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Volume 16 - Number 19

September 16, 2016

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GSE MBS Issuance Up Again in August, Market Share Improved

Fannie Mae and Freddie Mac saw a solid 10.0 percent increase in production of single-family mortgage-backed securities in August, and there are signs that the GSEs are regaining some lost market share as well. The two GSEs issued $91.59 billion of single-family MBS last month, their highest monthly total since August 2013. Interestingly, most of the increase came from rising refinance activity. The flow of refi loans is up 14.0 percent at Fannie and 8.7 percent at Freddie, while purchase-mortgage business rose 9.9 percent and 6.3 percent, respectively, at the two firms. Two thirds of the way through 2016, GSE single-family business was still down slightly from the first eight months of last year.

CSP Progress on Track, But Some Leary of Change, Market Fairness

Credit unions and some others in the industry are apprehensive about the changes the GSEs’ Common Securitization Platform will bring as the date nears for Freddie Mac to issue the first mortgage-backed security on the system. The National Association of Federal Credit Unions wrote the Federal Housing Finance Agency last week citing concerns about the CSP’s potential impact on credit unions. While the trade group said it is not opposed to creating a more efficient platform with an open architecture to support multiple issuers, Ann Kossachev, NAFCU’s counsel, worries about a level playing field. “NAFCU and its member credit unions are concerned that the consolidation of the securitization programs will make it more difficult for...

Fannie Names NPL Winners, Freddie Markets Multi-servicer NPL

Recent nonperforming loan activity at the GSEs includes billion dollar transactions in which Fannie Mae revealed the winning bidders of its seventh NPL auction and Freddie Mac marketed its first multi-servicer NPL sale. Subsidiaries of Goldman Sachs, Neuberger Berman, Lone Star and MFA were the winning bidders of Fannie’s latest nonperforming loan sale, totaling $1.06 billion. The GSE announced last week that it had sold 6,800 mortgages total, in four separate pools. Goldman’s MTGLQ Investors won the largest chunk, 2,887 loans with an aggregate unpaid principal balance of $468,901,523. Neuberger’s PRMF Acquisition LLC won the second pool, 1,551 loans, and Lone Star’s...

FHFA Seeks Input on Mortgage Originations Survey

The Federal Housing Finance Agency seeks comments on its National Survey of Mortgage Originations proposal to collect information from 24,000 borrowers annually about their experience with choosing and taking on a mortgage. Formerly known as the National Survey of Mortgage Borrowers, the FHFA renamed it earlier this summer to avoid confusion with the American Survey of Mortgage Borrowers. The ASMB is different in that it’s FHFA’s tool to solicit information specifically on the borrower’s experience with maintaining their existing mortgage. “In particular, the NSMO provides timely information on newly-originated mortgages and those borrowing that is not available from existing sources,” said the FHFA.

Judge Rules to Dismiss GSE Shareholder Case in KY

A GSE investor in Kentucky lost her case last week when the court dismissed claims that the government damaged Fannie Mae and Freddie Mac by implementing the net worth sweep of the GSEs’ profits. Arnetia Robinson alleged that her investments in Fannie and Freddie were “materially damaged” when the Federal Housing Finance Agency and the Treasury Department amended the existing preferred stock purchase agreement in 2012. According to court records, Robinson was seeking declaratory and injunctive relief that would prevent enforcement of portions of the PSPA. She contended that the sweep violates the Housing and Economic Recovery Act and said the Treasury acted “arbitrarily and capriciously.”

GSEs' Focus Should be on Credit Access, Honest Stress Test

Talk of housing finance reform is just a “solution in search of a problem,” according to one housing expert. Tim Howard, former senior executive at Fannie Mae for more than 20 years, said that with the GSEs’ loans performing well, the argument for replacing them is becoming harder to make. “It is no longer credible to claim that replacing Fannie and Freddie with an untested alternative, forcing them to do mandatory risk sharing or requiring them to hold bank-like levels of capital could possibly fix what now ails the U.S. residential mortgage market,” said Howard. He said the small size of the credit box is one of the primary problems that needs to be addressed, explaining that...

GSEs Modernizing Mortgages with Uniform Closing Dataset

Fannie Mae and Freddie Mac are well underway preparing to implement the Uniform Closing Dataset that will become mandatory in the second half of 2017. A big part of the change is moving to an electronic process to support the Consumer Financial Protection Bureau’s closing disclosure. This month, Fannie announced a new collection service that it said offers flexible options for delivering the UCD file in multiple phases of the business process. It includes the ability to verify data and eligibility electronically. Banks can submit either a single file or batch file, get data quality and eligibility feedback messages, and each submission is...

Freddie Holds Bus Tour of Foreclosed Properties in Chicago

Freddie is busing potential homebuyers to tour affordable housing properties in Chicago as a way to reach low- to moderate income borrowers and unload foreclosed homes in the city. The event, to be held on Sept. 17, is sponsored by the GSE’s HomeSteps real estate unit and the Chicago Urban League. It will include tips on buying foreclosed properties.HomeSteps is the mortgage giant’s program to sell foreclosed properties. While the program is available across the country, it offers special financing for buyers in only 10 states: Alabama, Florida, Georgia, Illinois, Kentucky, North Carolina, South Carolina, Tennessee, Texas and Virginia.

GSE Shareholders Amend Compaint to Dismiss, Add Charges

Plaintiffs in a Fannie Mae and Freddie Mac shareholder case challenging the GSEs’ quarterly earnings sweep dropped some of the charges in their original complaint to bypass the Federal Housing Finance Agency’s motion to consolidate all of the cases. The pair, Gary Hindes and David Jacobs, is looking to dismiss counts that allege derivative breach of contract and other similar claims and instead allege “unjust enrichment” against the Treasury Department. The plaintiffs bought the class action suit focusing on Delaware and Virginia corporate law on behalf of themselves and other stockholders. Court documents in David Jacobs and Gary Hindes v. The Federal Housing Finance Agency...

GSE Roundup

HFSC Continues to Seek Five-Member Commission for FHFA. During a full committee markup this week, the House Financial Services Committee voted to convert regulatory agencies currently headed by single directors, such as the Federal Housing Finance Agency, along with the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency, into bipartisan, five-member commissions. The HFSC voted to make the Treasury’s one-time GSE privatization study become an annual report/testimony. FHFA Publishes Open Government Plan 2016. The Federal Housing Finance Agency published a document this week highlighting some of the ways it plans to advance the principles of “transparency, participation and collaboration” through open communication and public engagement.

Poll

After the November elections, how long will it take for a new Congress and White House to pass GSE reform legislation?

I’m confident a bill will be passed the first year.
2 to 3 years. GSE reform is complicated.
Sadly it won’t happen in a Clinton or Trump first term.
Not in my lifetime.

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