FNMA & FHLMC Bond Price Fixing Claims

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VaCAP Board

Coalition of Appraisers in Virginia at Virginia Coalition of Appraiser Professionals
Coalition of individual appraisers working together to unite, promote and protect the collective interests of all appraisal professionals in Virginia; to promote needed changes in laws, rules, regulations, policies and standards affecting all appraisers in Virginia; to observe and report the actions of regulatory, legislative, oversight, and standards-setting entities of the Commonwealth.
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Price Fixing & Discrimination - FNMA & FHLMC Bond Price Fixing ClaimsAre the profits being reported by Fannie and Freddie being skewed because of price fixing?

In an article released on CNBC by Reuters, US District Judge Jed Rakoff ruled investors can pursue antitrust claims against banks for conspiring to fix prices of bonds from Fannie Mae and Freddie Mac. According to the article, there are transcripts of chat room discussions that prove a conspiracy to price fix mortgage backed bonds from Fannie and Freddie between January 2009 and January 2016.

Rakoff wrote.

The chats unmistakably show traders, acting on behalf of those defendants, agreeing to fix prices at a specific level before bringing the bonds to the secondary market.

GSE Reform is on the forefront of President Trump’s agenda. Much of the reform is based on the profits of Fannie and Freddie. That being said, are the reported profits real or a result of price fixing?

See the article here.

Now add a few logs to the raging fire.

Bifurcation and Waivers have not been well received by appraisers, and rightfully so. Appraisers who are paying attention know the value of their service and understand not what could happen, but understand what is happening. Rightfully so, appraiser are concerned.

Well it is not just appraisers that are concerned. It now appears Loan Officers have a growing concern over bifurcation and waivers. In Rob Chrisman’s Daily Mortgage News and Commentary on September 7th. A loan officer is reporting issues with discrimination within Fannie Mae and Freddie Mac’s waiver program. VaCAP has shared several articles expressing concern for discrimination within algorithms , so this really is no surprise.

Well, price fixing and discrimination are illegal. The banks, Fannie Mae and Freddie Mac are right there in the middle of it.

See Rob Chrisman’s Newsletter here.

To say this will be an interesting ride, would be the understatement of the century. There are lots of major caveats happening in the mortgage world and none, and we do mean none, appear to be in favor of consumer protection or the safety and soundness of the economy.

Our advice to appraisers:

First, make sure your appraisals are rock solid. Don’t take shortcuts because an amc or lender states it is OK. Follow USPAP and State Law to keep yourself out of trouble.

Second, diversify your business. Lender work right now is questionable and when the market comes crumbling down, make sure you have the resources to survive; both professionally and personally.

Third, get involved with your state coalitions and other appraisal groups. Appraisers, regardless of location and business focus, need to stick together.

To join or renew your VaCAP membership, clickhere.

VaCAP Board

VaCAP Board

Coalition of individual appraisers working together to unite, promote and protect the collective interests of all appraisal professionals in Virginia; to promote needed changes in laws, rules, regulations, policies and standards affecting all appraisers in Virginia; to observe and report the actions of regulatory, legislative, oversight, and standards-setting entities of the Commonwealth.

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4 Responses

  1. Ross Grannan on Facebook Ross Grannan on Facebook says:

    I’m shocked shocked surprised

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  2. “Protecting the Public Trust”…It’s not just a harmless lie anymore.

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  3. Avatar IMJSAYN says:

    “the PIW or Freddie’s ACE (Automated Collateral Evaluation) are great things but are discriminatory, and that roughly 10% of loans are receiving them. Some receive it and some don’t. One of our MLOs had two great borrowers with high income and high credit going for $400,000 loans. One was a 79.9% LTV loan. The MLO did not expect to receive a PIW and received it via DU. The other loan was a 40% LTV but received no PIW. It made no sense. There is hearsay that PIWs are based off of other appraisals in the area.”

    Didn’t Andre Perry pin the label of racism on the appraisal profession and claimed computers don’t recognize race???

    How bout them apples?

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    • Neither CU, ACE or PIW’s are ‘great things’ (I assume that was hyperbole). The mortgage industry needs to speak with MISMO about irregularities in systems they have advocated for.

      There is no credible AVM or automated risk rating program in America today. There are over-hyped programs which when coupled with drinking very large amounts of Kool-aid, give ignorant Mortgage Banking executives the illusion of plausible deniability.

      Thats the only risk rating they are concerned with.

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FNMA & FHLMC Bond Price Fixing Claims

by VaCAP Board time to read: 2 min
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