Former Fannie Mae employee found guilty of making millions on shady foreclosure sales

Ordered to forfeit a property she bought with a duffle bag full of cash

February 15, 2019 | HousingWire A former Fannie Mae employee is now facing 40 years in prison after being found guilty of accepting millions of dollars in bribes and kickbacks in exchange for selling Fannie Mae-owned foreclosures for less than market value.

Back in January 2018, Shirene Hernandez was charged with accepting bribes for steering foreclosures to certain brokers and even allegedly buying some foreclosures herself at below market value.

And this week, Hernandez was found guilty of two wire fraud counts that involved the deprivation of honest services.

Hernandez formerly worked at Fannie Mae in California as an REO foreclosure specialist and was tasked with the sale of properties foreclosed on by Fannie Mae. Read more here.

Rising Sale Prices and Mortgage Rates Mean You’ll Have to Fork Over More for that Home Purchase this Year

The Washington Post | January 11, 2017       Last year, more people wanted to buy homes and fewer people decided to sell, which made 2016 one of the strongest seller’s markets in recent years.

Unfortunately, 2017 looks to be more of the same. According to Doug Duncan, Fannie Mae’s chief economist, homeowners are staying in their homes longer, and the super-low interest rates we’ve seen since 2012 mean that it’s often less expensive to stay rather than downsize.

Low housing inventory means that prices will continue to rise. Rising interest rates mean affordability will be impacted, particularly for first-time buyers. So, if you’re planning to buy in 2017, be prepared for even higher prices and higher interest rates.  Read more here.

 

2,300 U.S. Foreclosures Show a Racial Divide in House Decay

The New York Times | December 13, 2016         The modest white house on Arlene Avenue in Dayton, Ohio, was an eyesore. The paint was peeling, and parts of the shutters were missing. The yard was thickly overgrown, and the back door, such as it was, had been jury-rigged from plywood.

The home on Jeanette Street in New Orleans didn’t look much better, with its broken steps, exposed wiring and vines sprouting from the gutter.

And the pale-green property on 64th Avenue in Oakland, Calif., ticked off many of the same complaints: broken windows, damaged fence, rotten wood, peeling paint.

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Each of these homes, among more than 2,300 foreclosures around the country visited by fair-housing testers between 2011 and 2015, sits in a census tract that is overwhelmingly nonwhite. Nonprofit housing advocacy groups allege in a federal district court lawsuit filed in California this month that the lender responsible for maintaining them, the quasi-government agency Fannie Mae, allowed them to deteriorate.  Read more here.

How to Get the Government Out of Mortgage Lending

Bloomberg View | December 20, 2016        One of the least discussed challenges of the incoming Trump administration may also be among the most economically consequential: what to do with Fannie Mae and Freddie Mac, the government-controlled entities that own or guarantee about half of all U.S. home mortgages.

Trump's pick for Treasury Secretary, Steven Mnuchin, has said he wants to put housing finance back into private hands. Sensible as the goal may be, the hard part will be getting there.

Fannie and Freddie illustrate how slippery the term "private" can be. The two operated as privately owned corporations for decades, albeit with a congressional mandate to promote access to mortgage credit. They generated ample profits for shareholders and gained a dominant position thanks in large part to the expectation that the government would rescue them in an emergency. That perception proved correct in 2008, and they have been wards of the state ever since.

The failure of Fannie and Freddie has drawn the government far deeper into U.S. housing finance than it ever intended, at a time when even its pre-crisis involvement appears excessive. Subsidized lending may have boosted home ownership, but it also contributed to a consumer-debt burden that has hobbled the recovery and rendered the economy more prone to crisis. Most other advanced-nation governments play a much smaller role, with little apparent effect on home ownership.  Read more here.

 

Fannie, Freddie Replace HAMP with New Foreclosure Prevention Program

HousingWire | December 14, 2016        Fannie Mae and Freddie Mac announced on Wednesday their replacement for the Home Affordable Modification Program. The government sponsored enterprises revealed the Flex Modification foreclosure prevention program, which is designed to help America’s families by offering reductions to their monthly mortgage payments.

The government's Home Affordable Modification Program is slated to end on Dec. 31, 2016, concluding a seven-year government program designed to save struggling homeowners who are behind on their mortgage, or in danger of imminent default due to financial hardship.

HAMP’s sibling, the Home Affordable Refinance Program, which was created at the same time, was extended in August until Sept. 30, 2017 in order to create a smoother transition period for a new refinance product. 

“The new Flex Modification announced by Fannie Mae and Freddie Mac (the Enterprises) today was designed based on lessons learned from crisis-era loan modification programs to help borrowers stay in their homes and avoid foreclosures whenever possible,” the FHFA said in a statement.   Read more here.

 

J.P. Morgan Readies Mortgage-Backed Deal

Deal is J.P. Morgan’s first since the financial crisis involving mortgages entirely owned by the bank

Wall Street Journal | March 14, 2016   J.P. Morgan Chase & Co. is trying to sell new securities that would pass along most of the credit risk on $1.9 billion in mortgages, in an attempt to revive a debt market that has been largely left to the government since the financial crisis.

The largest U.S. bank by assets is expected to price the residential mortgage-backed deal over the next two weeks. J.P. Morgan would hold 90% of the deal by keeping the safest parts, or the most senior tranches, and plans to sell off the riskier pieces to investors.

Banks issued trillions of dollars worth of bonds backed by home loans in the years before the financial crisis but have had trouble winning over investors burned when the market crashed. Financial institutions issued $61.6 billion in private mortgage bonds in 2015, up from $54.1 billion in 2014 but a fraction of the $1.19 trillion issued at the peak of the housing boom in 2005, according to data from trade publication Inside Mortgage Finance.

Government-sponsored entities Fannie Mae and Freddie Mac have dominated the market in their absence. The two companies have recently been selling new securities that use derivatives to unload the risk of default on the mortgages they guarantee.

The new deal is J.P. Morgan’s first “house transaction” since the financial crisis, meaning it is entirely backed by mortgages the bank owns. The pool includes a mix of more than 6,000 mortgages, both newer and refinancings, around 75% of them conforming with the underwriting standards set by Fannie and Freddie. Most of the mortgages are made to individuals with high credit scores.  Read more here.

Is Another Housing Crisis Just Around the Corner?

Fox News|  January 19, 2016     Movie sequels are rarely as good as the original films on which they’re based. The same dictum, it appears, holds for finance. The 2008 housing market collapse was bad enough, but it appears now that we’re on the verge of experiencing it all again. And the financial sequel, working from a similar script as its original version, could prove to be just as devastating to the American taxpayer.

The Federal National Mortgage Association (commonly referred to as Fannie Mae) plans a mortgage loan reboot, which could produce the same insane and predictable results as when the mortgage agency loaned so much money to people who had neither the income, nor credit history, to qualify for a traditional loan.   Read more here.

SBC to Pay $550 Million to Settle U.S. Mortgage Bond Claims

NEW YORK (Reuters) – HSBC Holdings Plc <HSBA.L> is expected to pay $550 million (338.29 million pounds) to resolve a U.S. regulator’s claims the bank made false representations in selling mortgage bonds to Fannie Mae <FNMA.OB> and Freddie Mac <FMCC.OB> before the financial crisis, a person familiar with the matter said Friday.  Read more here.