MI rescission issues plaguing your company? MGIC, and their shareholders, received coal in its stocking after the news came out that it was being sued by Bank of America’s mortgage unit in a dispute over claims. The suit alleges that MGIC “denied and continues to deny” valid mortgage insurance claims submitted by Bank of America’s Countrywide unit. Bank of America says MGIC denied claims based on “unreasonable interpretations” of its policies. The suit seeks “declaratory relief” for interpretation of the policies.
Regardless of whether or not it is good or bad for our industry, or the debate about the timing of the announcement, on Christmas Eve the U.S. Treasury agreed to provide Fannie Mae and Freddie Mac with as much capital as they need over the next three years. It is an effort to reassure the investors who bought their debt – not the securities backed by mortgages. But the Treasury also said that it would stop buying the F&F’s mortgage-backed securities and end a short-term-liquidity facility set up for both companies and for the Federal Home Loan Banks. (This does not impact the ongoing Fed purchase program.) The government took over both companies 15 months ago, and has put $60 billion into Fannie and $51 billion into Freddie versus the “old” caps of $200 billion each. Opponents say it gives F&F a blank check with no real end, but supporters say it gives mortgage investors assurance and stability.
In a story making the rounds over the weekend, Warren Buffett and his staff, along with other holders of Res Cap debt, are rumored to be in talks to buy Residential Capital, the mortgage business owned by GMAC, General Motor’s finance division. Res Cap does have quite a servicing portfolio, but still has lost $9.2 billion over the past eight quarters. Res Cap’s losses were one of the main drivers behind GMAC’s $12.5 billion government bailout.
Citigroup Inc. and Wells Fargo & Co. said that they repaid $45 billion from the Troubled Asset Relief Program. …