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Volume 16 - Number 28

January 13, 2017

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Fannie Gained Share in Surging GSE 1-Family Business of 2016

Heavy refinance activity at the end of the year lifted single-family business at Fannie Mae and Freddie Mac to a three-year high in 2016, according to a new Inside The GSEs analysis and ranking. The two firms guaranteed $973.72 billion of single-family mortgage-backed securities during 2016, up 18.1 percent from the previous year. That included a 5.7 percent increase from the third to the fourth quarter that was fueled by a 24.5 percent jump in refi loans delivered into new GSE MBS. While both companies saw solid gains from 2015 activity, Fannie’s 23.3 percent increase was more than double the 11.0 percent rise in Freddie volume. [includes two charts]

GSE Reform Outlook Optimistic, Questions Remain

Although the question of when the conservatorship status of the GSEs will be resolved is still up in the air, a new administration has many speculating that change is on the horizon for Fannie Mae and Freddie Mac. The November election gave Republicans both houses of Congress and the executive branch. This seemed to lend itself to more talks on when and how to reform the GSEs as they approach close to a decade in conservatorship. But, while the sentiment to do something is apparent, agreeing on the best path forward is a different story. And, as in the past, there is no shortage of competing thought processes and proposals.

Investors Unite Hopes Privatization Leads to Shareholder Fairness

With increased talk of privatizing Fannie Mae and Freddie Mac, Investors Unite wants reassurance that shareholders will be treated fairly. The GSE shareholders rights trade group said, “Now everybody is talking about ending the conservatorship,” in a recent blog posting. While that may be an exaggeration, since the presidential election there has been a renewed interest in bringing the GSEs out of its eight-plus years conservatorship, where they’ve been since September 2008. Recent talks began with and snowballed after Treasury-secretary designee Steve Mnuchin said that getting the GSEs out of government control would be a top priority for the new presidential administration. And Mnuchin said that he plans to do this “reasonably fast.”

Real Estate Investors Optimistic About GSE Quarterly Meeting

Fannie Mae invited several real estate investors to its first quarterly meeting of the year this month to discuss single-family rental loans. Tom Wilson of Wilson Investment Properties and Bruce Norris of the Norris Group attended and spoke from the investor’s perspective on single-family rental loans, which have become harder to obtain since the housing downturn. Wilson said that as a result it’s been more difficult for investors and landlords to be “economically motivated” to provide sufficient housing. Discussions at the meeting with the two California-based real estate investors centered on Fannie’s limit on the number of loans to a...

Fannie Mae Makes Changes to Simplify Investor Reporting

Fannie Mae is eliminating the mortgage-backed securities call-in requirement in preparation for the upcoming integration with the Common Securitization Platform. The change is part of several modifications to the GSE’s investor reporting requirements that servicers must implement by Feb. 1 when reporting borrower activity. The GSE referred to the MBS call-in as a “non-industry standard and redundant practice” that requires servicers to report their monthly pool balances for MBS swaps and loan activity data reports. In addition to preparing servicers for when Fannie integrates with the CSP, the change will help simplify policies and procedures. “Fannie Mae can rely on existing loan level data from servicers to drive security balance processing. Servicers will no longer have...

FHLBanks to Expand Diversity and Inclusion Program, Other Changes

The Federal Home Loan Banks Office of Finance announced changes this week to some of their debt programs and said they will allow more securities dealers to participate in their diversity and inclusion program. The FHLBank is planning to incorporate other aspects of diversity, beyond what’s already been established, in order to help expand the scope of dealers eligible to participate in the program. The first change went into effect Jan. 10 when the minimum new issue par amount for negotiated callable bonds decreased. That number will drop from $15 million to $10 million when diversity and inclusion dealers participate in the underwriting group.

Treasury Dept. Talks Housing Progress and New Goals

As the guard prepares to change in a week, Treasury Secretary Jacob Lew said in an exit memo released last week that only legislation can comprehensively address “the ongoing shortcomings of the housing finance system.” In the memo, Lew documents the Treasury’s progress over the last eight years and outlines his goals for the future of the department. He said that fixing the housing finance system remains the major unfinished piece of work of post-financial crisis reform. While he said the housing market has improved, Lew acknowledged that many homeowners and neighborhoods continue to struggle. “A starting point for such legislation should be the principles President Obama laid out in 2013, which stressed a clearly-defined role for the...

IG: FHFA Should Better Manage Nonbank Servicer Risks

A recent audit showed that the Federal Housing Finance Agency needs to do a better job at managing nonbank risks such as mortgage servicing transfers. In response, the FHFA said it will finalize a risk-based proposal to examine how well the GSEs manage that and other risks by the end of this month. The FHFA’s Inspector General said that the agency has not made sure that both Fannie Mae and Freddie Mac are tackling potential risks. The IG noted that out of three advisory bulletins issued that addressed nonbank servicer risk, one of the GSEs only complied with one of the bulletins.The heavily redacted report doesn’t mention which GSE failed to comply with the bulletins, but a...

Developers Seek Ideas for Fannie Headquarters Once Vacated

As Fannie Mae prepares to vacate its iconic headquarters with a move to downtown Washington in 2018, the buyers of the colonial-style building are mulling over plans on what to do with the four-story, close to 250,000 square-foot property. Roadside Development, in a partnership with Sekisui House, bought the building situated on about 10 acres last month.Before making plans on what to do with the property, Roadside is seeking public input in the form of community meetings and online outreach. Roadside founding Principal Richard Lake said the firm wants to sit with the community and spend time with them to get ideas, just as they did in other nearby development projects.

GSE Roundup

Moody’s says HAMP Replacement Program Credit Neutral for CRTs. The GSEs’ new Flex Modification foreclosure prevention program that will replace the expired Home Affordable Modification Program has a neutral credit impact on GSE risk-risk transfer deals. Moody’s said that the volume of modifications and the re-default performance under the Flex program will be comparable to modification levels and performance under the current programs. The firm also noted that the new program will not result in increased modification volume. Servicers have until Oct. 1, 2017, to implement the new program. Freddie’s Recent ACIS Transaction. Last week, Freddie Mac announced its last Agency Credit Insurance Structure of 2016 in the form of a $285 million offering. The GSE said it...

Poll

HUD has announced a 25 basis point cut in FHA premiums, which is slated to take effect in late January. Is your lending shop for or against a cut in FHA premiums?

For. It should help lending volumes.
Against. The private MI sector should take on this risk, not the government.
Too early to say.
I believe the new White House may scuttle the idea so it doesn’t matter.

vote to see results