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The Trump administration is preparing to release as early as the first part of September its long-awaited plan to return Fannie Mae and Freddie Mac to private-shareholder ownership, the Wall Street Journal reported. The proposal comes more than a decade after the government seized the mortgage-finance firms to save them from collapse. It would likely seek to put the companies on a sounder financial footing and then release them from government control if Congress doesn’t enact a more fundamental overhaul in the meantime. The plan, which could be floated shortly after the Labor Day holiday, is expected to envision a version of what has been called “recap and release,” which would ensure the firms have adequate capital to absorb loan losses in a future housing slump. Its provisions aren’t expected to give details for initial public offerings for the firms. If the proposal is carried out, the firms could ultimately return to the way they operated before the financial crisis. While administration officials would prefer that Congress act on a more sweeping overhaul of housing finance, Republican control of the Senate and Democratic control of the House leaves lawmakers unlikely to act. The firms are unlikely to face new competition because only Congress can create a more-level playing field that could break up the firms’ effective duopoly.

More than a decade after home loans triggered the worst financial crisis in a generation, the strict lending requirements put in place during its aftermath are starting to erode, the Wall Street Journal reported. Home buyers with low credit scores or high debt levels as well as those lacking traditional employment are finding it easier to get credit. The loans have been rebranded. Largely gone are the monikers subprime and Alt-A, a type of mortgage that earned the nickname “liar loan” because so many borrowers faked their income and assets. Now they are called non-qualified, or non-QM, because they don’t comply with post-crisis standards set by the Consumer Financial Protection Bureau for preventing borrowers from getting loans they can’t afford. Borrowers took out $45 billion of these unconventional loans in 2018, the most in a decade, and origination is on track to rise again in 2019, according to Inside Mortgage Finance, an industry research group. Such mortgages aren’t guaranteed by government agencies and typically charge higher interest rates than conventional loans. Proponents of unconventional loans argue that mortgages became too hard to get in the aftermath of the crisis and that their proliferation will open the housing market to sound borrowers who had been shut out of it. But some worry that the competition for customers could drive lenders to loosen standards too much.

Tenants of 12 rent-stabilized buildings in northeast Brooklyn want a bankruptcy court to appoint a trustee that would oversee buildings they say are plagued by chronic leaks, mold and infestations, Crain's New York Business reported. The tenants, who rallied yesterday outside of federal bankruptcy court in Downtown Brooklyn, say that they have been failed by the nonprofit that manages the building, Northeast Brooklyn Housing Development Corp. (NEBHDCo.) The dozen buildings are owned by three companies — Park Monroe HDFC, Northeast Brooklyn Partnership LP, and 984-988 Green Avenue HDFC — run by NEBHDCo. The CEO of the nonprofit, Jeffrey Dunston, was named the second-worst private landlord in the city on the Public Advocate’s 2018 rankings, with 1,345 violations among 231 apartment units. Requests for comment from the nonprofit were not immediately returned. The buildings in Brooklyn have blocked fire exits, doors that don’t lock, collapsed ceilings and rats, bed bugs and roaches, tenants say. With the building’s ownership sorting through a chapter 11 bankruptcy, the counsel for the tenants says it is time for a court-appointed trustee to help repair the buildings.

Fannie Mae and Freddie Mac, two mortgage-finance firms that back nearly half of U.S. mortgages, will have to consider credit-score alternatives to Fair Isaac Corp.’s FICO score when determining a mortgage applicant’s creditworthiness, under a new rule issued yesterday by the mortgage-finance giants’ federal overseer, the Wall Street Journal reported. The move by the Federal Housing Finance Agency is seen as a win for VantageScore, a credit-score system by VantageScore Solutions LLC, which is owned by the three large credit-reporting firms: Equifax Inc., TransUnion and Experian PLC. “One of my priorities is to ensure that the American people have a safe and sound path to sustainable homeownership, which requires tools to accurately measure risk,” FHFA Director Mark Calabria said in a written statement. The new rule “is an important step toward achieving that goal,” he added. Regulatory rollback legislation signed into law last year required the FHFA to set new standards for Fannie Mae and Freddie Mac to approve credit-score models.

Los Angeles’ priciest-ever real estate listing, a 157-acre Beverly Hills parcel known as “The Mountain,” is scheduled to be sold at auction on Thursday, the Wall Street Journal reported. The vacant parcel with sprawling views of the L.A. basin, also known as “The Vineyard,” was listed for $1 billion last year, but the price has since been lowered to $650 million. The property has drawn interest from a number of Hollywood celebrities and business titans over the years. In recent months, Amazon chief executive Jeff Bezos has scoped out the property several times as an investment opportunity, though a source close to Bezos said the e-commerce billionaire has determined that it was overpriced. The upcoming auction follows a failed attempt by the current owner, a limited liability company known as Secured Capital Partners, to secure chapter 11 protection. A U.S. bankruptcy judge in Los Angeles dismissed the company’s petition last month, seeking to put an end to years of litigation and setting the stage for a foreclosure. The company has accumulated more than $200 million in debt on the property, according to court filings, though the borrower has disputed that amount.

The Department of Housing and Urban Development (HUD) approved Tuesday an agreement to settle allegations that a bank led by Treasury Secretary Steven Mnuchin and a top Trump-appointed bank regulator violated federal lending discrimination laws, The Hill reported. HUD announced on Tuesday that it approved a settlement between CIT Bank and a California fair lending nonprofit over claims that the bank’s subdivision, OneWest Bank, discriminated against black and Latino customers in the Los Angeles area. The allegations, made in a 2017 complaint to HUD by the California Reinvestment Coalition, cover conduct that occurred while Mnuchin and Joseph Otting, who Trump appointed to lead the Office of the Comptroller of the Currency, led the bank. The California Reinvestment Coalition accused OneWest of refusing to offer mortgages, market banking services and operate branches in majority-minority neighborhoods in Los Angeles between 2014 and 2017. The practice, known as “redlining,” is illegal under federal law. CIT Bank did not admit to the allegations in the complaint, but agreed to offer $100 million in mortgages and home loans in majority-minority neighborhoods, invest $5 million in other loan subsidies, spend $1.3 million on advertising and community outreach and provide $1 million in grants for financial education counseling.