CONGRESS

of the usability of the new application with consumers,
nonprofit advocacy groups, lenders, mortgage professionals,
and government housing agencies. Following this
outreach period, the Enterprises expect to finalize the form
and publish the dataset.
Other 2015 Conservatorship Activities:
Boards of Directors – As conservator, FHFA approves
the appointment of new directors serving on the boards of
directors of each Enterprise. In 2015, FHFA approved the
election of Lance F. Drummond to serve on the Freddie
Mac board of directors.
Executive Compensation – In May, FHFA authorized
the Fannie Mae and Freddie Mac boards of directors to
submit proposals for compensation of their CEOs that
would promote CEO retention, allow reliable succession
planning, and ensure the continuity, efficiency and
stability of Enterprise operations. Each board submitted
a proposal for FHFA review, and FHFA approved an
identical plan for both companies. The approved plan
deferred significant compensation to ensure retention,
was performance-based and did not include a bonus. The
plan also positioned each CEO’s compensation below the
25th percentile of comparable institutions, a requirement
set by FHFA in recognition of the fact that the Enterprises
are in conservatorship. The changes approved by FHFA
took effect on July 1, 2015. In November, President
Obama signed a law suspending the pay increases for the
Enterprise CEOs, and FHFA has implemented the law reinstating
the prior CEO compensation limits.
Guarantee Fee Pricing – In April, FHFA concluded a
review of the Enterprises’ guarantee fees and announced
that existing guarantee fees, on average, were at an
appropriate level. FHFA determined that some modest
adjustments to upfront guarantee fees were also appropriate.
These adjustments included elimination of the 25
basis-point, up-front adverse market charge put in place
in March 2008, and the addition of targeted increases in
guarantee fees to address various risk-based and access-tocredit
considerations. The revenue from these increases is
expected to offset the revenue loss resulting from eliminating
the adverse market charge. In making adjustments to
the guarantee fees for certain categories of loans, FHFA
also took into account its decision to strengthen financial
and operational eligibility standards for mortgage insurance
companies.
The guarantee fee announcement followed a comprehensive
review and analysis, which evaluated information
provided by outside stakeholders in response to FHFA’s
request for input and other internal and external information.
FHFA focused on reaching an appropriate balance
between its statutory obligations to ensure the safety and
soundness of the Enterprises and to foster a liquid national
housing finance market.
Private-Label Mortgage-Backed Securities – In 2015,
FHFA continued its work on the remaining private-label
MBS lawsuits filed in 2011 against financial institutions
and certain of their officers and directors. 9 Each
suit alleged violations of federal securities laws and state
laws in the sale of private-label MBS investments to the
Enterprises between 2005 and 2007. The complaints
were filed under statutory authority granted to FHFA, as
conservator, by HERA, and reflected FHFA’s determination
that the institutions and individuals named in the suits
violated securities laws and common law, causing each
Enterprise to incur significant losses in these private-label
MBS investments.
At the beginning of 2015, two of FHFA’s private-label MBS
lawsuits remained pending: (1) FHFA v. Nomura Holding
America, Inc. in the U.S. District Court for the Southern
District of New York, and (2) FHFA v. The Royal Bank of
Scotland Group, PLC (RBS) in the U.S. District Court for the
District of Connecticut. The district court decided in favor
of FHFA and the Enterprises in the Nomura case in May
and awarded rescissory damages of over $806 million and
required return of the bonds, worth approximately $400
million, to the defendants.
9
FHFA filed 18 lawsuits in 2011. In 2013, FHFA reached settlements with six financial institutions resulting in resolution of five of the original 18 lawsuits and a combined recovery of
nearly $8 billion. In 2014, settlements were reached in 11 of the remaining private-label MBS lawsuits, resulting in the recovery of more than $10.3 billion on behalf of taxpayers.
10 FEDERAL HOUSING FINANCE AGENCY