Investments

Mini-Madoff? SEC accuses Robert Shapiro of running $1.2 billion real estate Ponzi scheme

Allegedly targeted thousands of investors, including many seniors
Late last week, the SEC sued Robert Shapiro, the founder of the Woodbridge group of companies and a well-known luxury real estate developer, for allegedly running a $1.2 billion Ponzi scheme that defrauded more than 8,400 investors by promising high returns on real estate investments.
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Morgan Stanley completes $400M consumer relief obligation for $3.2B mortgage settlement

Settlement required company to provide relief to New Yorkers
Morgan Stanley recently completed its $400 million consumer relief obligation that is part of the $3.2 billion mortgage bond settlement it reached last year. The settlement covers Morgan Stanley’s “deceptive” mortgage bond practices in the run-up to the financial crisis and requires the company to provide consumer relief for New York residents affected by the company’s alleged actions.
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RBS reaches $125 million mortgage bond settlement with California

Settlement covers “misrepresentations” of RMBS sold to state pension funds
Earlier this year, the Royal Bank of Scotland finally reached a $5.5 billion settlement with the Federal Housing Finance Agency over alleged violations of federal and state securities laws in connection with private-label residential mortgage-backed securities trusts purchased by Fannie Mae and Freddie Mac from 2005 to 2007. But RBS’ legacy issues are not done and dusted yet.
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Fannie Mae and Freddie Mac now allowed to hold $3B capital reserve

"Sufficient to cover other fluctuations in income"
The Federal Housing Finance Agency announced each government-sponsored enterprise is now entitled to a $3 billion capital reserve. Also in exchange for the capital cushion change, Treasury gets an additional $3 billion a piece in senior preferred stock. But, there's still a catch.
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Tax reform expected to go into effect immediately

Boost to economy likely temporary
“The president has said he is ready to sign tax reform legislation into law "within hours of passing,” touting tax cuts as a Christmas present for the American people,” predicts Lindsey Piegza, chief economist at Stifel.
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Trump tax reform sets markets up for Santa Rally

Passage expected this week
While the corporate tax cuts will lead to Fannie Mae and Freddie Mac needing some temporary monetary support from the Treasury, there isn’t much downside investors can see to the tax reform. Both the Dow and S&P are up in this morning’s trading.
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Ginnie Mae steps up oversight on refinances

Also, increasing tracking and analysis of prepayment rates
Ginnie Mae is getting the word out that it is actively monitoring the pooling activity of issuers to identify behavior that violates the latest changes to issuer policies. Namely, Ginnie Mae is changing its rules surrounding refinances after an investigation found that some lenders are aggressively targeting servicemembers and military veterans for quick and potentially risky refinances of their mortgages.
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