The FHFA filing an objection to the Bank of America settlement? Forget about it. After all should BAC implode upon having to fund another $50 billion in mortgage putback claims, and Countrywide have to be spun off and nationalized, it would simply mean that more capital would flow away from the already insolvent GSEs and to a totally new branch of taxpayer funded RMBS. Which is why are confident that the latest objection filed against the BAC settelement is merely there to weaken the case, or as Manal Mehta puts it: a Cover Your Ass filing because "they’ve pre-determined the conclusion and then will do the bare minimum discovery until they can jump ship and undermine the efforts of the rest of the objectors." Why else would anyone file a "conditional objection" whose sole purposes is " to reserve its capability to voice a substantive objection in the unlikely event that necessity should arise." Unlikely? Obviously this is Bank of America's higher power interest already doing all they can to prevent an out of control situtation getting even worse. Which after all is the whole point of why the Fed, Pimco, BlackRock et all filed the lawsuit in the first place: to ring-fence the total amount of cash outflow claims, instead of allowing Bank of America to experience death by a thousand lawsuits. In this regard, tonight's FHFA filing is nothing more than a wolf in plaintiff's clothing doing what they can to weaken the case against undoing the settlement.
Federal Housing Finance Agency Action Regarding Court Consideration of Proposed Bank of America Settlement
The Federal Housing Finance Agency (FHFA), in its capacity as conservator of Fannie Mae and Freddie Mac (the Enterprises), today filed an Appearance and Conditional Objection regarding the proposed settlement between Bank of America and a consortium of 22 investors being considered by a court in New York. This pleading was filed to obtain any additional pertinent information developed in the matter. The conservator is aware of no basis upon which it would raise a substantive objection to the proposed settlement at this time. In fact, FHFA considers it positive that the proposed settlement includes subservicing requirements, specific terms for the servicing of troubled mortgages and the curing of certain document deficiencies. Additionally, FHFA is encouraged that a number of significant market participants support the proposed settlement.
Due to its duty to preserve and conserve Enterprise assets, the conservator believes it prudent not only to receive additional information as it continues its due diligence of the proposed settlement, but also to reserve its capability to voice a substantive objection in the unlikely event that necessity should arise.
The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $5.7 trillion in funding for the U.S. mortgage markets and financial institutions.
Full filing below: