FHFA guideline modification might broaden variety of suspended counterparties

The Federal Housing Finance Administration is aiming to make it much easier to put entities and individuals into its Suspended Counterparty Program, a proposed guideline modification states.

This would need Fannie Mae, Freddie Mac and the Federal Home Loan Banks to report to the FHFA any private or business they work with that devoted “certain forms of misconduct” in the previous 3 years. The existing program was developed by FHFA letter in June 2012 and modified in December 2015.

Today, the SCP list is restricted to those that have actually devoted and are founded guilty of criminal offenses. “However, in FHFA’s experience of administering the SCP, it has determined that this standard is too narrow; specifically, it does not authorize suspension of counterparties that have been found to have committed various forms of misconduct in the context of civil enforcement actions,” the proposed change to the guideline stated.

It is aiming to broadly broaden the meaning of misbehavior “to all manner of civil enforcement proceedings,” consisting of cases prior to administrative law judges, in addition to qui tam actions (likewise referred to as whistleblower cases) such as those brought under the False Claims Act.

While much of those civil cases are settled without an admission of misbehavior, the proposition kept in mind, the modification might enable the FHFA to put those entities on the SCP list. “FHFA has determined that it is appropriate to permit suspension where enforcement claims are resolved without admission of misconduct,” the proposition stated.

For example, in the most current qui tam settlement including Movement Mortgage, the business particularly did not confess any legal liability for the False Claims Act infractions. 

Other modifications would permit positioning on the SCP for criminal or civil misbehavior in connection with the management or ownership of real estate.

“Amending the Suspended Counterparty Program will help strengthen FHFA’s ability to protect its regulated entities from business risks presented by individuals or institutions who engage in misconduct,” stated Director Sandra Thompson, in a news release. “The proposed rule will strengthen FHFA’s ability to ensure the regulated entities remain safe and sound so they continue to serve as reliable sources of liquidity.”

The modifications would likewise develop a capability to abandon suspension orders in particular scenarios.

Currently, the SCP list has 170 private or business names, the majority of which have a conclusive end date for the suspension. The individual on the list the longest time, beginning on April 15, 2013 with an indefinite suspension, is Lee Farkas, the founded guilty home loan scammer who ran Taylor, Bean & Whitaker.

First Mortgage and its founded guilty creator and chairman Ron McCord — a previous Mortgage Bankers Association chairman — are both likewise on the list. Live Well Financial, the defunct reverse home loan loan provider, was the most current addition.

This proposition will be opened for a 60-day remark duration once it is released in the Federal Register.


A news media journalist always on the go, I've been published in major publications including VICE, The Atlantic, and TIME.

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