On October 20, 2011, the Boards of Directors adopted a revised version of Rule 14 which contains notification provisions that will become effective on February 1, 2012. Under the new Rule, MERS® System Members will have enhanced requirements for notifying MERSCORP, Inc. (“MERSCORP”) of certain types of lawsuits, including some cases where Mortgage Electronic Registration Systems, Inc. (“MERS”) and/or MERSCORP are not a named party to the lawsuit. Notifications should be sent to the email address Rule14@mersinc.org. The attached Rule further defines the Members’ new responsibilities; please provide a copy of this Rule to all departments responsible for complying with it.
A draft revised Rule 14 of the MERS® System Rules of Membership was initially circulated for comment to the membership in May 2011. After receiving, considering, and incorporating extensive comments, the Boards adopted the attached version. Please note that Members will now have to notify MERSCORP of cases where neither MERS nor MERSCORP is a named party, but the cases involve issues related to the companies. See Section 2(a)(ii).
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RULE 14 NOTIFICATION TO MERSCORP, INC. OF LAWSUITS AND ADDITIONAL INDEMNIFICATION PROVISIONS
Did Fannie Mae issue the recent announcement [see below] prohibiting servicers from settling reps and warranties claims with Mortgage insurersspecifically becauseBAC /Countrywide just settled with one of their big insurers AND took back 80% of the loss.
The cash settlement of $1.1 billion will be paid in full by March 31, 2012. The initial payment of $850 million was paid on April 14, 2011. In addition, Bank of America and Countrywide have agreed to a reinsurance arrangement that will reimburse Assured Guaranty for 80% of all paid losses on the 21 first lien RMBS transactions until aggregate collateral losses in those transactions exceed $6.6 billion. Cumulative collateral losses on these transactions were approximately $1.3 billion with no paid losses by Assured Guaranty as of December 31, 2010. As of December 31, 2010, Assured Guaranty’s gross economic loss on these RMBS transactions, which assumes cumulative projected collateral losses of $4.6 billion, was $490 million. The total estimated value of the settlement is expected to be accretive to shareholders’ equity and adjusted book value, a non-GAAP financial measure.
Now lets see… Could BAC possibly pass the losses on to the govt. for the Fannie and Freddie guaranteed securities and is this why Fannie is trying to put her foot down with this letter below and say that the servicers do NOT have the authority to make such deals with the insurers, causing the GSE’s to eat the losses that the servicers are blithely bargaining away.
Meanwhile the deal has already been struck and partially paid. Will taxpayers be on the hook for yet another disastrous toxic originating love story?
Did BAC breach any fiduciary responsibilities with Fannie?
Effective immediately, Fannie Mae is prohibiting servicers from entering into any agreement that modifies the terms of an approved mortgage insurance master policy on loans delivered to Fannie Mae. Prohibited agreements include, but are not limited to, agreements that directly or indirectly
modify master policy provisions for settling of claims,
limit the right of a mortgage insurer to conduct file reviews or investigate claims,
limit the right of a mortgage insurer to rescind coverage,
rescind or modify coverage, or
restrict notice to Fannie Mae of changes in coverage status.
Further, Fannie Mae prohibits loss sharing, indemnification, settlement or similar agreements of any kind between servicers and mortgage insurance companies that affect Fannie Mae’s interest in its mortgage loans.
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