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Fannie Mae and Freddie Mac shareholders have lost another court decision in their efforts to overturn an agreement that allows the Treasury Department to capture most of the government-sponsored enterprises' (GSE) profits, NationalMortgageNews.com reported on Friday. A U.S. District Court judge in Kentucky ruled that the Federal Housing Finance Agency did not exceed its authority in entering into an agreement with Treasury in 2012 that sweeps the GSEs' profits into the U.S. Treasury. The decision handed down by Chief Judge Karen Caldwell builds on a decision in Perry Capital LLC v. Treasury Secretary Jack Lew. The 2014 decision brought by hedge fund Perry Capital was the first setback for private shareholders who are suing the government. In Arnetia Joyce Robinson v. FHFA, the GSE shareholders contended that FHFA has failed to rehabilitate the two mortgage companies and said a net worth sweep of the GSEs' quarterly profits will lead to a "nationalization of the two companies."

Deutsche Bank AB is pushing back against the U.S. Justice Department’s demand that it pay $14 billion to settle high-profile probes into its packaging of mortgages in the run-up to the financial crisis, MarketWatch.com reported today. The German bank confirmed on Thursday that it has kicked off negotiations with the U.S. agency over the proposed charges, after the <em>Wall Street Journal</em> reported the proposed settlement Thursday. The Justice Department’s investigations are connected with the bank’s issuance and underwriting of residential mortgage-backed securities between 2005 and 2007. In January, the Justice Department settled mortgage-related claims with Goldman Sachs Group Inc. for $5.1 billion, while JPMorgan Chase & Co. was fined $13 billion in 2013.

Mortgages to borrowers with spotty credit histories have yet to come roaring back from the financial crisis, but they are on the rise at the private equity giant Lone Star Funds, the New York Times reported today. Its wholly owned mortgage business, Caliber Home Loans, is one of the few financial firms to report a significant percentage increase this year in the dollar value of subprime mortgages it is managing and servicing for homeowners. Most of the subprime mortgages at Caliber are “legacy” loans, those issued before the housing bust, which Lone Star acquired from banks and federal agencies. For the second time in three months, Lone Star, which was founded by the billionaire investor John Grayken in 1995, has indicated that it is on the verge of bringing to market a mortgage securitization backed mainly by newly issued mortgages to borrowers with troubled credit histories. Many of the nonprime mortgages bundled into the bond offerings were written by Caliber in the last two years. Lone Star and Caliber sold a similar but smaller bond offering last year.

PricewaterhouseCoopers (PwC) has settled a lawsuit accusing the auditing firm of failing to detect the fraud that brought down Taylor, Bean & Whitaker Mortgage Corp. in 2009, a lawyer for the mortgage lender's bankruptcy trustee said on Friday, Reuters reported. The settlement ends a civil trial in Miami-Dade County Circuit Court in Florida in which the trustee had sought more than $5.5 billion in damages from PwC. Terms are confidential, a lawyer for the trustee said. The case stemmed from PwC's auditing work for Montgomery, Ala.-based Colonial BancGroup Inc, where Taylor Bean, among the nation's largest privately held mortgage lenders, was a major customer. The lawsuit accused PwC of missing a massive fraud in which Taylor Bean Chairman Lee Farkas and others hid losses by shuffling money among Colonial accounts and by selling nonexistent or worthless mortgages. Taylor Bean filed for bankruptcy in August 2009. Colonial filed for bankruptcy that same month, days after regulators seized its banking operations. It was the sixth-largest bank failure in U.S. history.

A new report released yesterday by the U.S. Census Bureau that shows that more new homes were sold in July than in nearly a decade, the New York Times DealBook blog reported. Buyers purchased single-family houses at the annual rate of 654,000, the highest rate since October 2007, the government said. That is 31 percent higher than a year earlier. Those numbers are volatile and include a wide margin of error, but combined with other evidence, the United States housing market seems to be solidly on the mend in 2016. Builders have started work on new housing units at a pace of more than 1 million homes a year every month since April 2015, more than doubling from a low of 478,000 in the spring of 2009. In the new Census Bureau report, the median sale price for new homes actually fell, to $294,600 from $310,500 in June.

Freddie Mac shareholders cannot force the mortgage finance company to allow them to inspect its records, a federal court ruled yesterday, the Wall Street Journal reported today. The U.S. District Court for the Eastern District of Virginia yesterday dismissed a lawsuit brought by Timothy Pagliara, a shareholder of Freddie Mac. Pagliara had asked the court to order Freddie to allow him to inspect its books and records. Virginia law gives shareholders of companies the right to inspect company records so long as they have a legitimate purpose for doing so. Freddie Mac was chartered by the federal government but it is subject to Virginia corporate law. The court held that Freddie shareholders no longer possess a right to inspect the company’s records because those rights had been transferred to the Federal Housing Finance Agency when the company entered into conservatorship in 2008.

The U.S. Justice Department said on Friday that a Georgia real estate investor pleaded guilty to charges of fraud in a bid-rigging scheme involving public foreclosure auctions, MorningConsult.com reported. Otto Gogolin admitted that he agreed not to bid against other investors at public real estate foreclosure auctions in a scheme spanning from 2008 to 2011, the Justice Department said in a statement. Gogolin and others suppressed prices at public foreclosure auctions, exchanged payoffs with each other and defrauded the banks in charge of the mortgage notes, DOJ said, citing documents filed in federal district court in northern Georgia. The court documents also allege that Gogolin and his associates secretly re-auctioned properties obtained through bid rigging and pocketed proceeds that would have been used to pay off the mortgages and other debts, or in some cases would have gone to the previous foreclosed homeowners, according to DOJ.

A former senior trader at Goldman Sachs has agreed to pay $400,000 and be barred from the securities business for at least two years for misleading customers into paying more for residential mortgage-backed bonds in the years after the financial crisis, the New York Times DealBook reported yesterday. The former trader, Edwin Chin, was fired from Goldman in 2012, when he was running its residential mortgage-backed securities trading desk and was its most active trader in the securities. In his work, Chin negotiated transactions for hedge funds and other clients that were buying and selling the bonds, sometimes out of Goldman’s own holdings. In a civil settlement announced yesterday, the Securities and Exchange Commission said that Chin had repeatedly abused his duty as an intermediary to increase Goldman’s trading profits, and thus, indirectly, his own compensation.