Appraiser Income

In JPMorgan Case, a Missed Opportunity to Charge Its Executives
By JESSE EISINGER, ProPublica

Both the Securities and Exchange Commission and JPMorgan Chase won great public relations victories last week. But the public lost — and in ways that go far beyond this one spat.

By cracking down on the bank for its faulty internal controls in the $6 billion London Whale trading loss, the S.E.C. can claim to be the ferocious regulator we have all been waiting for. JPMorgan and its chief executive, Jamie Dimon, got the best coverage they could have hoped for under the circumstances: the sense that the bank is beleaguered, surrounded by regulators, but at least it could put the trading loss behind it.

Yes, the S.E.C. wrung an admission of wrongdoing out of the bank, and the regulators scored a large settlement. It’s an improvement for a regulator to display the ferocity of a mealworm, rather than a banana slug, but let’s hold the celebrations until it reaches at least the level of a garter snake.
After all, Mr. Dimon had already made a great display of admitting that he and the bank’s senior ranks had messed up — well, at least as soon as it was clear that bluster wasn’t getting them anywhere.

The admission was nice, but the S.E.C. did not charge any top executives with misleading disclosure. Why not? …continue reading the rest of this post: JP Morgan Execs Stay Out of Jail But Settlement Talks of $13 Billion

Fannie Mae Overpaid Servicers by $89 Million
Reposted from Appraiser News Online

Fannie Mae overpaid servicers by about $89 million in 2012 due to errors made by a third-party vendor incorrectly processing servicer reimbursement claims, National Mortgage News reported Sept. 18.

The Office of the Inspector General for the Federal Housing Finance Agency reported the problem, noting that Fannie not only overpaid servicers but also incorrectly denied $27 million in reimbursements last year.

However, the FHFA conducted its own review of the issue and claimed that the errors were “substantially less” than what the IG’s report suggested, although the agency failed to report the amount they said was overpaid, National Mortgage News reported.

The FHFA contracted with third-party vendor, Accenture, to review the reimbursement claims by servicers and then decide whether or not to pay, curtail or deny those claims. The IG’s report indicated that Accenture reviewed about 1.3 million claims last year and approved $2.9 billion worth of reimbursements.

Before 2011, Fannie conducted its own reimbursement reviews; now 80 percent undergo manual review by Accenture.

The IG’s report indicated that errors largely were due to inconsistent application of guidelines, incomplete reviews or large volumes of claims.

“Although these overpayments may not equate directly to financial harm against Fannie Mae, they represent a fundamental problem that undermines the reliability and integrity of Fannie Mae’s servicer reimbursement operations,” the IG report concluded, National Mortgage News reported.

The report suggested that Fannie minimize processing errors by creating a red flag system, and it also advised the firm to quantify and aggregate overpayments and to determine the root cause of those overpayments. The IG also said the firm should then publish the results.

The FHFA said it would implement most of the IG’s recommendations but noted that it would not publish the results of a review of overpayments.

Refinancings were down slightly in the second quarter, as borrowers shied away from rising interest rates, the Federal Housing Finance Agency reported Sept. 3.

Fannie Mae and Freddie Mac had 279,933 mortgages refinanced through the Home Affordable Refinance Program in the second quarter of 2013; 294,300 mortgages were refinanced during the first quarter.

With mortgage interest rates rising sharply in June to 4.07 percent, compared to 3.57 percent in March, refinancings became less attractive to borrowers. HARP has resulted in 2.65 million refinancings since the program’s inception in April 2009.

Of the HARP refinancings in the second quarter, 19 percent had loan-to-value ratios of more than 125 percent. Figures through June showed that 18 percent of HARP refinances for underwater borrowers were shorter-term, 15- to 20-year mortgages, which build equity faster than 30-year mortgages.

HARP continued to account for a substantial portion of total refinance volume in certain states. Through the second quarter, HARP refinances represented 59 percent of total refinances in Nevada and 50 percent of total refinances in Florida, more than double the 21 percent of total refinances nationwide over the same period.

Underwater borrowers accounted for a large portion of HARP refinances in several states, representing more than 61 percent of HARP volume in Arizona, Nevada and Florida.

See the FHFA’s second quarter report.

Reposted from Appraiser News Online