Federal Housing Finance Agency Director Bill Pulte promised to step up use of the Suspended Counterparties Program via a post on X Friday, which might be a precursor to finalizing a Biden Administration rule.
"I strongly encourage lenders to make sure they have their 'house in order' as we are going to make it a focus to put bad actors on our Suspended Counterparty Program at U.S. Federal Housing FHFA. There is no room for fraud. We will make housing affordable again!" the April 10 post said.
Observers are waiting for more details from the FHFA and Pulte about specifics. National Mortgage News reached out to the FHFA for a comment.
The Community Home Lenders of America is supportive of Pulte's comments, which came days following news of
"CHLA concurs that fraud has no place in our housing finance system — so we support these actions," Scott Olson, the group's executive director, said in a statement.
In September, Pulte's predecessor Sandra Thompson,
The comment period ended in December, with a final rule not yet published.
Right now, approximately 200 names, both companies and individuals, appear on the list, which prohibits Fannie Mae, Freddie Mac and the Federal Home Loan Banks from doing business with them, noted Marty Green, an attorney with Polunsky Beitel Green.
The limited use of the list is one of the things that makes Pulte's comments interesting, he continued.
But the list has not been updated since October, when it added one company, Free Calm And Growing, its owner Dessalines Sealy, and three other individuals in separate actions.
"This may be a precursor to the finalization of that rule, which included expansion of the list to include certain civil penalties that didn't amount to a criminal conviction," said Green.
The original proposal was met with
The Mortgage Bankers Association supported the reproposal, with one recommendation for change regarding the definition of covered misconduct, a December comment letter to FHFA said.
"The re-proposal addresses several of MBA's concerns highlighted in a joint comment letter by distinguishing between misconduct that poses material risk to the safety and soundness of Fannie Mae and Freddie Mac from behavior with less severe impact," the December letter signed by Pete Mills, senior vice president, residential policy and strategic industry engagement.
"We are particularly pleased that FHFA did not move forward with the immediate suspension option and instead retained the current proposed suspension process thus reducing any due process concerns."
But based on Pulte's tenor, could the industry be in for a surprise. "The question is, are they going to repropose something that's broader?" Green asked, adding he doubled it, but that more information is needed.
Progressive group Americans for Financial Reform, a progressive group, was looking for the FHFA's proposal to include more of an emphasis on misdeeds involving multifamily and manufactured housing community loans, said Caroline Nagy, associate director of housing policy.
The Suspended Counterparty Program seeks to provide notice and due process to those involved. But she is also concerned about the lack of details in the posting.
"I could not tell you what fraud the [director] is referring to," Nagy continued. "I imagine his priorities might be different than mine."
The program exists to protect the government-sponsored enterprises, and by extension, the American public, especially given its history as a post-Financial Crisis creation.
How the regulator looks at potential bad behavior has to be above board and putting out a social media post about it, as
"What kind of fraud are we seeing?" Nagy said. "What safeguards do you think the GSEs should implement to prevent this kind of fraud?"
At the end of the day, the Suspended Counterparties Program should remain as "boring" as it is now, she hopes.
Pulte's post about the list is "a good reminder for the industry," Green said. "Don't ignore the list, pay attention to it."
