Compliance & Regulation

Freddie Mac's Conventional Mortgage Home Price Index's purchase-only series, which excludes refinancing data, registered the largest annual decrease in its 39-year history during 2008. Home sales prices dropped 9.5% on average during the year and their decline accelerated notably in the fourth quarter when the index registered a 17.9% annualized decrease compared to an 8% annualized fall during the third quarter. The fourth quarter index results for 2008 mark "the first time that year-over-year declines in home values were recorded in each of the nine regions of the country," according to Freddie Mac vice president and chief economist Frank Nothaft. The index also showed for the second consecutive quarter "every region of the nation experienced flat or declining home values," he said. He noted, however, that the range of declines was wide, with the West South Central area experiencing declines of one-tenth of 1% over the year while the Pacific region had a decline of 23%.

Freddie Mac said chief executive David Moffett — who took the helm of the GSE when it was placed into conservatorship in early September — has resigned from the company effective March 13. The mortgage investing giant said its board is working with the Federal Housing Finance Agency to appoint a successor and hopes to name an interim CEO before the 13th. Freddie said Mr. Moffett is leaving "to return to a role in the financial services sector." Mr. Moffett retired as vice chairman and chief financial officer of U.S. Bancorp in 2007. After his retirement, and before joining Freddie, he was a senior advisor to The Carlyle Group, working on financial service matters. Freddie Mac is supposed to report earnings soon. Last week Fannie Mae reported an annual loss of $58.7 billion.

Freddie Mac said chief executive David Moffett — who took the helm of the GSE when it was placed into conservatorship in early September — has resigned from the company effective March 13. The mortgage investing giant said its board is working with the Federal Housing Finance Agency to appoint a successor and hopes to name an interim CEO before the 13th. Freddie said Mr. Moffett is leaving "to return to a role in the financial services sector." Mr. Moffett retired as vice chairman and chief financial officer of U.S. Bancorp in 2007. After his retirement, and before joining Freddie, he was a senior advisor to The Carlyle Group, working on financial service matters. Freddie Mac is supposed to report earnings soon. Last week Fannie Mae reported an annual loss of $58.7 billion.

William Montelle Loyd III of Raleigh, N.C., has been sentenced to 84 months' imprisonment followed by three years of supervised release for conspiring to commit mail fraud, wire fraud, and aggravated identity theft. The court also ordered Lloyd to pay more than $1.26 million in restitution. From November 2002 through December 2006, Loyd entered into a conspiracy with others to obtain 16 loans from an online mortgage company worth approximately $2.6 million by submitting false documentation regarding employment, salary, appraisals and tax information during the course of securing the loans. The investigation revealed that Loyd utilized his father's and his brother's identities and Social Security numbers to obtain loans in their names without their authorization or knowledge.

Former Freddie Mac executive Pete Maselli has joined Lender Processing Services Inc., Jacksonville, Fla., as senior vice president of strategy and business development. In his new role Mr. Maselli will provide strategic counsel at key enterprise-level executive client meetings and represent LPS with the government-sponsored enterprises, the Department of Housing and Urban Development, the Office of the Comptroller of the Currency, the Mortgage Bankers Association and other governmental partners. He is based in Washington and prior to joining LPS, spent more than 15 years at Freddie Mac, where he led numerous strategic initiatives, including the Loan Prospector automated underwriting business. He also recently held key marketing and strategic planning positions at Overture Technologies and LandAmerica Financial Group.

Five of the 10 Federal Home Loan Banks that have thus far released unaudited 2008 financial results have taken fourth-quarter net losses and at least four of those have recorded "other than temporary impairments" for the year linked to private-label mortgage-backed securities market deterioration that the FHLBanks Office of Finance's warns could continue. The fourth-quarter net losses for these FHLBanks are as follows: Boston, $232 million; Pittsburgh, $188 million; San Francisco, $103 million; Dallas, $68 million, and Topeka, $63 million, according to the FHLBanks office in Reston, Va. Of these, FHLBanks that said they have recorded the OTTIs for 2008 as follows are: San Francisco, $590 million; Boston, $339 million; Pittsburgh, $266 million and Topeka, $5 million.

The FBI is investigating claims of a massive fraud at U.S. Mortgage Corp., Pinebrook, N.J., the privately held owner of Credit Union National Mortgage, which has filed for bankruptcy. More than three dozen credit unions allege the failed mortgage company owes them more than $110 million of loan proceeds it had collected for them as a servicer. The company's attorney said he is working with the U.S. Justice Department, the National Credit Union Administration, and regulators in several states in investigating the case. Lawyers for U.S. Mortgage could not be reached for comment. In documents filed earlier this week with the U.S. Bankruptcy Court, Picatinny FCU claims CU Mortgage sold more than $14 million worth of its mortgages to Fannie Mae without its knowledge and without paying the Dover, N.J.-based credit union the proceeds of the sale. Picatinny is one of more than three-dozen credit unions that have filed claims against the troubled lender. The largest unsecured claim is by Fannie Mae for $99.2 million, but the next 19 largest unsecured claims are all credit unions -- including the Treasury Department's CU.

Operating as a ward of the federal government, Fannie Mae posted a massive $25.2 billion loss in the fourth quarter, blaming its abysmal performance on asset- and derivative-related writedowns. For the year the GSE lost an eye popping $58.7 billion. The Congressionally chartered mortgage investing giant declared that it had a negative net worth of $15.2 billion at year-end - a gap that must be filled with taxpayer money. FHFA director James Lockhart already has requested that the Treasury Department cover the financial hole by increasing its preferred stock ownership stake in the company. In 2007, Fannie lost just $2.1 billion. It was taken over by the Federal Housing Finance Agency in early September of 2008. Its common stock continues to trade on the NYSE but at just 40 cents a share. Its main competitor, Freddie Mac, also is a ward of the government.

WASHINGTON -- Operating as a ward of the federal government, Fannie Mae posted a massive $25.2 billion loss in the fourth quarter, blaming its abysmal performance on asset- and derivative-related writedowns. For the year the GSE lost an eye popping $58.7 billion. The Congressionally chartered mortgage investing giant declared that it had a negative net worth of $15.2 billion at year-end -- a gap that must be filled with tax payer money. FHFA director James Lockhart has already requested that the Treasury Department cover the financial hole by increasing its preferred stock ownership stake in the company. In 2007 Fannie lost just $2.1 billion. It was taken over by the Federal Housing Finance Agency in early September. Its common stock continues to trade on the NYSE but at just 40 cents a share. Freddie Mac, also a ward of the government, is expected to issue its 4Q earnings shortly. Similar results are expected. Both GSEs were large investors in subprime and alt-A mortgage-backed bonds.

NEWARK, N.J. The FBI is investigating claims of a massive fraud at U.S. Mortgage Corp., the privately held owner of C.U. National Mortgage, which filed for bankruptcy earlier this week. More than three dozen credit unions are claiming the failed mortgage company owes them more than $110 million of loan proceeds it had collected for them as a servicer. In documents filed yesterday with the U.S. Bankruptcy Court, Picatinny FCU claims C.U. Mortgage sold more than $14 million worth of its mortgages to Fannie Mae without its knowledge and without paying the Dover, N.J., credit union the proceeds of the sale. Picatinny is one of more than three dozen credit unions that filed claims against the troubled lender this week. The largest unsecured claim is by Fannie Mae for $99.2 million, but the next 19 largest unsecured claims are from credit unions, including: Suffolk FCU ($33.8 million); Proponent FCU ($21.6 million); Sperry Associates FCU ($9.2 million); Treasury Department FCU ($8.7 million); Novartis FCU ($3.1 million); Educational Systems FCU ($3.1 million); County Educators FCU ($ 2.8 million); Energy FCU ($2.6 million); Rutgers FCU ($2.2 million)_ Piedmont Aviation FCU ($2.1 million); Pinnacle FCU ($1.8 million); Velocity County FCU ($1.5 million); TCT FCU ($1 million) as, well as Picatinny FCU. Also: Lassen County FCU ($832,000); JM Associates FCU ($502,000); Miami Firefighters FCU ($490,000); First Florida CU ($448,000) and Newark Board of Education Employees CU ($440,000). Other creditors include Harland Financial, Wolters Kluwer and PrimeAliance. Picatinny FCU said after it learned of the sale of its loans to Fannie Mae it demanded the loan files back so it could sell the servicing rights to another provider, but U.S. Mortgage refused the request. As proof of its claims, Picatinny FCU filed a Feb. 12 letter with the bankruptcy court from U.S. Mortgage's general counsel Andrew Liput explaining that $9.5 million worth of its mortgages "appeared to have been sold without your authority to Fannie Mae and the sales proceeds subsequently diverted." The company's attorney said he is working with the U.S. Justice Department, NCUA and regulators in several states in investigating the case. Lawyers for U.S. Mortgage could not be reached for comment yesterday. The owners of the privately held company are: Michael McGrath, Jr., a 35.6% stake; Brian McGrath, 7.6%; Thomas McGrath, 7.6%; James and Lori McGrath, 3%; and Labranche Inc., of New York City, 39.9%. Credit Union Journal