Newscast Media WASHINGTON D.C. — The Securities and Exchange Commission has charged six former top executives of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) with securities fraud, alleging they knew and approved of misleading statements claiming the companies had minimal holdings of higher-risk mortgage loans, including subprime loans.
Fannie Mae and Freddie Mac each entered into a Non-Prosecution Agreement with the Commission in which each company agreed to accept responsibility for its conduct and not dispute, contest, or contradict the contents of an agreed-upon Statement of Facts without admitting nor denying liability. Each also agreed to cooperate with the Commission’s litigation against the former executives. In entering into these Agreements, the Commission considered the unique circumstances presented by the companies’ current status, including the financial support provided to the companies by the U.S. Treasury, the role of the Federal Housing Finance Agency as conservator of each company, and the costs that may be imposed on U.S. taxpayers.
Three former Fannie Mae executives — former Chief Executive Officer Daniel H. Mudd, former Chief Risk Officer Enrico Dallavecchia, and former Executive Vice President of Fannie Mae’s Single Family Mortgage business, Thomas A. Lund — were named in the SEC’s complaint filed in U.S. District Court for the Southern District of New York.
The SEC also charged three former Freddie Mac executives — former Chairman of the Board and CEO Richard F. Syron, former Executive Vice President and Chief Business Officer Patricia L. Cook, and former Executive Vice President for the Single Family Guarantee business Donald J. Bisenius — in a separate complaint filed in the same court.
“Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was,” said Robert Khuzami, Director of the SEC’s Enforcement Division. “These material misstatements occurred during a time of acute investor interest in financial institutions’ exposure to subprime loans, and misled the market about the amount of risk on the company’s books. All individuals, regardless of their rank or position, will be held accountable for perpetuating half-truths or misrepresentations about matters materially important to the interest of our country’s investors.”
The SEC’s investigation of Fannie Mae was conducted by Senior Attorneys Natasha S. Guinan, Christina M. Marshall, Liban Jama, Mona L. Benach, and Associate Chief Accountant, Peter Rosario, under the supervision of Assistant Director Charles E. Cain, and Associate Director Stephen L. Cohen. Sarah Levine and James Kidney will lead the SEC’s litigation efforts.
The SEC’s investigation of Freddie Mac was conducted by Senior Attorneys Giles T. Cohen and David S. Karp and Assistant Chief Accountant Avron Elbaum of the SEC’s Division of Enforcement under the supervision of Assistant Director Charles E. Cain and Associate Director Stephen L. Cohen. Kevin O’Rourke and Suzanne Romajas will lead the SEC’s litigation efforts.
For more information about these enforcement actions, contact:
Robert S. Khuzami, Director
Lorin L. Reisner, Deputy Director
Stephen L. Cohen, Associate Director
Charles E. Cain, Assistant Director
Newscast Media, NEW YORK, New York — FOX News host Bill O’Reilly said the Occupy Wall Street movement is bogus because the actors and participants are misdirecting their anger and should be directing it to Fannie and Freddie Mac who partly responsible for the financial meltdown.
“My question is simple because I am a simple man. Why aren’t the Occupy loons demonstrating in front of Fannie Mae and Freddie Mac?” O’Reilly asked.
O’Reilly concluded that the movement was bogus, due to its unwillingness to confront the real entities that created the financial collapse. http://www.newscastmedia.com/bill-oreilly.html
Newscast Media HOUSTON, Texas –In an agreement that is likely to be repeated across the banking industry in the US, embattled financial institute Bank of America, has paid more than $2.5bn to settle a dispute over claims that it sold faulty mortgages to government-backed lenders. Bank of America said it paid $1.28bn to Freddie Mac and $1.34bn to Fannie Mae to resolve claims its Countrywide division sold products to the two giant mortgage lenders – whose loans are guaranteed by the US government – that may not have met underwriting standards.
Bank of America and its rivals have faced pressure from Freddie and Fannie and also private investors to either buy back mortgages or provide compensation for those loans that soured dramatically once US house prices started falling in late 2006. Most of the claims against Bank of America stem from mortgages sold by Countrywide Financial, a lender that Bank of America bought in a fire sale in summer 2008.
Brian Moynihan, Bank of America’s chief executive, said yesterday that the agreements “resolve substantial legacy issues in the best interest of our shareholders”. Shares in the bank, which is based in Charlotte, North Carolina, climbed almost 5pc to $13.83 in early trading on Wall Street.
The bank said that the settlement, which covers more than $127bn of mortgages sold by Countrywide, resolves all claims made by Freddie and Fannie. However, Bank of America still faces billions of dollars in claims from private investors who allege they were sold faulty mortgages. Mr Moynihan said in October the bank would fight those investors whose attitude was “I bought a Chevy Vega but I want it to be a Mercedes”. http://newscastmedia.com/bankofamerica-freddie.html
Newscast Media WASHINGTON — A joint investigation has been launched by officials in 50 states and the District of Columbia into allegations that mortgage companies mishandled documents and broke laws in foreclosing on hundreds of thousands of homeowners.
The states’ attorneys general and bank regulators will examine whether mortgage company employees made false statements or prepared documents improperly. The investigations are being led by Attorneys general in response to a nationwide scandal that’s called into question the accuracy and legitimacy of documents that lenders relied on to evict people from the homes.
The allegations raise the possibility that foreclosure proceedings nationwide could be subject to legal challenge. Some foreclosures could be overturned. More than 2.5 million homes have been lost to foreclosure since the recession started in December 2007, according to RealtyTrac Inc.
“This is not simply about a glitch in paperwork,” said Iowa Attorney General Tom Miller, who is leading the probe. “It’s also about some companies violating the law and many people losing their homes.”
Ally Financial Inc.’s GMAC Mortgage Unit, Bank of America and JPMorgan Chase & Co. already have halted some questionable foreclosures. Other banks, including Citigroup Inc. and Wells Fargo & Co. have not stopped processing foreclosures, saying they did nothing wrong.
In a joint statement, the officials said they would review evidence that legal documents were signed by mortgage company employees who “did not have personal knowledge of the facts asserted in the documents. They also said that many of those documents appear to have been signed without a notary public witnessing that signature — a violation of most state laws.
“What we have seen are not mere technicalities,” said Ohio Attorney General Richard Cordray. “This is about the private property rights of homeowners facing foreclosure and the integrity of our court system, which cannot enter judgments based on fraudulent evidence.” http://newscastmedia.com/bankfraud.htm