

–$885,000,000 class A-2 ‘AAAsf’; Outlook Stable;

–$1,078,450,000* class X1 ‘AAAsf’; Outlook Stable.

*Notional amount and interest only.

Of the FREMF 2012-K19 Multifamily Mortgage Pass-Through Certificates,
Fitch does not rate the $194,057,527 interest-only class X2-B, the
$194,057,527 interest-only class X3 or the $95,438,527 class D.

Of the Freddie Mac Structured Pass-Through Certificates, Series K-019,
Fitch does not rate the $194,057,527 interest-only class X3.

The certificates represent the beneficial interests in a pool of 83
commercial mortgages secured by 83 properties. The Freddie Mac
structured pass-through certificates, series K-019 (Freddie Mac SPC
K-019) represents a pass-through interest in the corresponding class of
securities issued by FREMF 2012-K19 Mortgage Trust. Each Freddie Mac SPC
K-019 security has the same designation as its underlying FREMF 2012-K19
class. All loans were originated by various seller/servicers according
to the guidelines of the Freddie Mac Capital Markets Execution (CME)
product. The certificates follow a sequential-pay structure.

The Master Servicer will be Bank of America, National Association, rated
‘CMS2+’ by Fitch. The Special Servicer will be Wells Fargo Bank,
National Association, rated ‘CSS2-‘ by Fitch.

The new issue report is available at ‘www.fitchratings.com‘.

Additional information is available at ‘www.fitchratings.com‘.
The ratings above were solicited by, or on behalf of, the issuer, and
therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

–‘Criteria for Analyzing Multiborrower U.S. Commercial Mortgage
Transactions’, Aug. 12, 2011;

–‘Global Structured Finance Rating Criteria’, June 6, 2012;

–‘Criteria for Special-Purpose Vehicles in Structured Finance
Transactions’, June 13, 2011;

–‘U.S. Commercial Mortgage Servicer Rating Criteria’, Feb. 18, 2011;

–‘Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions’, Dec.
21, 2011;

–‘Counterparty Criteria for Structured Finance Transactions’, March 14,
2011.

Applicable Criteria and Related Research:

Criteria for Analyzing Multiborrower U.S. Commercial Mortgage
Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685995

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923

Criteria for Special-Purpose Vehicles in Structured Finance Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=680591

U.S. Commercial Mortgage Servicer Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=584005

Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=662869

Counterparty Criteria for Structured Finance Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=678938

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE
AVAILABLE ON THE AGENCY’S PUBLIC WEBSITE ‘WWW.FITCHRATINGS.COM‘.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
SITE AT ALL TIMES. FITCH’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE ‘CODE OF CONDUCT’ SECTION OF
THIS SITE.

Flint Area Association of Realtors reports July 2012 sales numbers better than … – The Flint Journal

GENESEE COUNTY, MI — Sales of homes in Genesee County increased by more than 16 percent during the month of July 2012 versus the same month in 2011, according to statistics from the Flint Area Association of Realtors.

house 1.jpgA home for sale sign sits in front of a property on South Franklin Road in Flint.

In July 2012, the association reported that 536 homes sold in the county, while only 461 were sold that month in 2011. The 2012 figure is the best July sales number since there were 577 homes sold that month in 2004.

Mike Conn, president of the Flint Area Association of Realtors, said that home sales in 2012 have been greater in each month than they were in 2011. He said there are multiple reasons for the upward trend in sales.

“My opinion on why home sales are up this year from last year is that the interest rates have fallen off,” Conn said. “Home values are going up, but interest rates are dropping, so people are getting the best value and buying now.”

The average sales price for Genesee County homes has increased 10.55 percent from July 2011. Last July, the average sales price was $76,926 while this July it was reported to be $85,043.

Despite the increase in sales, the number of new listings has dropped significantly. This number is down 13.29 percent from last year at this time. Lawrence Yun, the chief economist for the National Association of Realtors, said inventory shortages are often a factor in increased sales due to the principle of supply and demand.

“We’ve been seeing a steady decline in the level of housing inventory, which is most pronounced in the lower price ranges popular with first-time buyers and investors,” Yun said.

Conn agreed with Yun, saying that fewer homes available “creates a great market.”

“In terms of wanting to sell your home for a huge profit, it’s not the best time,” Conn said. “But selling it quick is something that sellers will see from this market.”

Pending home sales slip in June

California pending home sales dipped in June but were still higher than the previous year for the 14th straight month, according to the latest California Association of Realtors report. A National Association of Realtors report indicates nationwide pending home sales declined in June as well. Officials say the low inventory is slowing home sales and could cause more problems later on.

The state group’s Pending Home Sales Index dropped 3.8 percent from a revised 126.1 in May to 121.4 in June, but pending sales were up 4.7 percent from the 115.9 index recorded in June 2011. June marked the 14th consecutive month that pending sales were higher than the previous year.

Low inventory appears to be dragging sales. “Pending sales declined in June, partly due to a lack of housing supply, especially in REO properties,” said state association president LeFrancis Arnold.

The national association reports although nationwide pending sales fell in June, pending home sales still remain above a year ago. The nationwide Pending Home Sales Index slipped 1.4 percent to 99.3 in June from a downwardly revised 100.7 in May but is 9.5 percent higher than June 2011 when it was 90.7.

Lawrence Yun, chief economist for the national trade association, also said inventory shortages are a factor in the nationwide decline in pending sales. “Buyer interest remains strong but fewer home listings mean fewer contract signing opportunities,” Yun said. “We’ve been seeing

a steady decline in the level of housing inventory, which is most pronounced in the lower price ranges popular with first-time buyers and investors.”

Yun said there also have been delays in the closing process. “With record-low mortgage interest rates, there has been a surge of refinancing on top of a higher level of home purchases, which has been creating delays recently in the closing process,” he said.

According to the MLS Listings, Santa Clara County’s June inventory of 2,589 homes single-family homes dropped 38 percent from last year. The county’s June inventory was down 57.4 percent from 6,071 homes on inventory in June 2008.

There is worry that the housing shortage could cause problems in the future. “Inventory is important for housing market growth, and though our members report that inventory has improved in the last few months, it is still very low by normal standards,” said Suzanne Yost, president of the Silicon Valley Association Realtors.

A seven-month housing supply is considered normal for California. The state’s June housing inventory is at 3½ months and Santa Clara County inventory at two months.

“Any bank-owned properties that have been held back in markets with inventory shortages should be released expeditiously to help meet market demand,” according to Yun. “Housing starts will likely need to double over the next two years to satisfy the pent-up demand for both rentals and ownership.”

Information in this column is presented by the Silicon Valley Association of Realtors at www.silvar.org. Send questions on any topic to rmeily@silvar.org.

Round up of personnel announcements

Grey Oaks Realty

Wendy L. Mease has joined the brokerage as a sales consultant. A native of St. Louis, Mease holds a bachelor’s degree in business and has more than 10 years of experience in the Naples real estate market.

Talis Park

Victor Spina has been selected to lead the community’s sales efforts which are scheduled to launch this fall. Spina brings 21 years of sales leadership and first-hand home building knowledge including as vice president of sales and marketing with WCI Communities, co-founder of Indiana home builder, Sentry Homes and most recently as director of sales at Miromar Lakes Beach and Golf Club. At Talis Park, he will be responsible for overseeing the sales operation which includes recruiting, hiring, training and managing the sales team while also taking an active role in the community’s strategic marketing program. Spina is a member of the National Association of Realtors, the National Association of Home Builders, and the International Executive Guild. He has also served on the ethics committees for the Bonita Springs-Estero Association of Realtors and the Coastal Carolina Association of Realtors. He has also served as vice president of real estate with the Burroughs Chapin Corp. in the Carolinas.

Investment Properties Corp. (IPC)

Clint L. Sherwood, CCIM has been named partner at Investment Properties Corporation of Naples. Sherwood joined IPC in July 2002 after graduating from Florida State University with a degree in finance and real estate. IPC partners include William V. Gonnering, CCIM, SIOR, David J. Stevens, CCIM, and Craig D. Timmins, CCIM.

Keller-Williams Elite Realty

Keller-Williams Realty Inc. has named top producing agents/teams/groups from Keller-Williams Elite Realty in Bonita Springs on its Florida – South Regional performance ranking report for May 2012. The rankings are: Top Groups Written Volume: The Jordan Team; Top Groups Closed Volume: The Renee Team; The Michael Burke/Coconut Point Team; Top Teams Closed Volume: The Cassidy-Lashhab Team; Top Teams Closed Units: The Cassidy-Lashhab Team; Top Producers Closed Volume: Krista Asquith.

Fannie Mae posts $2.2B net gain for Q2

WASHINGTON (AP) — Fannie Mae earned $2.2 billion from April through June, its second quarterly gain in net income since being taken over by the government during the 2008 financial crisis.

The mortgage giant attributed the increase to improving home prices and fewer foreclosures.

Fannie said Wednesday that it paid a dividend of $2.9 billion to the Treasury Department and sought no additional aid.

Fannie’s net income attributable to common shareholders was 37 cents per share in the second quarter. That compares with a net loss of $5.2 billion, or 90 cents per share, in the same period last year.

“We think home prices have stabilized,” Fannie President and CEO Timothy Mayopoulos said in an interview on CNBC.

Fannie has reported gains in net income in both quarters this year. It earned $2.7 billion in the January-March quarter and paid a dividend of $2.8 billion to the Treasury.

The company received about $116 billion from the Treasury Department, the most expensive bailout of a single company. It has so far repaid about $26 billion.

Mayopoulos said he believes the company can be profitable going forward, though that doesn’t necessarily mean that Fannie will make enough money to pay a dividend each quarter to the Treasury.

“It’s going to depend on home prices,” Mayopoulos said.

The housing market has started to recover this year after languishing since the bust in 2006 and 2007. Home sales are higher than last year, although they are still below healthy levels. Home prices are rising in many markets, partly because the supply of homes for sale has fallen.

U.S. home prices, including sales of distressed properties, jumped 2.5 percent in June from the same month in 2011, according to a report issued Tuesday by data analytics firm CoreLogic. And the Standard Poor’s/Case-Shiller home price index reported price increases from April to May in all 20 cities tracked by the survey.

On Tuesday, McLean, Va.-based Freddie Mac reported net income of $1.2 billion for the second quarter and didn’t request any additional federal aid for the period. The gain compared with a net loss of $3.76 billion in the same period a year ago.

Fannie and Freddie own or guarantee about half of all U.S. mortgages, or nearly 31 million home loans. Along with several federal agencies, they backed nearly 90 percent of new mortgages over the past year.

The government rescued the two companies during the financial crisis after they incurred massive losses on risky mortgages. Taxpayers have spent about $170 billion to rescue Fannie and Freddie. It could cost roughly $260 billion more to support the companies through 2014 after subtracting dividend payments, according to the government.

Anthony Sanders, a real estate finance professor at George Mason University, said stable prices have reduced Fannie and Freddie’s losses on mortgages. But he doubts either Freddie Mac or Fannie Mae could ever repay their full debt to the taxpayers.

The companies are so deep in debt to the government that they’d need several decades of profits to fully repay, Sanders says.

Freddie Mac launches $4 bln new 5-year notes – IFR


Thu Aug 9, 2012 9:05am EDT

Aug 9 (Reuters) – Freddie Mac, the No. 2 U.S. home funding
company, on Thursday launched its new $4 billion five-year reference note sale,
said IFR, a Thomson Reuters service.

The notes, which are due Sept. 29, 2017, are expected to yield about 26.5
basis points over comparable U.S. Treasuries.

Pricing is expected later on Thursday, with settlement on Friday, Aug. 10.

The joint lead managers on the sale are BNP Paribas, Goldman Sachs, and
Barclays.

Investors snapping up Sonoma County homes

For the first half of the year, absentee buyers purchased 30 percent of the houses and condos sold in the county, according to DataQuick, a real estate information service. That rate was up 1 percent from the same period a year earlier.

Real estate agents said absentee buyers — investors and second-home buyers — have been drawn by lower prices, historically low mortgage rates and increased confidence that prices aren’t going much lower.

Buying rentals can produce a better return than putting cash into many fixed investments, the agents said. That applies even without considering any future appreciation in home value.

“It’s a great time to be a landlord,” said Daniel Casabonne, an agent with Frank Howard Allen in Sonoma.

Similarly, some second-home buyers once thought “the Wine Country was out of their league” due to pricing, said Mike Kelly, an agent with Keller Williams in Santa Rosa.

Now those buyers are looking here, agents said, often with an eye to moving to the county permanently after retirement.

For the first half of the year, 952 of the 3,144 houses and condos sold in the county were purchased by absentee buyers, according to DataQuick, which is based in San Diego.

Among the county’s cities, Cotati had the highest portion of home sales to absentee buyers at 42 percent. Petaluma had the least, at 19 percent.

That was followed by Sebastopol, 37 percent; Healdsburg, 35 percent; Sonoma, 34 percent; Rohnert Park, 28 percent; Santa Rosa and Windsor, both 27 percent; Cloverdale, 21 percent; and Petaluma, 19 percent.

The numbers are based on sales in which the new owners receive tax bills and related correspondence at addresses other than the homes. It can be a less precise measurement in some rural communities where homeowners receive their mail at post office boxes.

Even so, experts around the country agree that waves of investors have been drawn to residential real estate.

The National Association of Realtors this spring estimated that investor home purchases in 2011 rose nearly 65 percent from a year earlier to 1.23 million homes. In contrast, owner-occupied purchases declined nearly 16 percent to 2.78 million homes.

“During the past year, investors have been swooping into the market to take advantage of bargain home prices,” Lawrence Yun, the association’s chief economist, said in the report. “Rising rental income easily beat cash sitting in banks as an added inducement.”

The California Association of Realtors reports that investment purchases in the state reached 17 percent in 2011, compared with 13 percent a year earlier.

Vacation home sales in 2011 amounted to 11 percent of all transactions nationally and 7

percent in California. Both state and national vacation home sales showed modest gains from 2010.

DataQuick has recorded a growing portion of absentee buyers in the nine-county Bay Area. Such buyers made up 23 percent of all sales in June. That compares with 20 percent a year earlier and 16 percent in June 2010.

Sonoma County’s median home price peaked in August 2005 at $619,000 before tumbling to $305,000 in February 2009. In the past two years, monthly median prices have seesawed in a narrow range and ended June at $348,000.

Ann Harris, an agent with Coldwell Banker in Sebastopol, said two of her clients recently purchased second homes in the county and hope to move to them permanently within the next five years. She has another three clients looking for such properties.

Harris said spouses are telling one another, “The prices are so good and interest rates so low. Let’s buy the retirement home for the future now.”

Among the county’s communities, Bodega Bay remains unsurpassed, with eight of every 10 homes sold to absentee buyers. Agents believe most of those homes are purchased as second homes, but some are turned into vacation rentals.

Dennis Erba, broker/owner of Coldwell Banker Coast Country in Bodega Bay, said typically a quarter of the buyers live in the county, a quarter come from the Bay Area and about half come from the Central Valley. However, that appears to have shifted after housing prices tumbled and property owners saw equity plummet.

“Sacramento did get hit pretty hard,” Erba said. “It does seem there’s more people from the Bay Area” now seeking coastal properties.

A handful of communities saw big jumps in absentee buyers from the previous year. Windsor recorded 61 such sales this year, up from 33 in 2011. Guerneville sales jumped to 42 from 21, while Cotati rose to 28 from 17 and Sonoma increased to 88 from 63.

David Rendino, an agent with RE/MAX Pros in Rohnert Park, said a number of the Cotati home purchases likely were made by investors because of the town’s proximity to Sonoma State University.

“You always have a sure thing there, because there’s always a need for rental housing,” he said.

Agents said investors and second-home buyers will continue to comprise a significant share of county home buyers.

One reason is the low cost of money. As an investor, Harris said she recently received a 30-year, fixed mortgage at 4.25 percent for one of her own rental properties.

Casabonne, who last year was the county’s top agent with $38 million in sales, said second-home buyers continue to value country settings, especially among the vineyards.

“With Sonoma,” he said, “it’s a destination location.”

(You can reach Staff Writer Robert Digitale at 521-5285 or robert.digitale@pressdemocrat.com)

Real estate’s returnsBy ROBERT DIGITALERealtor Daniel Casabonne has a Tuscan-style home in Sonoma listed at $1.4 million. The county’s top agent last year with $38 million in sales,…PressDemocrat.comAugust 11, 2012 2:47 PMpWith home prices still more than 40 percent off their peak, investors and second-home buyers keep snapping up significant amounts of Sonoma County real estate./ppFor the first half of the year, absentee buyers purchased 30 percent of the houses and condos sold in the county, according to DataQuick, a real estate information service. That rate was up 1 percent from the same period a year earlier./ppReal estate agents said absentee buyers — investors and second-home buyers — have been drawn by lower prices, historically low mortgage rates and increased confidence that prices aren’t going much lower./ppBuying rentals can produce a better return than putting cash into many fixed investments, the agents said. That applies even without considering any future appreciation in home value./pp“It’s a great time to be a landlord,” said Daniel Casabonne, an agent with Frank Howard Allen in Sonoma./ppSimilarly, some second-home buyers once thought “the Wine Country was out of their league” due to pricing, said Mike Kelly, an agent with Keller Williams in Santa Rosa./ppNow those buyers are looking here, agents said, often with an eye to moving to the county permanently after retirement./ppFor the first half of the year, 952 of the 3,144 houses and condos sold in the county were purchased by absentee buyers, according to DataQuick, which is based in San Diego./ppAmong the county’s cities, Cotati had the highest portion of home sales to absentee buyers at 42 percent. Petaluma had the least, at 19 percent./ppNO1That was followed by Sebastopol, 37 percent; Healdsburg, 35 percent; Sonoma, 34 percent; Rohnert Park, 28 percent; Santa Rosa and Windsor, both 27 percent; Cloverdale, 21 percent; and Petaluma, 19 percent./ppNOThe numbers are based on sales in which the new owners receive tax bills and related correspondence at addresses other than the homes. It can be a less precise measurement in some rural communities where homeowners receive their mail at post office boxes./ppEven so, experts around the country agree that waves of investors have been drawn to residential real estate./ppThe National Association of Realtors this spring estimated that investor home purchases in 2011 rose nearly 65 percent from a year earlier to 1.23 million homes. In contrast, owner-occupied purchases declined nearly 16 percent to 2.78 million homes./pp“During the past year, investors have been swooping into the market to take advantage of bargain home prices,” Lawrence Yun, the association’s chief economist, said in the report. “Rising rental income easily beat cash sitting in banks as an added inducement.”/ppThe California Association of Realtors reports that investment purchases in the state reached 17 percent in 2011, compared with 13 percent a year earlier./ppVacation home sales in 2011 amounted to 11 percent of all transactions nationally and 7THpercent in California. Both state and national vacation home sales showed modest gains from 2010./ppDataQuick has recorded a growing portion of absentee buyers in the nine-county Bay Area. Such buyers made up 23 percent of all sales in June. That compares with 20 percent a year earlier and 16 percent in June 2010./ppSonoma County’s median home price peaked in August 2005 at $619,000 before tumbling to $305,000 in February 2009. In the past two years, monthly median prices have seesawed in a narrow range and ended June at $348,000./ppAnn Harris, an agent with Coldwell Banker in Sebastopol, said two of her clients recently purchased second homes in the county and hope to move to them permanently within the next five years. She has another three clients looking for such properties./ppCW-25Harris said spouses are telling one another, “The prices are so good and interest rates so low. Let’s buy the retirement home for the future now.”/pp/CWAmong the county’s communities, Bodega Bay remains unsurpassed, with eight of every 10 homes sold to absentee buyers. Agents believe most of those homes are purchased as second homes, but some are turned into vacation rentals./ppDennis Erba, broker/owner of Coldwell Banker Coast Country in Bodega Bay, said typically a quarter of the buyers live in the county, a quarter come from the Bay Area and about half come from the Central Valley. However, that appears to have shifted after housing prices tumbled and property owners saw equity plummet./pp“Sacramento did get hit pretty hard,” Erba said. “It does seem there’s more people from the Bay Area” now seeking coastal properties./ppA handful of communities saw big jumps in absentee buyers from the previous year. Windsor recorded 61 such sales this year, up from 33 in 2011. Guerneville sales jumped to 42 from 21, while Cotati rose to 28 from 17 and Sonoma increased to 88 from 63./ppDavid Rendino, an agent with RE/MAX Pros in Rohnert Park, said a number of the Cotati home purchases likely were made by investors because of the town’s proximity to Sonoma State University./pp“You always have a sure thing there, because there’s always a need for rental housing,” he said./ppAgents said investors and second-home buyers will continue to comprise a significant share of county home buyers./ppOne reason is the low cost of money. As an investor, Harris said she recently received a 30-year, fixed mortgage at 4.25 percent for one of her own rental properties./ppCasabonne, who last year was the county’s top agent with $38 million in sales, said second-home buyers continue to value country settings, especially among the vineyards./pp“With Sonoma,” he said, “it’s a destination location.”/pp(You can reach Staff Writer Robert Digitale at 521-5285 or robert.digitale@pressdemocrat.com)/pCopyright 2012 PressDemocrat.com – All rights reserved. Restricted use only.

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Judge In SEC Probe: Ex-Executives Knew Fannie Mae’s Disclosures On …

* Ex-CEO Mudd accused of misleading mortgage disclosures
* Judge says SEC plausibly alleged intent to mislead
* Lawyers for defendants not immediately available
By Jonathan Stempel
Aug 10 (Reuters) – Three former senior Fannie Mae executives lost their bid to dismiss a U.S. Securities and Exchange Commission civil fraud lawsuit accusing them of misleading investors about the company’s exposure to risky mortgages.
The executives, including one-time Chief Executive Daniel Mudd, contended that Fannie Mae had explicitly and accurately disclosed its exposure to subprime and low-documentation “Alt-A” home loans before the government seized the mortgage-finance enterprise in September 2008.
But U.S. District Judge Paul Crotty in Manhattan said the SEC plausibly alleged that Mudd, former Chief Risk Officer Enrico Dallavecchia and former Executive Vice President Thomas Lund materially misled investors by not disclosing exposures to risky mortgages that totaled more than $440 billion.
“They must have known that Fannie Mae’s disclosed subprime and Alt-A exposure calculations were materially misleading,” Crotty wrote on Friday. “Defendants’ conduct in making, or aiding others that made, these misstatements constitutes and extreme departure from the standard of ordinary care.”
James Wareham, a lawyer for Mudd, said in an email: “The evidence establishing the adequacy of Fannie Mae’s disclosures (and the efforts by the many employees involved in making these disclosures to get it right) is overwhelming. Indeed, the company used the identical disclosures just this week. Discovery will reveal just how shameful this case truly is.”
Andrew Levander, a lawyer for Dallavecchia; and Michael Levy, a lawyer for Lund, did not immediately respond to requests for comment.
SEC spokesman Kevin Callahan said: “We are pleased that the judge rejected the defendants’ arguments and we look forward to proving our claims in court.”
U.S. regulators seized Fannie Mae and the smaller Freddie Mac on Sept. 7, 2008, just over a week before Lehman Brothers Holdings Inc went bankrupt, and put them into a conservatorship.
The mortgage finance companies are now overseen by the Federal Housing Finance Agency, and have since the seizures drawn down about $188 billion of taxpayer money, while repaying only about $46 billion.
Mudd had run Fannie Mae from 2005 until the seizure.

CRACKDOWN
Like other regulators, the SEC has faced criticism for not cracking down harder on individuals accused of contributing to the 2008 financial crisis and five-year housing slump through poor underwriting and misleading marketing of mortgage debt.
Mudd, Dallavecchia and Lund were sued on Dec. 16, 2011, the same day the SEC filed a similar lawsuit against three former Freddie Mac executives, including onetime chief executive Richard Syron.
The Freddie Mac are trying to dismiss that case , and oral argument is scheduled for Aug. 20 before another Manhattan federal judge, Richard Sullivan.
Mudd and Syron are among the most senior individuals charged by federal or state investigators in any case related to the financial crisis.
Angelo Mozilo, who built Countrywide Financial Corp into one of the biggest subprime lenders, settled an SEC case for $67.5 million in 2010, though Bank of America Corp, which had bought Countrywide in 2008, indemnified him for $45 million.
The SEC did in 2010 win a $550 million settlement with Goldman Sachs Group Inc over that bank’s packaging and sale of a collateralized debt obligation known as Abacus.
Goldman did not admit wrongdoing, and the SEC is still pursuing its lawsuit against the only individual charged in that case, Goldman vice president Fabrice Tourre.
On Thursday, Goldman said the SEC dropped a separate probe over its role in selling $1.3 billion of subprime mortgage debt.

“ABOUT ZERO PERCENT”
In its Fannie Mae lawsuit, the SEC contended that the company concealed exposure to more than $100 billion of subprime loans and $341 billion of Alt-A loans.
It quoted Mudd as telling the public as recently as Aug. 20, 2008, during a radio interview less than three weeks before the seizure, that Fannie Mae had “about zero percent” subprime loan exposure. He defined such a loan as “a loan to a borrower that has had a credit problem in the past,” court papers show.
In their defense, lawyers for Mudd said some of the suspect loans did not meet Fannie Mae’s definition of subprime loans.
They also said that Fannie Mae, even after going under “full government control and new management,” continued to report loan exposures “exactly as it did” previously.
The FHFA last year filed lawsuits against 17 banks over losses that Fannie Mae and Freddie Mac suffered on about $200 billion of mortgage debt.
FHFA spokeswoman Stefanie Johnson said with regard to Crotty’s decision: “We are reviewing the case.”
Mudd resigned in January as chief executive of Fortress Investment Group LLC, one of a few publicly-traded U.S. hedge fund and private equity fund managers, after having taken a leave of absence in the wake of the SEC charges.
The Fannie Mae case is SEC v. Mudd et al, U.S. District Court, Southern District of New York, No. 11-09202. The Freddie Mac case is SEC v. Syron et al in the same court, No. 11-09201.

Fannie Mae's New CEO: 'Comfortable' With Decision Not to Slash Mortgage Balances

Tim Mayopoulos


Fannie Mae is no longer bleeding cash, at least for now.

After devastating losses since 2008, the mortgage giant reported its second straight quarter of positive net income, even after making a $2.9 billion dividend payment to the U.S. Treasury. Fannie Mae has taken $117.1 billion from the Treasury since the fall of 2008.

Improving home prices and decreasing mortgage delinquencies have helped to boost the bottom line, but Fannie Mae’s CEO Tim Mayopoulos, who took the reigns of the company earlier this summer, says he’s not convinced housing is out of the woods yet.

“I think it’s too early to declare a national housing recovery,”Mayopoulos said in an interview Wednesday on CNBC. “What’s driving our results has been home price improvements. We are not expecting to see huge improvements going forward.”

Fannie Mae reported net income of $5.1 billion in the second quarter of this year, up from $2.7 billion in the first quarter. Foreclosures, however, still weigh heavily on the balance sheet, despite the far higher quality of loans in the new book of business since 2009. 59 percent of Fannie Mae’s single-family guaranty book of business as of the end of the second quarter consisted of loans it had purchased or guaranteed since the beginning of 2009.

Expectations of an improving housing market prompted Fannie Mae to reduce its future loan loss reserves to $68 billion from nearly $77 billion in the first quarter. The company notes in its report that it believes credit-related expenses will be lower in 2012 than in 2011. Mayopoulos, again, seems to hedge that somewhat.

“We are very excited about the new book of business we’ve been writing since the beginning of the crisis. We believe that we could be profitably going forward but it doesn’t mean we will necessarily make enough every quarter to be able to cover the entire dividend payment to the Treasury,” said Mayopoulos, who added that he is very comfortable with where Fannie Mae’s underwriting standards are now, despite criticism from housing industry players who claim credit is too tight.

Mayopoulos expects home prices to bounce around more before finding a solid bottom, and that will in turn keep millions of borrowers, around 11 million by several recent accounts, in a negative equity position, owing more on their mortgages than their homes are currently worth. The Obama administration has been pushing hard for Fannie Mae and Freddie Mac to participate in the government’s program that pays lenders to reduce balances on troubled loans. Last week, however, Fannie Mae and Freddie Mac’s conservator, FHFA director Edward DeMarco, said the mortgage giants would not participate in that program.

“We are comfortable with where Director Demarco came out. We believe that we have the tools here at Fannie Mae to really help homeowners in terms of doing modifications and to help people who are in distress,” Mayopoulos said.

Fannie Mae completed 35,332 loan modifications in the second quarter, down from 46,671 in the previous quarter. It also approved just over 24,000 short sales and deeds-in-lieu of foreclosure, up from just over 22,000 in the previous quarter. Refinances were far higher, with Fannie Mae acquiring 247,000 of those loans in the quarter.

Fannie Mae still has over 109,000 foreclosed properties on its books, despite selling more of them than they took in during the quarter. Its foreclosure rate is falling as are its loan delinquencies, but the legacy losses are still quite large. Fannie Mae has been experimenting with bulk sales of foreclosures as well as bad loans to investors.

As for the future of the mortgage giant, which along with Freddie Mac and FHA accounts for around 90 percent of all new mortgage originations, Mayopoulos said he would leave that to policy makers. Until then, he is somewhat hopeful that Fannie Mae will continue on its own path to recovery.

“We do think over the long term Fannie Mae can have strong profitability and can return a considerable amount of value to taxpayers, but over the next few quarters I think it’s going to really depend on housing prices and other factors.”

Questions?  Comments?  And follow me on Twitter @Diana_Olick

Fannie And Freddie Pay Back 25% Of Bailout; FHA Recapitalizes

Fannie Mae, Freddie Mac Get Profitable

Since late last decade, politicians, economists and Wall Street have shown concern for Fannie Mae, Freddie Mac and the FHA, and the agencies’ respective ability to remain solvent. High default rates led to large quarterly losses, a pattern which repeated from a period of close to 5 years.

Lately, those concerns have eased, especially with Fannie Mae and Freddie Mac posting unexpected quarterly profits this week.

  • Fannie Mae : $5.1 billion second-quarter profit
  • Freddie Mac : $3.0 billion second-quarter profit

Since late-2008, the two groups received $188 billion in taxpayer funds as a “bailout”. They’ve repaid a quarter of that, to date, and with a few more profitable quarters, the loan will be repaid in full.

Not surprisingly, the improving housing market is playing a role in the agencies’ return to profitability. As home prices rise, less money is set aside to cover future losses, tipping balance sheets toward the black.

Better risk management helps, too.

Click here to get today’s mortgage rates.

FHA Rebuilds Its Reserves, Too

Fannie Mae and Freddie Mac aren’t the only mortgage groups to rebuild their reserves. The FHA has been recapitalizing, too.

Since early-2009, the FHA has raised its mortgage insurance premiums on four separate occasions. New FHA homeowners in high-cost areas such as Orange County, California; and Loudoun County, Virginia now pay as much as 1.50% annually to the FHA’s capital reserves.

Bigger premiums plus fewer FHA defaults has helped the self-funded FHA maintain a positive capital ratio, and work toward its congressionally-mandated 2% reserve ratio. The $25 billion mortgage servicer settlement helped, too, contributed $1 billion to the FHA’s bottom line. 

The FHA’s capital ratio is currently under 0.50%. 

Click here to get today’s mortgage rates.

Mortgage Delinquencies Dropping

Another big factor in Fannie Mae, Freddie Mac and the FHA’s return to profitability is that more U.S. homeowners are staying current on their respective home loans. As compared to one year ago, just 7.58% of U.S. mortgages were considered delinquent.

A delinquent mortgage is one that’s more than 30 days past due, but not in foreclosure.

On a seasonally-adjusted annual basis, Q2 2012 represents an 86 basis point improvement. Fewer defaults mean fewer losses and, with fewer losses, comes more profit. This is good for the future of the big three lenders and may decrease the chance the mortgage fees rise for future home loan applicants.

Click here to get today’s mortgage rates.

Mortgage Rates Remain Low

For U.S. homeowners, the profitability of a government-backed lender may seem unimportant, and in a lot of respects, it is. What’s more important is the mortgage rates through said institutions and, right now, mortgage rates are great.

If you’re floating a mortgage or looking to lock one in, get a mortgage rate quote today.

Click here to get today’s mortgage rates.