Tag Archives: SEC

Speaking on behalf of the Financial Stability Oversight Council, Treasury Secretary Timothy Geithner made recommendations before the Senate Banking Committee on reforming the housing finance system. Specifically, Geithner called for establishing national standards for mortgage servicers, which the committee believes will ""realign incentives and help reestablish confidence in the integrity of the housing market."" Geithner also stressed the importance of reducing the government's role in the housing market.

The nation's foremost securities regulator is considering a civil injunction against Standard & Poor's (S&P) for its rating of a collateralized debt obligation (CDO) linked to high-risk mortgages. S&P's parent company told investors Monday it received notice that the Securities and Exchange Commission (SEC) may proceed with enforcement actions and monetary penalties. At the center of the investigation is a $1.6 billion CDO from 2007, which has been cited as an example of why the financial crisis ran so deep.

Investigators are looking to determine whether Standard and Poor's (S&P) over-rated dozens of mortgage-backed securities prior to the financial crisis. The Securities and Exchange Commission has been investigating the matter for several months, and the Justice Department recently joined the investigation, according to media reports. The federal probe began before S&P downgraded the U.S. credit rating from triple-A status to double-A status. The SEC has reportedly also been investigating Moody's in regards to two mortgage-bond deals.

Home Loan Servicing Solutions, Ltd. (HLSS) is preparing an initial public offering (IPO) of 18.3 million shares. HLSS is a spin-off of Georgia-based Ocwen Financial Corporation. Simultaneously with the offering, HLSS founder and chairman of the board of directors, William C. Erbey, will purchase $10 million of HLSS's ordinary shares at the same price as the IPO. HLSS plans to distribute at least 90 percent of its net income to shareholders through monthly cash dividends.

The FDIC has filed suit against former IndyMAC Bancorp Inc. CEO Michael Perry for $600 million in losses caused by risky mortgage loans. The FDIC accuses Perry of purchasing $10 billion in risky residential loans.

Ally Financial Inc., one of the nation's five largest mortgage servicers, acknowledged receipt of subpoenas from the U.S. Department of Justice and the U.S. Securities and Exchange Commission (SEC) Wednesday. The subpoenas are directed at Ally Financial Inc. and GMAC Mortgage LLC's mortgage activities. Ally says the subpoenas may result in adverse judgments, fines and penalties, or injunctions.

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.

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 Securities and Exchange Commission said Tuesday that JPMorgan Chase has agreed to pay $153.6 million to settle charges that it misled investors in a complex mortgage securities transaction just as the housing market was starting to plummet. JPMorgan noted in a statement that its securities affiliate named in the SEC complaint ultimately lost nearly $900 million in connection with the deal. The SEC, though, says the company failed to disclose that the hedge fund involved in structuring the deal stood to profit if the assets defaulted.

As it peels back the layers of the secondary market to delve deeper into the trading of the subprime mortgage bonds reputed for setting off the financial crisis, the Securities and Exchange Commission (SEC) has set its sights on major credit ratings agencies. The SEC is considering bringing civil fraud charges against Standard & Poor's and Moody's Investors Service for their role in positioning mortgage-backed securities that held a high risk of default as grade-A investments.