Fannie Mae
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May 18, 2012 - Inside The GSEs
Fired Fannie Staffer to Press Lawsuit Despite Ruling
Fannie Mae received a leg up earlier this month in its defense against a former staffer’s wrongful termination lawsuit when a federal judge ruled that the GSE is not legally considered a government entity while under the conservatorship of its regulator, the Federal Housing Finance Agency. Caroline Herron, a former Fannie vice president who left in 2007 but returned as a consultant in 2009, filed suit against the GSE in June 2010. Herron claims she was wrongly fired for reporting what she said was Fannie’s mismanagement of the Obama administration’s housing rescue initiatives. According to papers filed in U.S. District Court for the District of Columbia, Herron sought to prove that Fannie was not a private company but an adjunct of the state while under FHFA conservatorship as part of her claim against Fannie. Herron asserted a Bivens claim, a claim under the First Amendment for private damages against federal officials for civil rights violations outside the purview of the Federal Tort Claims Act.
May 18, 2012 - Inside The GSEs
FHFA Issues Draft Strategic Plan for Public Comment
The Federal Housing Finance Agency is requesting public comment on its draft document Strategic Plan: Fiscal Years 2013-2017. The FHFA said it’s updating its plan in order to incorporate the strategic plan for conservatorships of Fannie Mae and Freddie Mac that the Finance Agency sent to Congress in February.
May 18, 2012 - Inside The GSEs
FHFA Bank MBS Lawsuits Survive Dismissal Motion
Look for the Federal Housing Finance Agency to press its multiple legal actions against many of the nation’s biggest issuers of non-agency mortgage-backed securities after a federal judge rejected a bid by UBS Americas to turn back the FHFA’s lawsuit over its sale of non-agency MBS to Fannie Mae and Freddie Mac. Judge Denise Cote, of the U.S. District Court for the Southern District of New York, two weeks ago denied UBS’ motion to dismiss on statute of limitations grounds, while dismissing the FHFA’s negligent misrepresentation claims. The FHFA, as GSE conservator, sued UBS in July 2011 alleging that billions of dollars of MBS purchased by Fannie and Freddie were based on offering documents that contained “materially false statements and omissions.”
May 18, 2012 - Inside The GSEs
FHFA Notes Modest Goals For REO-to-Rental Pilot
Investors will be able to bid on Fannie Mae real estate-owned single-family homes intended for rent “in the next few months” but the Federal Housing Finance Agency warns not to expect fire sale prices from its pilot program. FHFA Senior Associate Director for Housing and Regulatory Policy Meg Burns testified last week before a congressional field hearing that the agency is completing its review of investor applications and is on target to complete its first pilot transaction in the next few months. “The application process is comprehensive, rigorous and demanding, requiring exhaustive amounts of information and documentation from the applications and their business partners,” said Burns.
May 18, 2012 - Inside The GSEs
Obama Pushes Trio of Senate HARP Expansion Bills
The White House is backing a trio of Senate bills filed last week to expand the Home Affordable Refinance Program to an even wider circle of underwater borrowers as part of the Obama administration’s re-election “to-do list.” The Equity Rebuilding Act sponsored by Sen. Jeff Merkley, D-OR, would lower costs for some homeowners seeking to refinance through HARP. Under the bill, homeowners who are current on their mortgage seeking to refi into a 20-year loan term or shorter would have their closing costs covered by Fannie and Freddie. A second bill by Sen. Dianne Feinstein, D-CA, the Expanding Refinancing Opportunities Act of 2012, would create a $6 billion FHA fund to provide insurance for underwater homeowners who currently don’t have a federally backed loan. To pay for the FHA extension, Feinstein would extend by one year the temporary, 10-year, 10 basis point increase of the GSE guarantee fee that took effect April 1.
May 18, 2012 - Inside The GSEs
Fannie, Freddie Market Share Rises in 1Q12
Both Fannie Mae and Freddie Mac held onto their ample shares of mortgage-backed securities with something of a bump during the first quarter of 2012, according to a new Inside The GSEs analysis. The GSEs issued a combined $303.9 billion in MBS during the first quarter, a 13.9 percent increase from the fourth quarter of 2011. Compared to the first quarter of last year, Fannie and Freddie saw a 16.4 percent increase in MBS issuance. Between the two companies, Fannie and Freddie registered a plentiful 77.9 percent share of new MBS during the period that ended March 31, 2012, up from 77.1 percent the two companies held during the fourth quarter of 2011 and much farther apart from the 74.8 percent both GSEs held during the first quarter of 2011.
May 18, 2012 - Inside The GSEs
Delaware County Finds GSEs Not Exempt From Transfer Taxes
Real estate transactions in New Castle County, DE, will no longer be exempt from transfer tax as a conveyance from a governmental entity, following a new ruling from the county’s legal counsel.The New Castle county law department found that Fannie and Freddie are federally chartered private corporations and not governmental agencies. The county’s revised interpretation of the realty transfer tax statute earlier this month, “consistent with the growing practice in other jurisdictions,” has prompted the county to enforce the distinction starting in June.
May 17, 2012 - Inside Mortgage Finance
Fannie, Freddie Report First Quarter REO Inventory Decline; FHFA Lowers Expectations on Rental Pilot
A decline in Fannie Mae’s inventory of single-family real estate owned homes coupled with improved REO sale prices played a significant role in the company’s first free-and-clear profit since going into government conservatorship. Freddie Mac also reported improved REO disposition activity during the first quarter of 2012. Fannie said it acquired 47,700 single-family properties during the first quarter compared to 47,256 in the fourth quarter of 2011 and 53,549 in the first quarter of 2011. The government-sponsored enterprise disposed of 52,071 single-family REO during the first three months of 2012...
May 11, 2012 - Inside FHA Lending
Genworth Mortgage Insurance has named Martin Klein as acting chief executive officer in the wake of former CEO Michael Frazier’s resignation last week. Klein is and remains the company’s chief financial officer. James Riepe was named nonexecutive chairman of the board. NMI Holdings, Inc., has raised $550 million in a private placement to provide mortgage insurance on loans to Fannie Mae and Freddie Mac. The company is in the process of obtaining approvals from state insurance regulators and the two government-sponsored enterprises. The MI unit will be called ...
May 11, 2012 - Inside MBS & ABS
GSEs Focused on HARP, New MBS Platform; Ginnie Mae Copes With New Issuer Demand
Fannie Mae and Freddie Mac reported robust activity in their expanded refinance programs for underwater borrowers, while Ginnie Mae is looking at new procedures to identify the potential new issuers that are most likely to become strong participants in its program. Freddie officials are very focused on the expanded Home Affordable Refinance Program, said Paul Mullings, senior VP for single-family sourcing at the government-sponsored enterprise. He told attendees at the Mortgage Bankers Association National Secondary Market Conference in New York this week that HARP now accounts for 26 percent of the refi loan...
May 10, 2012 - Inside Mortgage Finance
Fannie Mae posted a profit large enough to cover its government dividend payment for the first quarter of 2012, while Freddie Mac came up a little short and had to ask the government for an additional $19 million to remain solvent. Fannie reported $2.7 billion in net income during the first quarter, compared to a net loss of $2.4 billion in the fourth quarter of 2011 and a net loss of $6.5 billion in the first quarter of 2011. The company credited its better results to lower credit-related expenses, resulting from a less significant decline in home prices, a decline in the company’s inventory of real estate...
May 10, 2012 - Mortgage Beat
Federal Court Finds Fannie Not a Government Entity in Firing Lawsuit
Fannie Mae received a leg up last week in its defense against a former staffer’s wrongful termination lawsuit when a federal judge ruled that the GSE is not legally considered a government entity while under the conservatorship of its regulator, the Federal Housing Finance Agency...
May 9, 2012 - Mortgage Beat
Donovan Urges Congress to Tear Down Barriers to Refinancing
Department of Housing and Urban Development Secretary Shaun Donovan this week urged Congress to pass legislation to make it easier for responsible owners who are current on their payments to refinance. Testifying before the Senate Committee on Banking, Housing and Urban...
May 8, 2012 - Mortgage Beat
MBA Advocates Matching GSE Rates
New York City – Mortgage Bankers Association President David Stevens this week at the MBA’s National Secondary Market Conference and Expo advocated for a change to Freddie Mac’s remittance cycle that would allow the two government-sponsored enterprises to be pooled together...
May 4, 2012 - Inside The GSEs
Senate Democrats Propose HARP 3.0 Legislation
Senate Democrats are drafting legislation to force Fannie Mae and Freddie Mac to expand the Home Affordable Refinance Program for underwater borrowers even farther beyond the newly unveiled HARP 2.0. The draft legislation by Sens. Robert Menendez, D-NJ, and Barbara Boxer, D-CA, unveiled last week during a subcommittee hearing would force the GSEs to waive representations and warranties on new HARP loans regardless of whether the refi lender serviced the previous mortgage.
May 4, 2012 - Inside The GSEs
Group Eying GSE Lenders for Disparate Impact Signs
A national consumer advocacy group, whose own investigation of FHA credit overlays spurred a federal probe of nearly two dozen FHA lenders, said it is keeping an eye on Fannie Mae’s and Freddie Mac’s use of loan-level price adjusters as a potential discriminatory lending practice. The National Community Reinvestment Coalition said it’s still waiting to hear from the Department of Housing and Urban Development about the results of multiple investigations HUD launched in December 2010 after NCRC found that 22 lenders set borrower credit scores as high as 640 for FHA loans, even though the FHA guarantees loans with scores as low as 580.
May 4, 2012 - Inside The GSEs
Fannie Asserts Right to Change Contract Terms
Fannie Mae announced this week it can change pricing and other terms under purchase agreements and mortgage-backed securities contracts with lenders should the GSE deem it necessary. According to the alert to servicers, Fannie is asserting its right to change pricing terms under standard purchase agreements, master agreements or mortgage securitization contracts. For any contracts and agreements entered into on or after May 1, Fannie said it reserves the right to change pricing “one or more times” during the term. Such changes may include the base guaranty fee, loan-level price adjustments and guaranty-fee adjustments on mortgages delivered under mortgage-backed securities contracts or as whole loans.
May 4, 2012 - Inside The GSEs
FHFA Feud Over GSE Writedowns Intensifies
The Federal Housing Finance Agency is still mulling over accepting principal reduction payments from the Treasury Department even as the debate between the factions for and against GSE loan writedowns is quickly dissolving into a partisan food fight. This week, two ranking House Republicans urged FHFA Acting Director Edward DeMarco to stand fast against mounting political pressure directed at him by the Congressional allies of the Obama administration as House Democrats took the gloves off, accusing the Finance Agency of falsely withholding pertinent information about the agency’s principal reduction analysis.
May 4, 2012 - Inside MBS & ABS
Revamped HARP Inspires Fannie Direct Marketing ‘Outreach’ to Spur More Lender Refi Business
In an effort to aggressively expand the recently retooled Home Affordable Refinance Program, Fannie Mae is encouraging lenders to make the most of HARP 2.0’s looser rules on marketing directly to eligible borrowers. The government-sponsored enterprise created “outreach materials” to help jump-start lenders’ marketing efforts to would-be borrowers who aren’t aware they may qualify for a HARP refinance. “Fannie Mae developed these model ‘HARP Materials’ to facilitate borrower consideration of HARP refinancing options that may be available through participating lenders and servicers...
May 2, 2012 - Mortgage Beat
Fannie Mae Announces Changes to Pricing Terms
Fannie Mae is asserting its right to change pricing terms under standard purchase agreements, master agreements or mortgage securitization contracts, according to an alert issued on May 1. The government-sponsored enterprise made clear its right to change the pricing...
April 26, 2012 - Mortgage Beat
FHFA REO Pilot Extension Deadline Extended?
Overwhelmed by as many as 400 private bidders vying to participate, the Federal Housing Finance Agency has reportedly extended the deadline for bids by one month. A HousingWire article recently reported that investors will now have until May to bid on the 2,490 foreclosed...
April 20, 2012 - Inside The GSEs
GSEs Pay Chicago Fee ‘Under Protest’
Fannie Mae and Freddie Mac have reluctantly directed their servicers to begin making payments next month in compliance with Chicago’s vacant property ordinance “under protest” as the GSEs’ conservator continues to fight the local legislation in court. Starting May 1, Fannie servicers will be required to include a written protest along with the ordinance’s $500 registration fee, according to a letter to servicers issued earlier this month. “All payments made to the city of Chicago, including vacant property registration payments, must be made ‘under protest’ by sending a written communication to the city with the registration fee,” explained Fannie. “This written communication must note that the Federal Housing Finance Agency determined that the registration fee does not apply to Fannie Mae, and that the registration fee is therefore paid under protest.”
April 20, 2012 - Inside The GSEs
Senator Asks FHFA For ‘Clear’ GSE Repurchase Process
The Federal Housing Finance Agency should give consideration to creating a mechanism to allow small mortgage lenders to more easily appeal GSE repurchase demands, according to one U.S. senator.In a letter sent last week to FHFA Acting Director Edward DeMarco, Sen. Jeanne Shaheen, D-NH, said several of her small-business constituents have noted a “sharp increase” in repurchase demands over the last year.
April 20, 2012 - Inside The GSEs
MBA Asks Fannie to Delay ‘Force-Placed’ Deadline
The Mortgage Bankers Association has asked Fannie Mae to push back its June 1 implementation deadline of the GSE’s new requirements for lender “force-placed” insurance policies to allow time for the creation of a “workable timeline” for compliance. Last month, Fannie announced it would implement changes to its Lender-Placed Insurance requirements by overseeing the force-placed polices itself instead of allowing banks and other financial institutions to do so.
April 20, 2012 - Inside The GSEs
FHLBanks Weigh In Against PACE Rule
The front-of-the-line priority status granted to participants of the Property Assessed Clean Energy home loan programs under the Federal Housing Finance Agency’s proposed rule could have wide-ranging and unintended consequences for the Federal Home Loan Banks, according to Bank officials. The FHFA received more than 400 comment letters late last month – including two from the FHLBanks of Indianapolis and New York – roughly split for and against implementation of the proposed “green” lending program.
April 20, 2012 - Inside The GSEs
Increase In HARP 2.0 Applications Boosts Banks’ Short-Term Income
Lenders should expect at least a short-term boost in profits from the Federal Housing Finance Agency’s recent tweaks to the Home Affordable Refinance Program, analysts say as the industry’s largest lenders have seen a big increase in new refinance applications for HARP 2.0. In its first-quarter earnings report issued last week, Chase cited the impact of HARP in part for generating $1.6 billion in mortgage production revenue, an 80 percent increase from a year earlier. Likewise, Wells reported first-quarter mortgage originations to be up $9 billion from the fourth quarter of 2011, with 15 percent of originations credited to HARP, while application volumes rose 20 percent during the same period.
April 20, 2012 - Inside The GSEs
FHFA: GSEs Draw Less From Taxpayers Than Projected
Fannie Mae and Freddie Mac’s combined cash infusion from taxpayers during the latter half of 2011 came in significantly below estimates forecast by the GSEs’ conservator, according to a new report. The Federal Housing Finance Agency’s fourth-quarter conservatorship report noted that Fannie and Freddie’s actual combined draw during the second half of last year was $19 billion, some $10 billion below the Finance Agency’s most optimistic projections issued last fall. In October, the FHFA circulated its updated projections of the financial performance of the GSEs, including potential draws under the Senior Preferred Stock Purchase Agreements with the Treasury Department.
April 20, 2012 - Inside The GSEs
GSE MBS Business Surges in 1Q 2012 Due to Refi
MBS Business Surges in 1Q 2012 Due to Refi GSE single-family securitizations leapt 16.2 percent during the first three months of 2012 compared to the previous quarter as mortgage lenders delivered some $303.9 billion in home loans to Fannie Mae and Freddie Mac’s securitization programs, according to an Inside The GSEs analysis. The first quarter’s flood of new business marked the fourth straight quarterly increase in production of GSE mortgage-backed securities after the market tanked in the second quarter of 2011.
April 20, 2012 - Inside The GSEs
FHFA Rolls Out New GSE Short Sale Timeline
Fannie Mae and Freddie Mac’s mortgage servicers will soon be required to review and respond to short sale requests within 30 days of an offer on the property and to provide weekly status updates if the offer is still under review after that, under new standards issued this week by the Federal Housing Finance Agency. Under the new guidance, effective June 15, servicers will have to make a final decision within 60 days of receiving an offer on a short sale property. The FHFA said the change is an attempt to hasten the traditionally time-consuming and difficult primary alternative to foreclosure.
April 20, 2012 - Inside The GSEs
FHFA Revises Categories for Examination Findings
The Federal Housing Finance Agency has revised and consolidated its categories for safety and soundness and Affordable Housing Program examination findings pertaining to Fannie Mae, Freddie Mac and the Federal Home Loan Banks, the FHFA announced in a recent advisory bulletin. Examination findings are deficiencies related to risk management, risk exposure, or violations of laws, regulations or orders that affect the performance or condition of a regulated entity, according to the FHFA.
April 20, 2012 - Inside The GSEs
GSE Writedown Foes Bolster Wavering FHFA
After months of hearing Congressional Democrats and White House allies suck up the public debate oxygen in favor of GSE principal reduction, mortgage writedown opponents are speaking up as the Federal Housing Finance Agency looks to be reconsidering its stand against loan forgiveness. Industry groups are expressing with greater volume their concern that principal forgiveness on loans guaranteed by Fannie Mae and Freddie Mac would ultimately hurt the housing market.
April 12, 2012 - Inside Mortgage Finance
Fracking Moratorium Could Get Messy For Mortgage Lending in Certain States
Fannie Mae and Freddie Mac have generally made exceptions to their own rule regarding title impediments for properties with oil, gas, water or mineral rights, though new environmental disputes over hydraulic fracturing may change that, with “confounding implications for a particular region’s lenders,” said rating service DBRS. While contracts that allow for parties other than the property owner to utilize the land often complicate matters, the profitability of leases for resources like natural gas make those properties more attractive, because “the lease would generate income the borrower could apply...
April 12, 2012 - Mortgage Beat
MBA Asks Sen. Franken To Modify GSE Repurchase Bill
The Mortgage Bankers Association has weighed in on an obscure bill recently filed in the Senate that would require the Federal Housing Finance Agency to prohibit Fannie Mae or Freddie Mac from any “possessory interest that could substantially reduce the financial...
April 6, 2012 - Inside The GSEs
Fed: Conservatorship of GSEs Cost Bank Investors $8 Billion
Roughly one out of every 14 banks in the country suffered significant investment losses following the September 2008 government takeover of Fannie Mae and Freddie Mac, according to a new Federal Reserve discussion paper. The paper, When Good Investments Go Bad: The Constriction in Community Bank Lending After the 2008 GSE Takeover, details how financial institutions took a bath when the two companies were placed into conservatorship and dividend payments on common and preferred shares were suspended.
April 6, 2012 - Inside The GSEs
OIG Finds No Fault With FHFA GSE Charity Oversight
Although it questions the appropriateness of Fannie Mae and Freddie Mac funding charitable activities while the two companies remain under government conservatorship, the Federal Housing Finance Agency’s official watchdog has concluded that the FHFA has the dissolution of the GSEs’ charity funds in hand. The recent report by the FHFA’s Office of Inspector General noted that at the time the conservatorships were established 3½ years ago, both companies had long-standing mechanisms in place to make “substantial contributions” to charitable organizations. In 2008, both GSEs’ charitable giving totaled $73 million.
April 6, 2012 - Inside The GSEs
Former Fannie Execs File Motion To Dismiss SEC Fraud Lawsuit
Three former Fannie Mae executives, including the company’s one-time CEO, have petitioned a federal judge to toss the securities fraud case the government filed against them late last year. Filed last week in the U.S. District Court for the Southern District of New York, the motion to dismiss contends the Securities and Exchange Commission is thin on proof that the GSE, at the direction of the then top executives, failed to disclose to investors the companies’ exposure to subprime mortgages prior to the 2008 housing market crash.
April 6, 2012 - Inside The GSEs
OIG: FHFA’s Dual GSE Oversight Roles May Conflict
The inherent tensions between the Federal Housing Finance Agency’s dual role as both conservator and regulator of Fannie Mae and Freddie Mac pose “significant challenges” that may put the Finance Agency at cross purposes with its two missions, according to the FHFA’s official watchdog. A white paper issued by the FHFA’s Office of Inspector General last week offering its current assessment of the agency’s conservatorship of the GSEs cited the Finance Agency’s two main challenges as: attempting to advance the enterprises’ business interests while assisting distressed homeowners; and simultaneously serving as both conservator and regulator.
April 6, 2012 - Inside The GSEs
Obama Signs GSE Bonus-Killing STOCK Act
President Obama this week signed into law a measure that, among other things, kills big bonus payments to Fannie Mae and Freddie Mac executives for as long as the GSEs are subsidized by taxpayers. After nearly two months and some legislative positioning, Congress passed the Stop Trading on Congressional Knowledge Act of 2012. Primarily, the STOCK Act bars House and Senate members and their staff from using non-public, inside information for personal benefit.However, an amendment to the bill which was passed on an overwhelmingly bipartisan margin in both houses of Congress prohibits the payment of bonuses over and above a GSE executive’s salary compensation while Fannie and Freddie remain in government conservatorship.
April 6, 2012 - Inside The GSEs
FHLBank Agency MBS Investments Slip in 4Q 2011
Fannie Mae and Freddie Mac mortgage-backed securities remained the preferred investment choice of the Federal Home Loan Banks during the fourth quarter of 2011, with a minor decline posted from the previous quarter, according to a new analysis by Inside The GSEs based on data from the Federal Housing Finance Agency. Ginnie Mae securities likewise posted a decline within the 12 FHLBank system during the three-month period ending Dec. 31, 2011. GSE MBS accounted for 69.6 percent of combined FHLBank MBS portfolios, down 2.1 percent from the third quarter of 2011. The Finance Agency’s data do not separately break out Fannie and Freddie volume or share.
April 6, 2012 - Inside The GSEs
FHFA Reconsiders Principal Reduction Stance
The Federal Housing Finance Agency is in the midst of a full and frank appraisal of the Treasury Department’s recently proposed incentive program to spur GSE principal reductions through the Home Affordable Modification Program, with a final answer to be forthcoming later this month, according to the agency head. For months now, FHFA Acting Director Edward DeMarco has been the target of unrelenting political pressure from the Obama administration and Congressional Democrats to allow Fannie Mae and Freddie Mac to employ mortgage principal reductions as a tool to modify underwater GSE loans.
April 6, 2012 - Inside The GSEs
Judge: GSEs Liable for Unpaid MI Prop. Taxes
Fannie Mae and Freddie Mac could end up on the hook for millions of dollars in unpaid property taxes as well as the targets of numerous legal complaints following a Michigan federal judge’s ruling that could force the GSEs to open their coffers to a plethora of revenue-starved local governments. Two weeks ago, U.S. District Court Judge Victoria Roberts granted Oakland County, MI, summary judgment in its lawsuit against Fannie and Freddie because the two GSEs failed to pay the transfer tax on deeds recorded by the state Register of Deeds Office, as required by Michigan law.
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