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Volume 15 - Number 2

January 16, 2015

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Nonbanks Continue Claiming Larger Share of GSE Business

If 2015 is anything like 2014, Fannie Mae and Freddie Mac will be getting over half of their single-family business from nonbanks by the end of the year. A new Inside The GSEs analysis of loan-level mortgage-backed securities data reveals that nonbanks accounted for 44.8 percent of Fannie/Freddie MBS issued in the fourth quarter of 2014. That was up from a nonbank share of 37.2 percent during the fourth quarter of 2013 and just 28.1 percent back in the first quarter of that year. As a group, nonbank sellers increased their total GSE sales by 2.9 percent from the third quarter to the fourth quarter, while the overall market declined by 2.1 percent. The biggest ... [with two exclusive charts] ...

Fannie, Freddie Winding Down Their Servicing Advances?

It appears that Fannie Mae and Freddie Mac may be slowly backing away from making large servicing advance facilities to certain nonbank customers. In a recent filing with the Securities and Exchange Commission, Green Tree Servicing said it amended an existing facility it had with Barclays Bank, increasing the line to $1.2 billion from just $100 million. A subsidiary of Walter Investment Management, Green Tree then turned around and repaid Fannie Mae some $765 million on the outstanding balance of an existing advance facility. It’s unclear how large Fannie and Freddie are in the advance market, but one servicing advisor had this to say on the topic: “Fannie is the largest lender of servicer advances in the business simply through ...

FHFA 2015 Scorecard Reflects Minor Shifts for Fannie, Freddie

The Federal Housing Finance Agency threw a few new wrinkles into its 2015 marching orders for Fannie Mae and Freddie Mac while sticking to major themes from 2014. Under the broad heading of maintaining credit availability, the two GSEs are expected to finish making improvements to their representation-and-warranty framework regarding loan originations, as well as continue clarifying their expectations regarding servicer performance and remedies. A new assignment for Fannie and Freddie is to assess the use of alternative credit scoring models, including operational and systems issues. The GSEs are expected to be ready to implement new duty-to-serve requirements when the FHFA implements a final rule. The Housing and Economic Recovery Act of 2008 directed the agency to issue regulations describing ...

White House Talks Up GSE Reform, Lawmakers Show Little Interest

The subject of cutting FHA premiums sucked up most of the oxygen in the room when President Barack Obama spoke about housing issues last week in Phoenix. However, the president also discussed the fate of Fannie Mae and Freddie Mac; he and the White House reiterated some core principles for GSE reform the president would like to see taken up in the 114th Congress. Although it is still early, the initial indications of interest from lawmakers were less than inspiring. “The president continues to strongly support long-term housing finance reform through legislation that requires private capital to take the risks and rewards in mortgage lending while preserving broad and affordable access for all creditworthy families,” the White House said in ...

FHLBanks Oppose FHFA’s Proposal on Membership

The Federal Home Loan Banks have mounted strong opposition to a proposal from the Federal Housing Finance Agency that would revise standards for membership in the FHLBank system. “The proposed rule, if finalized, will fundamentally alter the FHLBanks’ relationship with their members and impair the FHLBank system’s ability to advance its congressionally-mandated mission of providing liquidity to support housing finance markets and the U.S. financial markets generally,” said John Bowman, a partner at the Venable law firm, in a comment letter submitted on behalf of the Council of FHLBanks. The FHFA issued the proposed rule in September and the comment deadline closed this week. More than 1,200 comments were submitted with community banks, real estate investment trusts, state regulators and ...

Fannie Looking at Improving ‘As Soon As Pooled’ Program

Fannie Mae is looking to improve the efficiencies and systems that drive its “As Soon As Pooled” program, the secondary market giant confirmed to Inside The GSEs. A spokesman for Fannie said no major changes are planned, especially regarding eligibility requirements, which is good news for the small to medium-sized lenders that use it. “ASAP is something we have been looking at,” he said. “The focus is on how we can make it better. But I can’t offer you any timetables.” ASAP is essentially an early delivery program. It allows lenders to fund loans closer to origination – up to 60 days before they are delivered to Fannie.For nonbank lenders that use warehouse lines of credit, the cost savings can ...

Will Fannie’s New Appraisal App Raise Costs, Bog Down Closings?

Appraisers and real estate agents are anxiously eyeing Jan. 26, the day Fannie Mae rolls out its “dreaded” Collateral Underwriter system, an automated risk assessment of appraisals that returns a risk score, flags and messages to the submitting lender. Reports that CU will drive up appraisal costs and slow closings are spreading fear among appraisers and real estate agents despite Fannie’s assurances to the contrary. With CU, lenders can return and challenge appraisals and demand changes to avoid any potential repurchase demand, according to a Connecticut-based residential mortgage specialist, who requested anonymity. “CU will provide up to 20 comparables, and appraisers will have to defend the comps that they use,” she explained. “You’re looking at adding a week or two ...

Critics Oppose Using GSE Revenue To Fund Affordable Housing

Although the Federal Housing Finance Agency’s interim final rule is about prohibiting Fannie Mae and Freddie Mac from passing on the cost of Housing Trust Fund allocations to lenders, critics used the comment period to lambast the FHFA for allowing the allocations in the first place. “I don’t believe a company that is 100 percent shareholder-owned should give money to a charity before paying shareholders a dividend,” said Joe Johnson, affiliation undisclosed. “If Fannie and Freddie were released from conservatorship and were able to keep their own profits, then it would be fine to use them to fund the affordable housing fund.” Chris Roberts, affiliation also unknown, believes the FHFA’s action is a clear violation of the mandate to place ...

GSE Roundup

FNMA SVC-2015-01. Jan. 14, 2015. Fannie announced it has incorporated updates on compensatory fees and the MyCity program into its servicing guide. FNMA SVC-2015-02. Jan. 14, 2015. Fannie amended policies related to deferred payment obligations and repurchase prices or make-whole payments, as well as calculation of indemnification claims for loss of mortgage insurance benefits. The new requirements relate to non-bifurcated mortgages and insurer deferred payment obligations. For loans subject to a repurchase demand or make-whole payment for breach of selling reps and warranties, the servicer must remit the full amount, the notice makes clear. ...


The FHA is cutting its annual premium by 50 basis points. How much of a difference will this cut make in your FHA business?

Not much at all—maybe 10 percent at best.
Modestly. We expect a 10 percent to 25 percent gain in applications.
This is a real game changer, 25 percent or better.
Hard to say. This cut may just steal business away from the new Fannie/Freddie 97 LTV effort.

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