The new CEO of Fannie Mae will not be the decision maker on resolving repurchase issues between the GSE and Bank of America (BAC).
Fannie Mae severed some business ties with the bank late last year. The two sparred over defaulted mortgages Fannie forced BofA to buyback. The bank believed a multi-billion dollar settlement in 2010 covered recent claims, which Fannie denies.
Fannie promoted its general counsel Tim Mayopoulos to CEO on Tuesday. He was formerly the top lawyer at BofA and left shortly after the controversial merger with Merrill Lynch.
“My plan is to recuse myself with respect to matters that I had personal involvement in at Bank of America,” Mayopoulos said in an interview with HousingWire. “As CEO I will be aware of all of the major issues at Fannie Mae, and I will be working to ensure that people will be working on those issues and dealing with them appropriately, but I’m not going to be a decision maker with respect to matters that I had involvement in at Bank of America.”
As of March 31, BofA faces more than $3 billion in buyback requests aged at least 120 days, dwarfing the nearest bank JPMorgan Chase (JPM) with $1.7 billion in severely aged claims, according to the Fannie Mae financial filing.
“Clearly one of the things that we at Fannie Mae need to do is work through our differences with BofA,” Mayopolous said.
Still, the bank remains Fannie’s largest mortgage servicer, and it continues other functions with the GSE such as its participation in the Home Affordable Refinance Program and other initiatives.
Mayopolous said a team of top executives at Fannie will be handling decisions on the repurchase issue, including his chief risk and financial officers.
Fannie itself may be turning around. In the first quarter, it secured its first profit since entering conservatorship nearly four years ago. It remains the largest mortgage financier in the country, albeit at a price.
Fannie alone drew $116.1 billion from the Treasury Department so far and paid back $22.6 billion in dividend payments.
“I’m not naïve. I understand this is a very difficult and challenging job. I’ve been here for the last three years. I understand the challenges in front of me,” Mayopolous said. “I’m honored to lead an organization that is as critically important as Fannie Mae and an organization that helps as many Americans as we do. I think sometimes people lose sight of that as people talk about the trillions and billions of dollars of loans that we deal in.”
He added he intends to see the company through to whatever the next phase for housing finance will be.
“I don’t know how long conservatorship will last. That’s going to be a function of policymakers and their decision process,” Mayopoulos said. “I took this job with the expectation that I would be here for a while and knowing that we have a lot of important work ahead of us.”
