This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Bank of America, Fannie Mae Up Blame Game

Stocks in this article: BAC FNMA.OB

NEW YORK ( TheStreet) -- Fannie Mae (FNMA.OB) claims it decided to terminate its contract with Bank of America (BAC - Get Report) and not the other way around.

In a statement announcing its results, the housing finance giant said it decided to cut off Bank of America from selling most types of loans at the end of January after the bank failed to honor its repurchase requests in a timely manner.

Fannie said that Bank of America, which accounted for 52% of Fannie's outstanding repurchase requests as of December 2011, measured by unpaid principal balance, slowed the pace of its repurchases. As a result, Bank of America's delays, the bank accounted for 59% of repurchase requests outstanding for more than 120 days, up from 28% in the third quarter of 2011 and 37% in the year-ago quarter.

"Fannie Mae is taking steps to address Bank of America's delays in honoring Fannie Mae's repurchase requests. For example, Fannie Mae did not renew its existing loan delivery contract with Bank of America at the end of January, which significantly restricted the types of loans they can deliver to Fannie Mae," the GSE said in its statement.

It went on to add that it has not changed its estimates of how much it expects to ultimately collect from Bank of America and continues to work with the bank on these issues.

If it collects less than estimated from Bank of America, Fannie Mae may have to seek additional funds from the Treasury.

That would be in addition to the $4.571 billion the mortgage finance giant just requested, to bridge its networth deficit, after it posted a fourth quarter loss of $2.4 billion and a 2011 loss of $16.9 billion.

Further, Fannie said that the change in contract will not have a material impact on its results or operations as Bank of America represented less than 5% of Fannie Mae's loan delivery volume in the fourth quarter.

Bank of America said in its annual report that it will no longer sell loans to Fannie Mae , citing its differences over repurchase claims. "The non-renewal of these contractual delivery commitments and variances was influenced, in part, by our ongoing differences with FNMA in other contexts, including repurchase claims."

While the overall statement indicated that the termination was mutual, most industry observers had interpreted the bank's move as an aggressive step in its battle with the GSEs over repurchase claims.

Readers Also Like:

-- Written by Shanthi Bharatwaj in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs