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Volume 10 - Number 52

January 4, 2013

Fannie Building In-House Unit to Value MSRs

Fannie Mae is working on building an in-house unit to value mortgage servicing rights, according to industry officials who’ve been briefed on the GSE’s plans. However, it’s unclear at this point how far along Fannie is. A spokesman for the company declined to comment to Inside The GSEs about the matter. Officials familiar with the effort, including one former GSE executive, said Fannie is looking to value MSRs for two main reasons: to better judge counter-party risk on mortgage bankers that sell residential loans to the company, and perhaps to better value the asset because it may have plans to buy or finance servicing rights in the future.

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Poll

What is it going to take to convince lenders to loosen the credit box (i.e., remove underwriting overlays)?

The recent rep and warranty changes announced by the Federal Housing Finance Agency should go a long way in protecting lenders from future buybacks and help expand mortgage credit.
There won’t be any significant elimination of underwriting overlays until the government stops seeking huge mortgage-related penalties and settlements from lenders.
There shouldn’t be any expansion of the mortgage credit box since looser underwriting is what caused the recent mortgage crisis.

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