Lending in the High Tech Age

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Local edition SECONDARY MARKET 2012. It does not release Citi from liability with respect to the bank's servicing or other obligations on the included loans. Also not included is a small population of less than 1,000 loans sold with resource or some guarantee of performance and those currently in the repurchase process. Citi says it is "adequately reserved" for those loans not covered by the agreement. Jane Fraser, CEO of CitiMortgage, said the agreement "marks another important milestone in successfully resolving Citi's remaining legacy mortgage issues." She added that the bank will remain focused on "continuing to provide high-quality ment with the Federal Housing Finance Agency over allegations of misrepresented loans sold to both GSEs. OCC Deputy Stressed Importance of Multifaceted Risk Management The OCC's Darrin Benhart urges lenders to address risk monitoring holistically. WASHINGTON, D.C. // Speaking at an industry conference in Phoenix, Arizona, Darrin The M Report | 63 se c on da r y m a r k e t NEW YORK // Citigroup and Freddie Mac have reached an agreement to settle potential future repurchase claims on millions of loans sold to the GSE in the last decade. Risk management groups today need to be multidimensional, and banks need a culture that promotes risk identification across business lines. Benhart, deputy comptroller for credit and market risk with the Office of the Comptroller of the Currency (OCC), said the changing regulatory environment requires mortgage lenders to consider a number of potential risks on different fronts. "As you well know, the list of mortgage-related reforms is extensive," Benhart said, naming the qualified mortgage (QM) and qualified residential mortgage (QRM) among them. "These reforms mean you will need an even greater emphasis on risk management techniques that not only look at credit risk, but also encompass operational and compliance risk," he said. While in the past, various aspects of risk were often considered and managed individually, Benhart says going forward, it is important for all risks to be monitored in a holistic manner. "Risk management groups today need to be multidimensional, and banks need a culture that promotes risk identification across business lines," he said. Benhart says home equity lines of credit (HELOCs) and collateral valuations are two key areas his office will be watching in the coming year. As the industry focused heavily on loss mitigation during the past few years, Benhart says valuations slipped under the radar somewhat. His office reviewed valuation procedures "in a number of institutions" and found several common problems, including lack of oversight of appraisal management companies (AMCs), inconsistencies in appraisal processes, and inadequate reviews of appraisals and evaluations. "Problems ranged from independence, qualifications, and training of reviewers to the scope and depth of reviews," Benhart said. Overall, Benhart expressed an optimistic outlook for the mortgage industry and economy as a whole, though he added, "we must remain vigilant not to let unmanaged risks slip back into the industry." A na ly t ic s Citigroup agrees to pay to be released on claims for bad loans. mortgage products and service to [its] customers." The agreement is the latest in Citi's efforts to clear up legal issues stemming from the housing collapse. The bank settled with Fannie Mae in July over similar claims and is one of a few banks that have reached an agree- s e r v ic i ng Citigroup, Freddie Mac Settle on Repurchase Claims According to a release from Citi, the bank will pay Freddie Mac $395 million, all of which is covered by its existing mortgage repurchase reserves as of the end of Q2. The agreement covers claims for breaches of representations and warranties on 3.7 million loans sold between 2000 and Or ig i nat ion MICHIGAN. // Ally CFO James G. Mackey will soon be departing to take an executive position at Freddie Mac, the mortgage giant announced. Mackey will join Freddie Mac the week of November 11 to fill the role of EVP and CFO following the departure of Ross J. Kari, who announced last year his intent to retire in the second half of 2013. Mackey joined Ally in 2009. In his tenure there, he led a team of 1,000 finance staff with responsibility for the oversight of the company's financial analysis, controls and reporting, accounting, business planning, and investor relations. Prior to that, Mackey served as CFO for the Corporate Investments, Corporate Treasury, and Private Equity divisions at Bank of America. He began his career in 1992 at Pricewaterhouse Coopers LLP, where he served as a manager in the Financial Institutions Practice Group. "The board of directors and I are very pleased that Jim is joining Freddie Mac as CFO at a crucial time in the company's life," said Freddie Mac CEO Donald Layton. "Jim brings an impressive track record of success in helping a company deal with significant change, including a situation somewhat similar to the conservatorship under which we now operate. This will prove extremely valuable to Freddie Mac as we work to succeed both while in conservatorship and in the future."

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