Fannie Mae

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October 31, 2014 - Inside The GSEs

GSE MBS Business Activity Posts Overall Increase in September

Together, Fannie Mae and Freddie Mac in September posted a combined increase in the volume of single-family mortgages securitized, according to a new Inside The GSEs analysis. Fannie and Freddie issued $64.1 billion in single-family mortgage-backed securities in September, a 4.9 percent increase from August. However, September’s MBS issuance was down 56.7 percent on a year-to-date basis.


October 31, 2014 - Inside The GSEs

Enterprise Endnotes

FHFA’s Watt Promises a CEO for the CSP by Year-end. After a year of searching for a chief executive to lead Common Securitization Solutions, the Federal Housing Finance Agency is getting closer to picking a candidate for the job. Speaking at the annual convention of the Mortgage Bankers Association in Las Vegas last week, FHFA Director Mel Watt promised the industry that a CEO would be named by Dec. 31. The FHFA’s search firm is Spencer Stuart.


October 31, 2014 - Inside The GSEs

OCC: Freddie Re-Default Mods Perform Ahead of Fannie in 2Q14

Modified Freddie Mac mortgages performed better than Fannie Mae loans more than two years after modification as the performance gap between the two GSE closed slowly, according to the Office of the Comptroller of the Currency. The OCC’s latest Mortgage Metrics Report noted that Freddie loans had a 15.5 percent re-default rate six months after modification, while Fannie mods saw a 16.2 percent rate. At the 12-month mark, Freddie stood at 21.9 percent compared to Fannie’s 23.2 percent.


October 31, 2014 - Inside The GSEs

MBA Opposes FHFA IG Proposed Seller/Servicer Auditor Rotation

The Mortgage Bankers Association has formally called upon the Federal Housing Finance Agency’s official watchdog to reconsider some of its proposals meant to prevent the next multi-billion dollar fraud scheme against Fannie Mae and Freddie Mac. In a letter dispatched to the FHFA’s Inspector General late last week, the MBA cited its opposition to certain recommendations the IG made to the Finance Agency in its August post-mortem on the swindle perpetrated by the now-defunct Taylor, Bean & Whitaker Mortgage.


October 31, 2014 - Inside The GSEs

IG: Fed Tapering GSE MBS Will Curtail Guaranty Fee Revenue

The Federal Reserve’s quantitative easing tapering will put a dent in Fannie Mae and Freddie Mac guaranty fee revenues, according to the Federal Housing Finance Agency’s Inspector General. The evaluation report issued by the IG last week concluded that as the central bank pulls back from the mortgage-backed securities market, interest rates will drift higher and the GSEs will do less business, meaning declining g-fee revenue.


October 31, 2014 - Inside The GSEs

Federal Judge Shuts Down Mass. AG’s GSE Foreclosure Lawsuit

A federal judge last week dismissed claims brought by the state of Massachusetts that Fannie Mae and Freddie Mac violated state law by putting limits on the sale of pre- and post-foreclosure homes. State Attorney General Martha Coakley filed suit in June against the Federal Housing Finance Agency, as GSE conservator, alleging that Fannie and Freddie are violating state law by refusing to negotiate lower terms for distressed Bay State homeowners.


October 31, 2014 - Inside The GSEs

Fannie, JPMorgan Chase Pioneer New Risk-Sharing Transaction

Fannie Mae and JPMorgan Chase announced this week they are collaborating in a new risk-sharing vehicle that features recourse provided to the GSE on nearly $1 billion of new Chase originations. Separately, Freddie Mac has priced two more Structured Agency Credit Risk Transactions. JPMorgan Madison Avenue Securities Trust 2014-1 will simulate the behavior of a $989 million pool of JPMorgan-originated mortgages delivered into Fannie-guaranteed MBS.


October 31, 2014 - Inside The GSEs

Shareholders Announce $170M Legal Settlement with Fannie

Fannie Mae will pay $170 million to certain investors to settle a consolidated class-action lawsuit that alleges the GSE misrepresented its exposure to subprime loans in the run up to the 2008 mortgage crisis. The lead plaintiffs in the case include the Massachusetts Pension Reserves Investment Management Board and State Boston Retirement Board, which represent a class of common stockholders. The Tennessee Consolidated Retirement System represents a class of preferred stockholders.


October 31, 2014 - Inside The GSEs

Industry Commenters Take Aim At FHFA’s GSE Housing Goals

The Federal Housing Finance Agency may end up having second thoughts about its proposed housing goals for Fannie Mae and Freddie Mac given the room for improvement industry members cited in comment letters to the agency. Issued by the FHFA in September, the proposal would increase some of the benchmark levels for Fannie’s and Freddie’s affordable housing goals through 2017, while also establishing new housing subgoals for low-income multifamily properties.


October 31, 2014 - Inside The GSEs

GSE Shareholder Petitions Iowa Court to Reverse DC’s Dismissal

An Iowa-based GSE last week asked a federal court in the state to give “no weight” to a ruling earlier this month by a federal judge who dismissed litigation by other GSE shareholders, including Perry Capital and Fairholme Funds. Continental Western Insurance Co. filed papers in U.S. District Court for the Southern District of Iowa Central Division arguing that Judge Royce Lamberth was “simply wrong” in his interpretation of the Housing and Economic Recovery Act of 2008 and his HERA-based rationale to shut down shareholders’ suits in DC.


October 31, 2014 - Inside The GSEs

Experts: Uncertain Future of GSEs Will Accelerate Turnover

With little chance of GSE reform legislation passing until 2016, Fannie Mae and Freddie Mac will continue to experience employee turnover as well as infrastructure upkeep challenges, say experts. Speaking during a conference call sponsored by GSE shareholder rights group Investors Unite this week, Matt Seu, principal with Actualize Consulting and a former Freddie vice president, warned that six years of government conservatorship have taken a toll on the institutional memories at both companies. …


October 31, 2014 - Inside The GSEs

Lenders Encouraged by FHFA Buyback Relief, Want Details

Mortgage professionals seem cautiously optimistic about new policy proposals from the Federal Housing Finance Agency on buyback relief and high loan-to-value lending, but it remains to be seen whether they will have the desired impact. Speaking at the annual convention of the Mortgage Bankers Association last week, FHFA Director Mel Watt shared some concrete details about the new “life of loan” representation-and-warranty relief and outlined a number of other changes on tap.


October 31, 2014 - IMFnews

What We’re Hearing: 40 Percent of Lenders May Disappear Via M&A? / Less Competition? / They’ll be Back / Benjamin Lawsky, a Nice Guy, Really / Provident Exiting Certain States?

One veteran mortgage trade group official, a staunch Republican no less, told us that Lawsky is an “honest and bright guy,” adding that he understands the issues.


October 31, 2014 - Inside MBS & ABS

SEC Deadlock Stalls $16.7 Billion BofA Settlement; Fannie Will Pay $170 Million to Shareholders to End Pre-Crisis Suit

An internal conflict within the Securities and Exchange Commission is reportedly holding up final resolution of Bank of America’s record $16.65 billion settlement with government agencies. The settlement, announced last August, is stalled due to a partisan dispute among the five SEC commissioners over granting a waiver on additional sanctions that would take hold when the settlement is entered into court. The sanctions, if enacted, could adversely affect...


October 31, 2014 - Inside MBS & ABS

Fannie, JPMorgan Debut New Risk-Sharing Vehicle, Freddie Rolls Out Two STACRs Totaling $1 Billion

Fannie Mae and JPMorgan Chase announced this week they are partnering in a new risk-sharing vehicle that features recourse provided to the government-sponsored enterprise on nearly $1 billion of new Chase originations. Separately, Freddie Mac has priced two more Structured Agency Credit Risk Transactions. JPMorgan Madison Avenue Securities Trust 2014-1 will simulate the behavior of a $989 million pool of JPMorgan-originated mortgages delivered into Fannie-guaranteed MBS. While similar to Fannie’s Connecticut Avenue Securities program, there are...


October 31, 2014 - Inside MBS & ABS

Commercial Mortgage Securitization Up Sharply in 3Q14 As CMBS and Agency Multifamily Both Post Big Gains

A total of $51.18 billion of commercial mortgages were securitized during the third quarter of 2014 as the sector reached a new post-crisis high in new issuance, according to a new market analysis by Inside MBS & ABS. Commercial mortgage securitization rose 38.4 percent from the second quarter and represented the biggest three-month period in new issuance since the third quarter of 2007. For the first nine months of 2014, commercial mortgage securitization totaled $119.76 billion, down 24.4 percent from the same period last year. New issuance was off on a year-to-date basis because of the slump in production during the first half of 2014. Both sides of the market posted...[Includes one data chart]


October 31, 2014 - Inside MBS & ABS

Fed Ends Quantitative Easing Program, As Expected, But Will Yields Rise Enough to Lure Other Investors?

The Federal Reserve’s Open Market Committee brought the latest installment in its quantitative easing programs to a conclusion this week, but the central bank will continue to reinvest principal payments back into agency MBS. The FOMC also reaffirmed the current 0 to 0.25 percent target range for the federal funds rate. “The committee anticipates … that it likely will be appropriate to maintain the 0 to 0.25 percent target range for the federal funds rate for a considerable time following the end of its asset purchase program this month, especially if projected inflation continues to run below the committee’s 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.” And as usual, the Fed left...


October 31, 2014 - IMFnews

Academic Weighs in on GSEs' Future: Obama Should go with an ‘Administrative’ Solution

An administrative solution is already possible within the Housing and Economic Recovery Act of 2008, which grants the FHFA authority to bring the GSEs out of conservatorship.


October 30, 2014 - Inside Mortgage Finance

Experts: Obama Admin. Should Look to Release Fannie, Freddie From Conservatorship to Build Policy Legacy

The Federal Housing Finance Agency and the Obama administration could secure their legacies during the next two years by releasing Fannie Mae and Freddie Mac from conservatorship as two stable and smaller government-sponsored enterprises, say some experts. Speaking during a conference call sponsored by GSE shareholder rights group Investors Unite, Clifford Rossi – founder and principal at Chesapeake Risk Advisors – reiterated his call for an administrative solution that would recapitalize the GSEs and bring them out of conservatorship under strict conditions. “Knowing that it’s going to be an uphill battle to get any sort of resolution from Congress, it could be...


October 30, 2014 - Inside Mortgage Finance

The Recent Rate Decline Isn’t Expected to Slow the Mortgage M&A Train; Guild is Still Hungry for Deals

When rates take a noticeable dive – as they have the past few weeks – mortgage lenders contemplating a sale sometimes have a change of heart, opting to ride the new production wave. But this time around, that doesn’t appear to be the case. “Most every lender I speak to understands this to be a very temporary event prior to a relatively cold and uncertain winter,” said M&A advisor Rick Roque of Menlo Company. Over the past two months, Inside Mortgage Finance has found 10 publicly announced M&A transactions with several more likely signed that weren’t disclosed. Roque, who’s working on several deals, said...


October 29, 2014 - IMFnews

Short Takes: Redwood’s New Jumbo MBS Has Eight Non-QMs / MB Launches Sports Firm, Reveals Mortgage Earnings / Ellie Mae is Worth What? / FHFA Has a New Watchdog, Finally / Distressed RE Fund Raises a Bundle

Pacific Union Financial took in $100 million of profits. It’s not every day that a privately held nonbank tells the world what it’s earning…


October 29, 2014 - IMFnews

Fannie Mae Turning Into a Multifamily MBS Monster: Deals Doubled in 3Q

Former FHFA Acting Director Edward DeMarco wanted to shrink the multifamily programs of Fannie and Freddie, but that initiative has been placed on the back burner.


October 28, 2014 - IMFnews

MBS Investments by Credit Unions on the Wane

With certain exceptions, credit unions invest almost exclusively in agency product, avoiding jumbo securities.


October 27, 2014 - IMFnews

Short Takes: Try Convincing Commercial Banks About Buyback Relief / Fannie Not So Bullish / Simpler Comp Plans for LOs? / Wells Pays HECM Fine / New Correspondent Chief for Nationstar

Industry consultant Joe Garrett notes that one of his clients (back in 2003) had 52 loan officers and “about 52 comp plans”…


October 27, 2014 - IMFnews

Fannie Shareholders (Pre-Conservatorship) will Reap $170 Million from Settlement

The investor-plaintiffs claim that Fannie and two of the company’s former executives made false and misleading statements about the mortgage giant’s internal controls and its exposure to subprime.


October 24, 2014 - IMFnews

What We’re Hearing: More Questions About Wingspan but No Answers / Are Specialty Servicers Toast? / Should Ocwen Move Its India Workers to Upstate New York? / Mortgage Company Owner Wants to Buy Baseball Team

Note to Ocwen management: every US employee is a potential mortgage customer. Think about it.


October 24, 2014 - Inside MBS & ABS

FHFA-IG: Fed Tapering of Fannie, Freddie MBS Means ‘Significant’ Reductions in G-Fee Revenue

The Federal Reserve’s decision late last year to taper its agency MBS purchases appears to have contributed to higher mortgage rates, which in turn has helped lead to “significant reductions” in Fannie Mae and Freddie Mac guaranty fee revenue on MBS issued so far this year, according to the Federal Housing Finance Agency’s Inspector General. The evaluation report issued by the IG late this week concluded that continued tapering by the Fed and the eventual reduction of its massive MBS portfolio could have an “adverse impact” upon the financial performance of the two government-sponsored enterprises. “Although the Federal Reserve’s [quantitative easing] programs benefitted the enterprises’ financial condition in 2012 and 2013, its decision, among other factors, in late 2013 to taper its MBS purchases contributed...


October 24, 2014 - Inside MBS & ABS

Ginnie Updates Issuer Eligibility; Fannie and Freddie Continue With Do-It-Yourself Reform

Fannie Mae, Freddie Mac and Ginnie Mae have been around for decades and they dominate the residential MBS market, but the agencies are not standing still. Pushed by their federal conservator, Fannie and Freddie are rebuilding their securitization infrastructure and trying to reinvent how they do business with mortgage sellers. At the annual convention of the Mortgage Bankers Association this week, the Federal Housing Finance Agency announced an agreement in principle on changes to the representations-and-warranties framework used by the government-sponsored enterprises. Ginnie officials disclosed new issuer eligibility standards and performance evaluations. “GSE reform does not mean...


October 24, 2014 - IMFnews

FHFA IG Among Growing List of Financial Regulators with Armed Agents

According to the most recently available data, 33 IG offices had roughly 3,500 agents authorized to carry firearms.


October 23, 2014 - Inside Mortgage Finance

FHA Share of Home-Purchase Financing Falls to Five-Year Low, Borrowers Shift to GSEs and VA

High fees on FHA mortgages have helped push FHA’s market of financing for home purchases to the lowest level since the financial crisis, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. FHA mortgages were used to finance 18.2 percent of home purchases in September, based on a three-month moving average. That was down from a 21.9 percent share in September 2013 and 36.6 percent in May 2010, the highest level for FHA financing in the five-year history of HousingPulse. From 2008 through 2013, the Department of Housing and Urban Development increased...


October 23, 2014 - Inside Mortgage Finance

Fannie, Freddie Shareholders Look to Iowa Federal Court to Vacate DC Judge’s Dismissal of GSE Lawsuit

An Iowa-based investor in government-sponsored enterprise common stock this week asked a federal court in the Hawkeye State to give “no weight” to a ruling earlier this month by a Washington, DC, federal judge who dismissed litigation against the government by other GSE shareholders, including Perry Capital and Fairholme Funds. Continental Western Insurance Co. filed papers in U.S. District Court for the Southern District of Iowa Central Division arguing that Judge Royce Lamberth was “simply wrong” in his interpretation of the Housing and Economic Recovery Act of 2008 and his HERA-based rationale to shut down shareholders’ suits in DC. An investor in GSE stock, Continental’s counsel in the case is...


October 23, 2014 - Inside Mortgage Finance

Change in Control of Capitol Hill Could Spur Some Legislative Activity; GSE Reform Still Lacks Traction

If Republicans take control of the U.S. Senate in the upcoming elections, Congress next year may actually produce some mortgage-related legislation, according to political analysts participating on a panel at the Mortgage Bankers Association’s annual convention in Las Vegas this week. Any successful legislation will be narrowly targeted and not address complex problems like building a new mortgage finance system or resolving the status of Fannie Mae and Freddie Mac, analysts agreed. Over the last four years, the Democrats’ top priority has been preserving...


October 23, 2014 - Inside Mortgage Finance

Expanding Access to Credit May Grease Underperforming Home-Purchase Market

The mortgage credit box contracted quickly as the housing market slid toward disaster in 2007, but it’s proving to be much more difficult to stretch it back to what used to be considered normal. The subtitle to this week’s annual convention of the Mortgage Bankers Association could well have been “access to credit,” an idea that clearly dominated the conversation. Despite the recent unexpected drop in mortgage interest rates, most observers expect origination volume in 2015 to track closely to this year’s sluggish level and part of the problem is relatively weak home-purchase lending. Industry people are...


October 23, 2014 - Inside Mortgage Finance

FHFA Agrees to Additional Buyback Relief, Pushes Fannie and Freddie Back Into 97s

Federal Housing Finance Agency Director Mel Watt this week unveiled two significant policy changes aimed at opening up the mortgage credit box: additional buyback relief for originators that sell loans to the government-sponsored enterprises and a return to Fannie Mae and Freddie Mac purchases of mortgages with loan-to-value ratios between 95 percent and 97 percent. Speaking at the annual convention of the Mortgage Bankers Association in Las Vegas, Watt gave some concrete details about the new “life of loan” representation and warranty relief and outlined a number of other changes in the works. Moreover, industry officials contend...


October 23, 2014 - IMFnews

Short Takes: A ‘Troubling’ Corporate Culture at Ocwen? / IMA Launches Crowd-Funding Unit / Massachusetts Loses Foreclosure Battle with GSEs / Reverse Stock Split for Mortgage REIT

Interactive Mortgage Advisors has launched RealPartner.com, a crowd funding platform giving accredited investors access to performing residential mortgages...


October 23, 2014 - IMFnews

Yes, But Will the Megabanks Loosen Credit?

David Steckel of Bank of America said his institution has focused on capturing more of the customers who fit into the company’s credit box rather than making that box bigger.


October 22, 2014 - IMFnews

FHFA’s Watt Promises a CSP CEO Will be Named by Year-end

One former CEO candidate told IMFnews that back when he was approached about the job, the starting salary for the position was at least $400,000.


October 22, 2014 - IMFnews

GSE Shareholders Look to Iowa Federal Court to Vacate DC Judge’s Dismissal

An investor in GSE stock, Continental’s counsel in the case is Cooper & Kirk, the same law firm that represents Fairholme, a large hedge fund that bought up GSE stock last year.


October 21, 2014 - IMFnews

Short Takes: MBA Shows the Love for FHFA’s Mel Watt / Looser Mortgage Credit? Are You Crazy? / The CFPB ‘ePilot’ Moves Closer / The Fear of Running Out of Money / Are You Afraid of Ghosts?

After all, didn’t America suffer a housing “depression” because credit was too loose? Some GOP conservatives in Congress live by the edict: those who can own; those who can’t rent…


October 21, 2014 - IMFnews

QRM = QM; Final Rule on Risk Retention Includes Exemptions for Large Majority of Mortgages

Non-agency MBS sponsors will be allowed to retain the risk portion on vertical or horizontal tranches of the security or a combination of the two.


October 21, 2014 - IMFnews

FHFA’s Olive Branch on Buybacks and HLTVs Welcomed but It Won’t be a Game Changer

One mortgage executive added: “Watt is trying to do the right thing, but I’m not sure he will get there. It’s good to see the government admit that the pendulum went too far.”


October 20, 2014 - IMFnews

FHFA Chief Floats Initiatives Tied to Looser Credit: More Buyback Relief and Higher LTVs

In defining misrepresentations, FHFA will set a minimum number of loans that must be identified with one of the six trigger elements.


October 20, 2014 - IMFnews

Short Takes: Will FHFA’s Mel Watt Deliver the Goods? / Actually, Fannie is Buying 97 Percent LTV Loans, But… / IBM Gets Whacked / First Republic’s GOS / Quicken CEO Sworn in at MBA Show

What does IBM have to do with the mortgage business? Actually quite a bit, IBM is one of Fannie Mae’s largest technology vendors...


October 20, 2014 - IMFnews

Phoenix Capital and IMA Unveil New MSR Auctions

Servicing brokers expect a land rush of servicing deals before yearend.


October 17, 2014 - Inside Mortgage Trends

New Regs Pressure Lender Profitability

New regulations in the mortgage industry have wreaked havoc on the business, with lenders facing higher compliance risk and growing compliance costs, according to Fannie Mae’s third quarter survey of mortgage lender sentiment. The results show that 72 percent of lenders reported that recent regulations, among them the qualified-mortgage rule and the risk-based capital rules for banks, have had a “significant” impact on their business. Only 22 percent reported “minimal” impact ...


October 17, 2014 - Inside The GSEs

Enterprise Endnotes

IG Recommends FHFA Upgrade Its Recordkeeping. The Federal Housing Finance Agency is in compliance with its recordkeeping procedures but the policy and infrastructure of its records management could do with an upgrade, concluded an evaluation by FHFA’s Inspector General last week. The IG said that the Finance Agency’s Division of Enterprise Regulation’s recordkeeping practices “have limitations that impede the efficient retrieval” of examination workpapers by agency staff and by IG auditors.


October 17, 2014 - Inside The GSEs

UI Dings IG Audit of FHFA Rep-and-Warrant Framework as ‘Incomplete’

In an unusual move, a Washington, DC, think tank has publicly taken to task the official watchdog of the Federal Housing Finance Agency, finding a recent audit of the FHFA’s representation-and-warranty policy “incomplete.” The September report by the FHFA’s Inspector General concluded that the Finance Agency’s implementation of the rep-and-warrant framework was premature and resulted in “significant and unresolved operational risks” to Fannie Mae and Freddie Mac. An analysis by the Urban Institute found that the OIG’s conclusions were “incomplete and overstate the risk of the plan.”


October 17, 2014 - Inside The GSEs

Fitch: Fannie, Freddie Risk-Sharing On Pace to Top $400 Billion

Fannie Mae and Freddie Mac are set to sell portions of credit risk on U.S. residential mortgages “to the tune of a very sizeable increase” year-over-year, according to a report by Fitch Ratings. The two GSEs have completed 11 transactions since the risk-sharing initiative was initiated in July 2013, with Fannie and Freddie expected to issue credit-linked notes on a quarterly basis, said Fitch. …


October 17, 2014 - Inside The GSEs

Appeals Court Upholds Fannie’s ‘Sue-and-Be-Sued’ Charter Clause

In a 2-to-1 decision earlier this month, a three-judge panel of the Ninth Circuit Court of Appeals upheld a lower court ruling that tossed out state-law claims brought against Fannie Mae by homeowners fighting foreclosure proceedings. Homeowners in Lightfoot et al v. Cedant Mortgage Corp. et al sued Fannie and others in California state court after foreclosure proceedings were initiated against their homes. The homeowners filed the state court action after their prior federal claims were dismissed in federal district court.


October 17, 2014 - Inside The GSEs

GAO: Difficult to Evaluate FHFA on G-Fees Due to Lack of Goal Clarity

The Government Accountability Office took the Federal Housing Finance Agency to task last week for its less-than-transparent policy direction regarding guaranty fees. The wide-ranging report on housing finance reform efforts noted that the FHFA’s opaque position makes it difficult to hold the regulator accountable. “The lack of clearly stated goals for FHFA that recognize the potential trade-off between bringing private capital back into the market and making mortgage credit available has led to inconsistency in [the FHFA’s] policy on the level of guaranty fees on mortgage-backed securities issued by the enterprises,” the GAO said.


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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