Secondary Market

Freddie Mac has entered into a proposed settlement with the now defunct Taylor, Bean & Whitaker (TBW). Under the terms of the agreement, Freddie Mac will be granted an unsecured claim in the TBW bankruptcy estate for just over $1 billion. The GSE estimates it will only see between $40 million and $45 million from that claim. While the settlement entitles Freddie to additional funds related to its mortgage loans, it also requires the GSE to pay TBW and its trade creditors to settle their potential claims against the GSE.

A total of 25,485 suspicious activity reports (SARs) involving mortgage fraud were submitted to the Financial Crimes Enforcement Network in the first quarter, up 31 percent from a year earlier. The agency attributes the increase to more demands from investors for lenders to repurchase poorly performing mortgages, which have prompted additional loan reviews. Officials also found a number of incidents involving foreclosure rescue scams, false claims of identity theft, and property flopping.

Michigan's Oakland and Ingram Counties have filed lawsuits against Fannie Mae and Freddie Mac, alleging the GSEs avoided paying the state property-transfer tax on thousands of REO homes by claiming false exemptions. Oakland County says there are hundreds, perhaps thousands, of deeds recorded by Fannie and Freddie where they claimed exemptions. Officials maintain the exemptions cost Oakland County at least $250,000 per year.

According to an analysis authored by a former chief economist of Freddie Mac and a real estate economics professor at University of Aberdeen, responsibility for the failure of Fannie Mae and Freddie Mac falls directly on regulators and indirectly on their political overseers. The two analysts argue that the U.S. government's involvement in housing finance nurtured the excessively risky loans that fueled the housing bubble of the last decade and resulted in the systemic collapse of the global financial system.

The nation's second largest mortgage company has again reported a decline in the percentage of loans it holds that are 90 or more days past due and in foreclosure. Freddie Mac says its serious delinquency rate for single-family mortgages dropped to 3.53 percent in May. That's down four basis points from 3.57 percent the month before and down 53 basis points from 4.06 percent in May 2010. May's rate was the lowest it's been since September of 2009.

Morgan Keegan & Company and Morgan Asset Management agreed to pay $200 million to settle fraud charges related to subprime mortgage-backed securities (MBS), according to a statement from the Securities and Exchange Commission (SEC). The firms, along with two principals, were accused of false valuations related to subprime mortgage securities in five funds from January 2007 to July 2007.

The debate over what constitutes a Qualified Residential Mortgage (QRM) is heating up, with a pivotal argument centered around whether or not the proposed QRM stipulations will actually lower the risk of default. In one corner you have the handful of regulators charged with putting the definition of QRM into the rule book, and in the other corner you have just about everybody else, with consumer advocates joining mortgage bankers in a rare showing, and congressional lawmakers standing firmly alongside them.

Asset management and loss mitigation provider Green River Capital is expanding its REO services to the commercial mortgage industry. The new services include the disposition of assets, property maintenance, lease verification, and property valuation. Focusing its commercial REO efforts on small balance properties, the firm will also handle evictions and repairs and offer full title services.

Commercial real estate prices (CRE) in the U.S. declined in April by 3.7 percent, according to a new report from Moody's Investors Service. It marked the index's lowest level since its inception, but Moody's says the price recovery that began a year ago among ""trophy properties"" in the largest markets is still evident and continuing. However, this decrease is the index's fifth consecutive decline with distressed prices negating the price recovery seen in larger, higher quality assets.

Federal Reserve Chairman Ben Bernanke says its all the distress in the housing sector that's pulling home prices and consumer confidence down and keeping buyers away from the market, despite the fact that the Fed's bond-buying program has succeeded in keeping interest rates low and housing affordable. Bernanke says he'd like to see more efforts to modify loans, but when that's not appropriate, the industry needs to speed up the process of foreclosure and disposition to clear the market.