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Inside Washington (11/13/2012)
  • WASHINGTON (11/14/12)--A lawsuit filed by the Federal Housing Finance Agency (FHFA) charging Bank of America subsidiary Merrill Lynch with misleading Fannie Mae and Freddie Mac into buying billions of dollars of risky mortgage debt can proceed, a federal judge ruled Monday. The FHFA alleges that Merrill and other firms misrepresented that underlying mortgages complied with certain underwriting guidelines and standards (American Banker Nov. 13). The suit involves 88 mortgage-backed securities certificates that corresponded to 72 securitizations by Merrill. U.S. District Judge Denise Cote denied Merrill's claim that a District of Columbia law required the FHFA to demonstrate that Fannie and Freddie relied on the underwriter's claims. Merrill also maintained that the FHFA had forfeited its right to recover the amounts Fannie and Freddie paid for the securities because the statute of limitations had expired before the FHFA filed its lawsuit and that the agency cannot seek punitive damages …
  • WASHINGTON (11/14/12)--Federal Reserve Board Gov. Elizabeth Duke Friday suggested mortgage regulations should be eased for community banks. Increased regulatory standards may limit community banks' ability to compete in the mortgage lending market, she said. "Balancing the cost of regulation that is prescriptive with respect to underwriting, loan structure, and operating procedures against the lack of evidence that balance sheet lending by community banks created significant problems, I think an argument can be made that it is appropriate to establish a separate, simpler regulatory structure to cover such lending," Duke said in a speech to the Community Bankers Symposium. Credit unions make up 7% of home originations, according to information collected under the Home Mortgage Disclosure Act. Banks with between $500 million and $10 billion of assets account for about 13% of home loan originations, while those under $500 million of assets account for about 5% …
  • WASHINGTON (11/14/12)--Raj Date, the No. 2 official at the Consumer Financial Protection Bureau (CFPB), announced Monday he will leave the agency. Date's departure will likely take place in January after he helps the agency finalize several mortgage rules, including the qualified mortgage rule, which the agency is required to implement as part of the Dodd-Frank reform law (American Banker Nov. 13). Date had served as the agency's de facto leader following the departure of Elizabeth Warren, who formed the CFPB, and before the hiring of the agency's current director, Richard Cordray …


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