U.S. housing finance companies Fannie Mae and Freddie Mac are making riskier deals as they increasingly purchase mortgages from smaller lenders, a federal watchdog said on Thursday.

The government-owned companies do not lend money directly, but underpin the U.S. housing market by guaranteeing most new mortgages in the country.

The Federal Housing Finance Agency Office of Inspector General said in a report that the purchases from smaller lenders raises the exposure of the two companies.

“Smaller and non-bank lenders may have relatively limited financial capacity,” the watchdog said. “The enterprises face an increase in the risk that those counterparties could default on their financial obligations.”

Read on.

Great job exposing this, Propublica! And yes, any politician, regardless of political party, can be brought and paid for and lose his or her integrity.

Howard Glaser was brought on to help then-Attorney General Andrew Cuomo on his mortgage industry investigation. Glaser was working for the industry at the same time.

A version of this story was co-published with the Albany Times-Union.

In early 2007, when he was New York State attorney general, Andrew Cuomo brought on a longtime confidant as a consultant on mortgage industry investigations, a move that has gone undisclosed until now.

Glaser, who went on to become a top state official in Cuomo’s gubernatorial administration, was operating a lucrative consulting firm, the Glaser Group, with a host of mortgage industry clients.

Later…

WASHINGTON, July 16 (Reuters) – The Republican-led U.S. House of Representatives on Wednesday passed a bill to slash funding for Wall Street oversight and revamp new agencies dedicated to cracking down on fraud against consumers and policing risks after the financial crisis.

The $21.3 billion funding bill, which covers appropriations for the 2015 fiscal year beginning Oct 1 for financial services and other areas of government, passed the House in a 228 to 195 vote along largely partisan lines.

The Democrat-controlled Senate is not expected to approve the bill as it is now.

Earlier this week, the White House said that President Barack Obama “strongly opposes House passage” of the appropriations bill and would veto it if the legislation reached his desk.

House lawmakers have been crafting separate spending bills for various parts of the government, but the Senate has not passed any spending measures.

If the two chambers cannot…

Too many homeowners are falling through the cracks

Imagine you are a homeowner, on the verge of losing your home. You receive a letter from your servicer, notifying you that under a settlement, you’re eligible for a principal reduction of $150,000, which would help keep you in your home. There’s just one problem- the offer is in a language you don’t understand.

This is a true story about a homeowner in East LA who nearly missed out on this principal reduction modification until he worked with a housing counselor from the East LA Community Corporation, who spoke his language. While this story has a happy ending, we’re concerned that too many other homeowners are falling through the cracks.

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Law360, New York (July 16, 2014, 11:56 AM ET) — American International Group Inc. said Wednesday that it has reached a global settlement worth at least $650 million of all its claims against Bank of America Corp. and its affiliates over the sale of faulty residential mortgage-backed securities.

The deal resolves lawsuits pending in California and New York federal courts stemming from AIG’s direct losses at the hands of Bank of America’s marketing of RMBS and in connection with AIG’s securities lending program, according to statements from both companies.

AIG has also agreed to drop its..

Source: Law 360

Bank of America’s (BAC) mortgage-related litigation costs are something the banking giant wants to put behind it, but good luck with that, because it’s only going to get worse before it gets better.

Read on.

Bank of America illegally copied US$300 million worth of Tibco’s enterprise software for use in a massive IT project at its Merrill Lynch subsidiary, Tibco alleges in a lawsuit.

The bank stockpiled large quantities of Tibco software while it was still within the terms of a license agreement that expired in February 2013, then used the software for the project when it was out of license, according to the suit.

As of Tuesday, Bank of America hadn’t filed a response to Tibco’s suit, which was filed last month in the U.S. District Court for the Northern District of California. But a spokesman said the bank had done nothing wrong.

“We have a long history of positive relationships with our third party partners,” spokesman Mark Pipitone said via email. “In accordance with that, we have acted in good faith to observe the scope of Tibco’s license at all times, and we…