This annual report describes FHFA's accomplishments, as well as challenges, the agency faced in meeting the strategic goals and objectives during the past fiscal year.
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FOSTER competitive, liquid, efficient, and resilient (CLEAR) national housing finance markets that support sustainable homeownership and affordable rental housing; OPERATE in a safe and sound manner appropriate for entities in conservatorship; and PREPARE for eventual exits from the conservatorships.
2019 Conservatorships Strategic Plan
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Washington, D.C. – The Federal Housing Finance Agency (FHFA), as conservator of Fannie Mae and Freddie Mac, today announced it has reached a settlement with J.P. Morgan Chase & Co. and related companies for $4 billion to address claims of alleged violations of federal and state securities laws in connection with private-label, residential mortgage-backed securities (PLS) purchased by Fannie Mae and Freddie Mac. Under the terms of the agreement, J.P. Morgan Chase & Co. will pay approximately $2.74 billion to Freddie Mac and $1.26 billion to Fannie Mae to resolve certain claims related to securities sold to the companies between 2005 and 2007 by J.P. Morgan Chase & Co., Bear Stearns & Co., Inc. and Washington Mutual.
In separate settlements, J.P. Morgan Chase & Co. resolved representation and warranty claims with Fannie Mae and Freddie Mac related to single-family mortgage purchases by the two companies. Under the terms of the agreements, J.P. Morgan Chase Bank N.A. will pay a total of approximately $1.1 billion—$670 million to Fannie Mae and $480 million to Freddie Mac.
“The satisfactory resolution of the private-label securities litigation with J.P. Morgan Chase & Co. provides greater certainty in the marketplace and is in line with our responsibility for preserving and conserving Fannie Mae’s and Freddie Mac’s assets on behalf of taxpayers. This is a significant step as the government and J. P. Morgan Chase move to address outstanding mortgage-related issues,” said FHFA Acting Director Edward J. DeMarco. “Further, I am pleased that a resolution of single family, whole loan representation and warranty claims could be achieved at the same time. This, too, will have a beneficial impact for taxpayers and the housing finance market.”
FHFA’s General Counsel noted, “Our lead representation by Philippe Selendy and the firm of Quinn Emanuel Urquhart & Sullivan was central to reaching this landmark settlement and their work continues in the remaining PLS cases. I want to cite the strong work of the FHFA Office of General Counsel’s litigation group under Stephen Hart and the legal and business teams at Freddie Mac and Fannie Mae.
“The settlement of the PLS litigation was initiated by U.S. District Court Judge Denise Cote’s direction to undertake mediation of the PLS cases under her jurisdiction. The settlement also is aligned with the working group of federal and state authorities addressing claims related to private-label securities and FHFA has and continues to work with all the government entities involved.”
FHFA has now settled four of the 18 PLS suits it filed in 2011, and remains committed to satisfactory resolution of the pending actions.
The settlement agreement regarding private label securities claims between FHFA and J.P. Morgan Chase & Co. involves the following cases: FHFA v. JP Morgan Chase & Co., et al., No. 121 CIV. 6188 (DLC) (S.D.N.Y.)(and other named defendants); FHFA v. Ally Financial Inc., et al., 11 CIV. 7010 (DLC) (S.D.N.Y.); FHFA v. First Horizon National Corp., et al., No. 11 Civ. 6193 (DLC)(S.D.N.Y.) and FHFA v. SG Americas, Inc., et al., No. 11 CIV. 6203 (DLC)(S.D.N.Y.)
Link to Settlement Agreement; confidential filings omitted
The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $5.5 trillion in funding for the U.S. mortgage markets and financial institutions.
© 2020 Federal Housing Finance Agency