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Volume 16 - Number 15

July 22, 2016

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Nonbanks Continue Gaining Market Share in Servicing

Large depository institutions continued to let their servicing portfolios of loans pooled in Fannie Mae and Freddie Mac mortgage-backed securities slowly decline in the second quarter of 2016. A new Inside The GSEs analysis shows that banks, thrifts and credit unions still accounted for the lion’s share of GSE MBS servicing at the end of June. Depositories serviced $2.778 trillion of Fannie and Freddie single-family loans tied to MBS, or 66.6 percent of the total market. But that was down 0.9 percent from the previous quarter during a period when the total servicing of GSE single-family MBS edged slightly higher. Nonbanks, however, .... [includes two charts]

GOP Platform Released, Seeks to Limit Fed Involvement in Housing

This week, the Republicans adopted their official platform and called the GSE conservatorship a “corrupt” way of doing business. The GOP said the Great Recession devastated the housing market and caused taxpayers to pay billions of dollars to rescue Fannie Mae and Freddie Mac. They blame Democrats in Congress and the Obama administration for preventing efforts to reform the GSEs since they’ve been in conservatorship. “Their corrupt business model lets shareholders and executives reap huge profits while the taxpayers cover all loses,” the platform said. While vague in taking a stance on what should be done with Fannie and Freddie, the platform simply stated that the utility of both agencies should be “reconsidered.”

FHFA, GSE Concerns with PACE Loans Continue to Loom

The Federal Housing Finance Agency remains resistant to taking on Property-Assessed Clean Energy loans despite this week’s announcement that the FHA will allow PACE loans. PACE programs provide financing for home energy improvements and water conservation, repaid through an assessment added to the property’s tax bill. FHA’s new guidance addresses state programs where the PACE obligation is treated like a property tax with priority over an FHA mortgage lien.However, like other mortgage industry critics of PACE loans, FHFA Director Mel Watt, said he continues to have “serious concerns” with how PACE programs are financed.

Trade Groups, Congress Seek to Squash URLA Language Question

Trade groups and a long list of Congressmen are crying foul and urging the Federal Housing Finance Agency to not include a question asking borrowers’ language preference on its new Uniform Residential Loan Application. The FHFA, along with Fannie Mae and Freddie Mac, are considering adding the question as a last- minute addition to the URLA. However, in June, nine trade groups, including the American Bankers Association, Consumer Mortgage Coalition and Mortgage Bankers Association, wrote FHFA Director Mel Watt to voice their concerns, many of which focused on compliance and discrimination issues. They argued that a language preference question requires lenders to ask borrowers sensitive questions before...

FHFA's Principal-Reduction Map Shows FL, NJ Most Eligible States

Last week, the Federal Housing Finance Agency released a map highlighting eligible borrower locations for its principal-reduction program and instructed servicers to begin soliciting borrowers. The interactive map highlights where the most eligible borrowers are located for its new principal reduction option for loan modifications. The number of borrowers eligible to take advantage of the program has declined some. When it was announced in April, the FHFA estimated that 33,622 borrowers would be eligible, but it has since lowered that estimate to 30,000. The FHFA attributes the reduction to a “continuously evolving housing market” that may have improved in some areas.

Lawmakers Request Outside Review of FHFA-OIG

Two senators are questioning the effectiveness of the Federal Housing Finance Agency’s watchdog, the Office of the Inspector General, in light of staff cuts in the Office of Audits over the past two years and money spent to hire outside attorneys and employees. Sens. Charles Grassley, R-IA, and Ron Johnson, R-WI, penned a letter late last month to the Council of Inspectors General on Integrity and Efficiency requesting an outside review of the FHFA OIG. Prior to the letter to the CIGIE, which monitors the integrity of the IG office, Grassley has sent several letters to FHFA OIG’s Laura Wertheimer since last October regarding organizational changes made under her leadership.

Low-Downpayment Programs Quietly Returning to Market

A growing number of lenders are partnering with Fannie Mae and Freddie Mac to offer low downpayment products requiring as little as 1 to 3 percent down. Many were announced without much fanfare and this has created a quiet comeback of sorts, according to Deutsche Bank.So far, seven lenders, including three large traditional banks, have introduced programs this year. Although the GSEs cap their high loan-to-value products at 97 percent, some lenders step in and subsidize the extra funds needed to make up the difference to help cash-strapped borrowers. The GSEs began offering their 97 percent LTV programs in late 2014 after they phased it out several years earlier.

OIG Findings Show Some FHFA Examinations Ineffective

The Federal Housing Finance Agency Office of Inspector General released three reports last week accusing the FHFA of shirking its responsibility to effectively examine Fannie Mae and Freddie Mac. The first report said the FHFA failed to deliver timely reports of its examinations to the GSE boards and obtain written responses back from the boards about remediating specific concerns. The FHFA and Division of Enterprise Review provide examiners with “very limited guidance” for communicating the exams’ findings, conclusions, and ratings to the board of directors of a regulated entity, according to the report. “In contrast, other federal financial regulators have issued detailed...

FHLBank Raises Loan Limit by $1M and Expands MPF Program

The Federal Home Loan Bank’s Mortgage Partnership Finance Direct program significantly raised its loan limits from $1.5 million to $2.5 million, and now includes hybrid adjustable-rate mortgages. This is the second jump in about a year. Last June, the loan limit more than doubled from $729,750 to $1.5 million. MPF Direct participants are often small lending institutions. Eric Schambow, senior vice president and senior director with MPF product management, told Inside The GSEs that in working with members that already deliver under the MPF program and its Advisory Council of Private Funding Institutions, the FHLB heard them express the need to more completely match what the marketplace offers.

IU Poll Says Voters Want More Housing Access, Help from GSEs

Most voters are not happy with housing and mortgage access and favor more government intervention, according to a national housing poll of 1000 likely voters released last week by Investors Unite. More than half of those familiar with Fannie Mae Freddie Mac, 55 percent, had a favorable view of the mortgage giants. The survey was done in late June by Douglas Schoen, founder of Schoen Consulting,a pollster and democratic campaign consultant. It included views on homeownership, housing policies and the GSEs. He said the desire for policy change is “widespread and urgent.”

Community Banks Voice Reform Concerns at Senate Briefing

Community banks and affordable housing groups spoke at a Senate staff briefing this week to discuss GSE reform efforts and the impact on smaller lenders and affordable housing groups. The concerns ranged from the low capital at Fannie Mae and Freddie Mac to recent up front risk-sharing efforts to the Common Securitization Platform currently in the works. …

FHFA Denying Access to GSE Corporate Records

The Federal Housing Finance Agency is seeking to prevent GSE shareholder and director of Investors Unite, Tim Pagliara, from inspecting the corporate records of Fannie Mae and Freddie Mac. Pagliara filed a lawsuit in state courts in March hoping to gain access, as an individual stockholder, to the GSEs’ records to determine the circumstances surrounding the sweep. Fannie, incorporated in Delaware, and Freddie, incorporated in Virginia, both denied his request to review the records earlier this year. Pagliara then argued that his rights as a shareholder were denied for “no legitimate basis.” This week, the FHFA filed a motion to substitute itself for Pagliara and remove...

GSE Roundup

FHFA Publishes Update to Proposed Duty To Serve Rule: This week the Federal Housing Finance Agency provided an update to its proposed duty to serve rule in the form of summaries of roundtable meetings it held with various groups in April and May, On April 19 and May 2, FHFA said it met with rural housing market stakeholders. On April 20, it met with consumer groups, civil rights groups, affordable housing advocates and energy efficiency stakeholders, on April 25, FHFA met with financial service stakeholders, and on April 26, FHFA met with members of the manufactured housing industry.

Poll

The yield on the benchmark 10-year Treasury fell to all-time low of 1.34% recently. How much better will originations be at your shop in the second half compared to 1H, if at all?

Better by 1% to 10%.
Better by 11% to 25%.
Off the charts better. Applications are great now.
Worse than 1H, but not by much.
A lot worse. But not sure on the damage.

vote to see results
Housing Pulse