Tag Archives: Repurchase Demands

Bank of America and Citigroup both released their fourth-quarter earnings Thursday, revealing the scars their legacy mortgage issues have left. BofA reported net income of $732 million, a significant decline from $2 billion in Q4 2011. The bank did better on a year-long scale, coming in at $4.2 billion (well above its $1.4 billion income in 2011). While Citi pulled ahead compared to last year, its earnings still fell well short of forecasts.

While the mortgage market continues its slow trod toward recovery--with distressed liquidations and delinquencies on the decline--industry participants await the final word from lawmakers on one key issue affecting the future of their businesses. The Consumer Financial Protection Bureau has expressed its intent to announce its final decision on what constitutes a qualified mortgage this year. This, in turn, will give the industry some insight into what can be expected to define a qualified residential mortgage (QRM), according to Fitch Ratings.

Bank of America and Fannie Mae reached a $10.3 billion agreement Monday to resolve repurchase claims on loans originated from 2000 through 2008. The agreement also requires BofA to pay the GSE $1.3 billion in compensatory fee obligations. BofA simultaneously announced its intent to sell the servicing rights of 2 million mortgage loans to specialty servicers.

Freddie Mac is ramping up repurchase demands and increasing the pool of defaulted loans subject to put-backs to include mortgages originated prior to the crisis in 2004 and 2005, according to U.S. Bancorp CEO Richard Davis. Speaking to investors at the Goldman Sachs Financial Services Conference this week, Davis described the news as ""unexpected,"" but Freddie Mac maintains it has always had the authority to pull files for review when loans stop performing regardless of when the loans were originated. The GSE says its repurchase policies have not changed and it is committed to working with lenders to resolve any issues.