James B. Lockharta III, Directory of the Office of Federal Housing Enterprise Oversight [OFHEO] sent a letter to NY Attorney General Andrew Cuomo, on Nov. 8, 2007, regarding his recent letters to Fannie Mae and Freddie Mac (and associated press release). Download OFHEO Letter 11/08 to AG Cuomo (107.5K)
Here are some excerpts from the OFHEO Director's letter:
After reviewing these materials, I feel that you and your staff may not fully understand the differences between the mortgage-backed securities (MBS) issued by the GSEs and those issued by other entities.
As I see it, we each have responsibility, as part of our respective mandates, to help ensure that fraud is not perpetrated on mortgage borrowers or on market participants. Pursuing this mutual goal will be more effectively accomplished, at less disruption to the integrity and soundness of the mortgage market, by cooperation.
Official rips Cuomo on appraisal probe - Nov. 9, 12007
Some of the issues the OFHEO believes need to be discussed include:
- The Enterprises' efforts to monitor and prevent appraisal fraud and OFHEO's oversight of that activity. As you know, there is pervasive Federal law, regulation and guidance about appraisal fraud.
- Your demand that two federally-chartered and federally-regulated Enterprises cease doing business with a major federally-chartered bank, which you have not charged or subpoenaed, unless certain conditions stipulated by you are met.
- The scope, authority and supervision of the independent examiner, which we will also be discussing with the Enterprises.
- The potential expansion of the examination to other financial institutions from which the Enterprises buy mortgages.
- Since purchasers of the Enterprises' MBS receive a corporate guarantee of repayment from the Enterprises, whether this issue is more of a safety and soundness matter than a securities issue.
Download OFHEO Letter 11/08 to AG Cuomo (107.5K) Thanks to the Consumer Mortgage Reports blog for this letter.
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