Fannie Mae

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May 27, 2016 - Inside The GSEs

GSE Roundup

Ditech and HLP Principal-Reduction Outreach. Ditech Financial and Hope Loan Port collaborated to find distressed homeowners eligible for the Federal Housing Finance Agency’s new principal- reduction modification program. The two parties said HLP’s platform “is designed to integrate HUD-approved non-profit housing counselors seamlessly and securely with Ditech’s mortgage servicing operations, enabling counselors to more easily help homeowners who may qualify for the program.” Freddie’s Third NPL Transaction of 2016. This week Freddie Mac announced a $783 million non-performing loan transaction featuring seven pools, including two extended timeline pools targeting smaller investors. The NPLs are currently serviced by Bayview Loan Servicing, LLC. FHFA Request for Comment. The Federal Housing Finance Agency issued a request for comment this week for a host of technical...


May 27, 2016 - Inside The GSEs

UI Recommends Relaxing LTV for Small Multi-Unit Properties

Financing for two- to four-unit properties has become difficult since the housing crisis and Laurie Goodman, codirector of the Housing Finance Policy Center, suggests the GSEs relax the loan-to-value ratios on those properties. When Fannie Mae and Freddie Mac tightened LTV requirements based on higher default rates on two- to four-unit properties, Goodman said in a new report, the GSEs may have “overcorrected." Lending for these properties was 5 to 6 percent of all single-family lending prior to 2009, said Goodman, but has since fallen to 2 to 3 percent of origination share. She blames the GSEs’ current higher loan-to-value lending requirement.


May 27, 2016 - Inside The GSEs

Single-Security, CSP on Target for Multi-Year Launch

The Single Security is on target for implementation in Freddie Mac’s platform in 2017 and is set to reach the second stage in 2018, according to officials speaking at the Mortgage Bankers Association secondary market conference last week. David Applegate, CEO of Common Securitization Solutions, the joint venture owned by the GSEs that is building the Common Securitization Platform, said in 2018 Fannie Mae will switch its to-be-announced business to the CSP and begin issuing Single Securities that will be fully interchangeable with Freddie Single Securities. The GSE plans to use the CSP for all of its new mortgage-backed securities issues, including non-to-be-announced products such as securities backed by adjustable-rate mortgages, said Renee Schultz, senior vice president of capital markets at Fannie.


May 27, 2016 - Inside The GSEs

More Documents Release Help Solidify GSE Investor Lawsuits

An issue over whether the government had the right to use executive privilege to keep thousands of documents from disclosure is the centerpiece of GSE lawsuits by investors. Fifty-three documents were made public last week and helps solidify their argument that there was no need to bail out Fannie Mae and Freddie because they had more than enough capital to weather the financial crisis. The Treasury Department provided the documents to plaintiffs last week as part of a court case in Kentucky and some are calling the release a game-changer in terms of the anticipation of more documents being released. One of those high-ranking officials is Jim Parrott, former White House housing finance executive and now a fellow at the Urban Institute.


May 27, 2016 - Inside The GSEs

GSE Execs Feature Tech Upgrades In Remarks to Mortgage Bankers

Top single-family executives at Fannie Mae and Freddie Mac described new technology upgrades and the success of their credit-risk transfer programs during remarks at last week’s secondary market conference sponsored by the Mortgage Bankers Association. Andrew Bon Salle, executive vice-president for single-family business at Fannie, said the GSE is working to enhance the customer experience and make doing business with the company simpler and more certain. He said customers are reporting sharp gains in efficiency from Fannie’s collateral underwriting tool, and a new version of Desktop Underwriter will be rolled out next month. A key feature in version 10.0 of DU is the inclusion of trended credit data.


May 27, 2016 - Inside The GSEs

FHFA Didn't Provide Proof of Fraud, BofA's $1.2B Penalty Dismissed

Bank of America escaped having to pay $1.2 billion in penalties when a federal appeals court dismissed the Federal Housing Finance Agency’s allegations of fraud this week. The appeal stemmed from a 2013 verdict stating that Countrywide Home Loans, a subsidiary of BofA, was liable for damages caused by selling bad loans to Fannie Mae and Freddie Mac during the financial crisis. Whether or not a breach of contract can also support a claim for fraud was the argument and primary factor in the judge’s decision. It seems that even if a loan seller is guilty of an intentional breach of contract, it’s not considered fraud.


May 27, 2016 - Inside The GSEs

CA Continues Trend as Top GSE Mortgage Market in First Quarter

California remained the top state for Fannie Mae and Freddie Mac activity in the first three months of 2016 with volume reaching $36.18 billion, three times as much as Texas, which trailed in second place with $12.43 billion in volume. However, GSE activity in California saw a 23.8 percent decline from the previous quarter while volume in Texas was up by 5.2 percent, according to a new Inside The GSEs analysis. In California, the average Fannie and Freddie loan was $307,302 in line with the state’s 2015 average of $310,185. That number followed only Hawaii, which had an average loan size of $362,236 and the District of Columbia, which was $336,268.


May 27, 2016 - Inside The GSEs

CSP Timeline Should Be More Aggressive, Says MBA

The pace of GSE reform has been too slow, said Mortgage Banker Association President and CEO David Stevens, who’s calling for faster implementation of the Common Securitization Platform and Single-Security. He’s worried that if the CSP platform has not made enough progress, it could face changes in planning down the line. He said the real estate finance industry should continue to push for faster implementation to make sure that any advances made cannot be reversed. “Additionally, the platform should be open to non-agency mortgage-backed securities so that long-term efforts for both private capital and GSE reform can take advantage of the benefits of its efficiency, data and consistency” Stevens added, while speaking...


May 27, 2016 - IMFnews

What We’re Hearing: Did Wells Hit A Mortgage Home Run? Time Will Tell / A Media Coverage Coup / The BofA-NACA-Pinto Project, A Status Report / Why Jumbo MBS Issuance Won’t Return Anytime Soon / Publishing Note

Let's face it: most banks are just chicken to hold mortgages in portfolio unless they're jumbos...


May 27, 2016 - IMFnews

Incenter Offering $1.4 Billion of Fannie, Freddie Servicing Rights

The Texas portion of the receivables has been measured at 60.5 percent with Colorado a distant second at 13.6 percent.


May 27, 2016 - IMFnews

Mortgage Securitization Rates Turn Paltry in 1Q16; Banks Keep Hogging Jumbos

Wells Fargo reported an 11.7 percent increase in its conventional-conforming originations during the first quarter, but the company’s GSE loan sales fell 12.2 percent on a sequential basis – quite a differential.


May 27, 2016 - Inside MBS & ABS

Newly Released Documents Called a ‘Treasure Trove’ Of Damaging Evidence in GSE Shareholder Cases

Investors who are suing the government over the terms of the conservatorships of Fannie Mae and Freddie Mac said the 53 documents recently made public solidify their claim that the government-sponsored enterprises had plenty of capital and a government bailout was unnecessary. The Treasury Department provided the documents to plaintiffs last week as part of a court case in Kentucky. “The newly de-designated documents also suggest...


May 27, 2016 - Inside MBS & ABS

Securitization Rates Remain Relatively Low in Early 2016, Even the Government Market Is Lagging

The share of new home mortgage originations packaged into MBS drifted slightly lower in the first quarter of 2016, a new Inside MBS & ABS analysis reveals. Some $255.7 billion of newly originated mortgages were pooled in MBS in the first three months of the year, representing a paltry 67.3 percent of the estimated $380 billion of first-lien originations in the primary market. For the purposes of calculating securitization rates, loans aged more than three months and modified loans are excluded from agency MBS issuance figures. Fannie Mae and Freddie Mac securitized...[Includes one data table]


May 27, 2016 - Inside MBS & ABS

FRBNY Trading Desk Holds First of Two Small-Scale Agency MBS Sales Transactions. Is This a Dry Run?

The Federal Reserve Bank of New York’s Open Market Trading Desk this week conducted the first of two small-value agency MBS sales operations, “for the purpose of testing operational readiness.” The second test is slated for June 1, 2016. The total current face value of sales across the two operations will be less than $150 million, according to the bank. The first transaction, which involved four Fannie Mae MBS currently valued at approximately $120 million, occurred in the middle of this week. The settlement date is June 13, 2016. Meanwhile, the June 1 operation will involve...


May 27, 2016 - Inside MBS & ABS

Test of Deeper MI Credit-Risk Transfer May Happen Later This Year, But GSEs Still Wary of the Risks

One of the government-sponsored enterprises appears likely to test a form of credit-risk transfer that mortgage bankers have been clamoring for: transactions that allow mortgage sellers to pay lower MBS guarantee fees on loans that have deeper mortgage insurance coverage than is required by the GSE charters. Robert Schaefer, vice president for credit enhancement strategy at Fannie Mae, said there is “a high probability that we will do an MI deal later this year that addresses the pain points” the GSE sees in the deeper MI concept. “We are talking...[Includes one data table]


May 27, 2016 - IMFnews

GSE Preferred Shareholders Rejoice in Release of New Court Documents. A White House Cover Up?

One of those high-ranking officials is Jim Parrott, former White House housing finance executive...


May 26, 2016 - Inside Mortgage Finance

With Servicing Costs Steadily Rising, Is it Time to Think The Unthinkable: A Hike in GSE Servicing Compensation?

Although mortgage delinquency rates are once again at pre-crash levels, servicing costs continue to rise, leading some factions of the industry to ask whether Fannie Mae and Freddie Mac should increase the standard 25 basis point fee they pay to their servicers. The issue of higher servicing compensation was raised by an individual lender during the audience Q&A at a panel featuring the top single-family executives of the two government-sponsored enterprises at last week’s secondary market conference sponsored by the Mortgage Bankers Association. Both noted that servicing has changed significantly since the housing crisis, and that the Federal Housing Finance Agency has directed them to review servicing compensation. Subsequent interviews conducted by Inside Mortgage Finance revealed...


May 26, 2016 - Inside Mortgage Finance

Origination Channel Mix Little Changed in Early 2016 Despite Disruption Caused by TRID Problems

Mortgage brokers grabbed a slightly bigger share of the originations market in the first quarter of 2016, according to a new Inside Mortgage Finance ranking and analysis. Mortgage brokers generated an estimated $38 billion of new home loans during the first quarter, a modest 2.7 percent increase from the previous period. Meanwhile, correspondent production declined by 0.8 percent to an estimated $122 billion and retail originations weakened by 2.2 percent. There appeared...[Includes four data tables]


May 26, 2016 - IMFnews

Wells Fargo Launches ‘Proprietary’ High LTV GSE Loan. But Can it Amass Volume?

The HLTV loans will be sold to Fannie Mae mostly, but Freddie Mac will play a role as well...


May 25, 2016 - IMFnews

FHFA’s Watt Happy with FHLB Profits, but Worries About ‘Non-Core’ Assets, Insurers

Litigation settlements, of course, have played a role in the resurgence in profits at Fannie Mae and Freddie Mac, though the legal gravy train is just about over for those two.


May 24, 2016 - IMFnews

Short Takes: The Industry Strikes Back / Breach of Contract, Not Fraud / A Wingspan Candidate? / BKFS: A 10-Year Low in Foreclosure Starts / PHH Home Hires Former Bank Executive

Bad news for specialty servicers: Black Knight Financial Services said 58,700 foreclosures were started during April, the lowest reading in 10 years...


May 23, 2016 - IMFnews

Short Takes: So Much for the Quiet on TRID Complaints / Mortgage Lenders Lean Toward Trump? / The Last Squeezing of the HARP Grapes / Former Wells Exec Joins Fannie Mae Board

So, who will mortgage professionals vote for come the fall election? Trump or Clinton?


May 23, 2016 - IMFnews

Single GSE Security, CSP Still on Target for 2-Stage Launch; The Cost Thus Far: $270 Million

Although the CSS joint venture has a projected budget and multi-year budget plan, it is working with FHFA about when to release that information…


May 20, 2016 - IMFnews

What We’re Hearing: Let the TRID-Compliance Games Begin! / The Central Nervous System = CMS / And Don’t Forget a Parking Space for the CFPB! / JPM Now the Jumbo King / A New MSR Deal From IMA / Where Would the GSEs Be Without Their Legal Recoveries?

Helpful CFPB mortgage audit tip: Set aside a parking space for the visiting CFPB examiner(s) that says, “Welcome, CFPB…”


May 20, 2016 - Inside MBS & ABS

HARP Participation Numbers Continue to Dwindle, FHFA Plans Push as Program Heads for Moth Balls

Activity in the Home Affordable Refinance Program continued to dwindle in the first quarter of 2016 as the post-housing crisis initiative winds down before expiring at the end of the year. HARP refinances fell to just 19,989 in the first quarter, down 5.2 percent from the previous period and off 36.8 percent from a year ago, according to a new Federal Housing Finance Agency report. While both government-sponsored enterprises saw a decline in volume, Freddie Mac volume was...[Includes one data table]


May 20, 2016 - Inside MBS & ABS

MBS Prices Finally Begin to Ratchet Down. Is the Big ‘Correction’ Upon Us or More False Positives?

Over the past two weeks, MBS prices have been on a downward trajectory, leading some market watchers to ponder whether the long-awaited correction in values is finally upon the industry. But no one is quite ready to wave the white flag. Moreover, there’s a school of thought that says any rise in the yield on the 10-year Treasury bond could be short lived and, at some time over the next six to 12 months, rates might head south again, igniting yet another small refi rally. Some also believe the chance of a recession is in the cards. Barry Habib, who runs MBS Highway, a rate-locking advisory service, thinks...


May 20, 2016 - Inside MBS & ABS

Single Security, CSP Still on Target for 2-Stage Launch, $270 Million Sunk Into Project so Far

Freddie Mac and Common Securitization Solutions remain on track for the first stage of the ambitious Single Security to be implemented next year, according to officials speaking at this week’s secondary market conference sponsored by the Mortgage Bankers Association. David Applegate, CEO of CSS – the joint venture owned by the two government-sponsored enterprises that is building the common securitization platform – also said the project is on target to reach the second stage sometime in 2018. That’s when Fannie Mae will switch its to-be-announced business to the CSP and begin issuing Single Securities that will be fully interchangeable with Freddie Single Securities. Renee Schultz, senior vice president of capital markets at Fannie, said...


May 20, 2016 - Inside MBS & ABS

Banks Ramp Up Holdings of Residential MBS Despite Retreat by Some Goliaths of the Industry

Commercial banks and thrifts boosted their combined holdings of residential MBS to a new record, $1.661 trillion, during the first quarter of 2016, according to a new Inside MBS & ABS analysis. The data include held-to-maturity and available-for-sale accounts, but not trading assets, which included another $45.99 billion of residential MBS as of the end of March. The banking industry’s MBS holdings in HTM/AFS portfolios rose 1.0 percent from the end of 2015, and they were up a substantial 5.2 percent from a year ago. It’s worth noting that total assets in the banking industry actually rose a bit faster, by 2.1 percent, dropping the MBS share of total assets down slightly to 10.2 percent. Unlike some quarters, when activity by one or two dominant banks accounts for most of the industry’s change, the first-quarter increase was...[Includes two data tables]


May 20, 2016 - IMFnews

FHFA OIG Lays Claim to $3.5 Billion in Recoveries

The OIG’s investigations also include matters tied to loan origination and short sale fraud and even REO…


May 20, 2016 - IMFnews

Conservative Groups (Surprisingly) Join the Fannie/Freddie Recap Bandwagon

The groups stress that the conservatorships were intended to be a short-term measure to keep the GSEs solvent…


May 20, 2016 - IMFnews

The Love Affair Continues: Banks and MBS, Though the Big Boys Pull Back

At $1.661 trillion, it’s a new record in terms of banks and MBS holdings…


May 19, 2016 - Inside Mortgage Finance

Conservative Groups Surprisingly Join the Bandwagon Calling for Recapitalizing Fannie Mae and Freddie Mac

Frustrated by inaction on housing finance reform, a dozen conservative organizations led by the National Taxpayers Union called on Congress to begin recapitalizing Fannie Mae and Freddie Mac. The coalition of center-right organizations urged Congress to pass H.R. 4913, the “Housing Finance Restructuring Act of 2016.” They said the Treasury sweep of the government-sponsored enterprises’ profits implemented in 2012 has “jeopardized” the financial system and taxpayers. “If there is one thing this presidential campaign has revealed, it is...


May 19, 2016 - Inside Mortgage Finance

Industry Execs Consider Liquidity, Bringing Private Capital into Government-Dominated Market

The heavy role of Fannie Mae, Freddie Mac and Ginnie Mae in the post-crisis mortgage market has brought lower rates and considerable liquidity to the mortgage business, but industry leaders question whether private capital can meet the growing need to finance nonbank servicing portfolios and the eventual pullback of the Federal Reserve. “We wouldn’t have the same price we have now without the government being there; its programs provide a 2 to 3 percent discount,” said Stan Middleman, CEO of Freedom Mortgage Corp., during a panel session at the Mortgage Bankers Association’s secondary market conference this week. “They are the whole enchilada. If you took them out, we’d have nothing.” The government-sponsored enterprises are...


May 19, 2016 - Inside Mortgage Finance

Mortgage Product Mix Little Changed in Early 2016, Refi Surge Bolstered Purchase Slump

All three major food groups in the contemporary mortgage market – government-insured, jumbo and conventional conforming – saw roughly the same drop in new originations from the fourth quarter of 2015 to the first three months of 2016, according to a new analysis by Inside Mortgage Finance. Production of loans with FHA, VA and rural housing guarantees held up a little better than the other sectors, with estimated originations slipping 1.0 percent from the fourth quarter. Although purchase mortgages account for a relatively higher share of originations in the government-insured market, there was a boost in refinance lending, especially in the VA program, that helped sustain overall production in the sector. The conventional-conforming and jumbo markets were...[Includes two data tables]


May 19, 2016 - IMFnews

GSEs Clarify Their Views on Servicing Compensation

Is it time to take another look at GSE servicing fees? A topic is reborn...


May 19, 2016 - IMFnews

Servicing Auctions Gather Steam, But Concerns Remain About MSR ‘Marks’

MorVest's David Fleig predicted that nonbanks – which have been gaining market share the past two years – eventually will move to convert some of their MSR assets into cash via bulk sales.


May 19, 2016 - IMFnews

Purchase-Mortgages Fell Almost 13 Percent in 1Q16…

Production of loans with FHA, VA and rural housing guaranties held up a little better than the other sectors, with estimated originations slipping 1.0 percent from the fourth quarter.


May 18, 2016 - IMFnews

Is ‘Zero Capital’ for the GSEs Really a Non-Issue?

When Freddie recently unveiled a first-quarter loss due to hedges affected by falling interest rates, MBA chief Dave Stevens issued a statement once again calling for Congress to enact housing-finance reform, but said nothing about the issue of zero capital.


May 17, 2016 - IMFnews

Short Takes: The GSEs Get Religion on Servicing Fees? / A ‘Seminal’ Change? / Oh, Carol. Former FHA Chief Racks Up Ocwen Shares / Searching for Principal Reduction Candidates / A New Hire for Stonegate

“This is a seminal change,” one GSE observer told us.


May 17, 2016 - IMFnews

A Positive Sign: GSE Business Rises in April – But Slightly

The average credit score for purchase loans securitized last month was 749.7, the first time that measure has been below 750 in over two years.


May 16, 2016 - Inside the CFPB

Life Under TRID: Working With Tech Vendors a Big TRID Problem for Many Lenders

Fannie Mae’s Economic & Strategic Research Group surveyed senior mortgage executives earlier this year and confirmed that lenders are still facing challenges in complying with the CFPB’s integrated disclosure rule known as TRID, according to new findings released by the government-sponsored enterprise last week. The controversial rule integrates the consumer disclosure requirements under the Truth in Lending Act and the Real Estate Settlement Procedures Act. According to Sheila Teimourian, vice president and deputy counsel at Fannie, more than three-quarters of the lenders surveyed indicated that the two biggest challenges were managing or coordinating with third-party technology vendors and communicating with key players, such as the buyer, seller and loan officer. About eight in 10 of those who cited coordinating with ...


May 16, 2016 - IMFnews

A New Idea on GSE Reform: Turn Fannie and Freddie Over to Ginnie?

To significantly reduce credit risk, all mortgages sold to Ginnie 2.0 would require a private credit enhancement attached to the loans…


May 16, 2016 - IMFnews

MBA Calls for New QM Rules, Warns About ‘Regime Change’ Risk

“The QM rule needs to stand on its own two feet … The FHFA should not be in charge of setting national mortgage underwriting,” said MBA chief Dave Stevens.


May 13, 2016 - Inside The GSEs

Fannie Survey Shows Smaller Lenders Most Impacted by TRID

Although the GSEs are reviewing loans to make sure the new TRID forms are being used, not for technical compliance, Fannie Mae’s survey of lenders on the impact of TRID showed vendor coordination and communication with key players have been the biggest challenges. More than three quarters of the lenders surveyed cited challenges when it comes to managing and coordinating third-party technology vendors and communication with buyers, sellers and loan officers. In addition, smaller lenders said they feel more burdened since the rule took effect in October. Fannie said many small- to-midsized lenders indicated that they don’t have the same resources as larger institutions which can easily invest in upgrading systems and have in-house compliance resources to...


May 13, 2016 - Inside The GSEs

Flood Insurance Act Could be Problematic for Fannie, Freddie

While many applaud the Flood Insurance Market Parity and Modernization Act that passed the House unanimously late last month, one mortgage group says the bill could cause problems for Fannie Mae and Freddie Mac. Currently, homeowners can only get coverage from the National Flood Insurance Program. The bill, H.R. 2901, expands flood insurance options by including private flood insurance, and requires the GSEs to accept any private flood insurance company a borrower chooses, as long as the company is financially sound. It also lifts certain federal restrictions placed on insurance companies and gives states more flexibility to license and regulate private flood insurance. Rep. Dennis Ross, R-FL, who co-sponsored H.R. 2901 with Rep. Patrick Murphy, D-FL, said the...


May 13, 2016 - Inside The GSEs

Upcoming Changes to GSE Tools Include Alternative Credit Data

The GSEs are preparing big updates to their loan origination tools and one of the most noticeable changes will be Fannie Mae’s use of trended credit data to help more consumers qualify for a mortgage. Fannie will be rolling out Desktop Underwriter 10.0 during the weekend of June 25. Trended credit data relies on expanded information on borrowers’ credit history that shows the balance, minimum payment due and amount that is generally paid to determine if the consumer regularly pays off debt or carries a revolving balance. By using trended credit data in the risk assessment, Fannie said it allows for a more thorough analysis of the borrower’s credit history and is a “powerful predictor” of risk.


May 13, 2016 - IMFnews

What We’re Hearing: ‘Deferred Tax Assets’ at the GSEs Top $55B But … / Time to Wipe Out Some GSE Shareholders? / Mortgage ‘Shorts’ Reduce Their Bets / What’s a Mortgage Call Center Really Worth? / Impac Looking for Deals?

One observer noted: “Talk about a government takeover! This feels third-world to me…”


May 13, 2016 - IMFnews

Mortgage REITs Scale Back MBS Holdings in 1Q16, But...

The MBS holdings of 16 top mortgage REITs were down 0.3 percent from the fourth quarter...


May 13, 2016 - Inside MBS & ABS

SoFi has Securitized Student Loans and Now Has Fannie Approvals; Will ‘Marketplace’ Scrutiny Rock the Boat?

Marketplace lender Social Finance this month received seller/servicer approvals from Fannie Mae, but it remains to be seen just how active it will be in the secondary mortgage market. According to a spokesman for the privately held “SoFi,” the nonbank is now funding roughly $100 million per month in non-agency jumbos. According to firms that have done business with SoFi, it has sold the loans to OneWest Bank and Wells Fargo. To date, the online lender has yet to issue any ...


May 12, 2016 - Inside Mortgage Finance

Is ‘Zero Capital’ for the GSEs Really a Non-Issue? Hey, There’s A Bunch of ‘DTAs’ Left at the Two…

In almost 19 months, the capital cushions at Fannie Mae and Freddie Mac will fall to zero, which means if either government-sponsored enterprise (or both) suffers a net loss in a quarter, Uncle Sam will need to step in and supply cash to get the afflicted party back to zero. Depending on whom you talk to in the mortgage industry, a capital draw from Treasury could set off irrational behavior on the part of Congress or it’s much ado about nothing. …


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