Browse articles from all of our Newsletters related to FHFA.

January 30, 2015 - Inside The GSEs

Freddie Mac to Auction Seriously Delinquent Loans

Three pools of seriously delinquent mortgages with a total unpaid principal balance of $410 million will be auctioned off by Freddie Mac. The delinquent pools, with unpaid principal balances of $160 million, $141 million and $109 million, will be offered through Mission Capital Advisors, the broker in the deal, according to a Bloomberg report. Competitive bidding will end on Feb. 4. A large chunk of the loans are two years past due, the report noted. Freddie spokesman Tom Fitzgerald declined to provide further details, saying information at this stage of the deal is provided solely to prospective bidders. He said details on the results will be provided after auction. The transaction is the second of such sales for Freddie in ...

January 30, 2015 - Inside The GSEs

OIG: FHFA More Diverse at the Top Than in Mid-Level Positions

The Federal Housing Finance Agency’s diversity record at senior-level positions has improved, but remains far more wanting among mid-level management positions, according to a report by the agency’s Office of the Inspector General. An OIG analysis of FHFA data showed that the percentage of minorities and women in senior positions at the agency increased from 2011 to 2013. In addition, promotions of minorities at the senior level also increased over the same period. The report further found that the share of women at mid-level positions also rose during the same timeframe. However, the percentage of minorities in these positions remained unchanged, it noted. The OIG conducted a review of diversity and related workplace issues within the FHFA from March through ...

January 30, 2015 - Inside The GSEs

Fannie Looks to Foster Stability, Maturity in Risk-Sharing Business

Fannie Mae’s risk-sharing business had a gang-buster year in 2014, and the Federal Housing Finance Agency set a higher goal for the GSE in 2015. “Certainly we were very pleased with where we were able to take the program last year,” said Laurel Davis, Fannie vice president for credit risk transfer, in an interview with Inside The GSEs. “If you think about 2013, our goal then was to just launch something and to test the market and see what would happen.” The plan for 2014 was “to establish a regular pattern of issuance with the market,” Davis said. “Even though we had a good amount of issuance last year, obviously the program itself is still in its infancy. So our ...

January 30, 2015 - Inside The GSEs

Fannie, Freddie ‘Performance Pay’ May Be on Chopping Block

Fannie Mae and Freddie Mac have filed notice with the Securities and Exchange Commission warning that they might not be able to pay “deferred” compensation to executives if the GSEs fail to meet their 2015 conservatorship scorecard goals. Fannie, for instance, notes that the Federal Housing Finance Agency “will have the primary role” in determining whether the mortgage giant achieved its goals. None of the potentially affected executives are named in the separate SEC filings of the two. One former GSE regulator had this to say on the matter: “The purpose of the conservatorship scorecard is to drive performance. They are tied directly to GSE executive compensation.” According to the recently released 2015 scorecard, performance is based on a variety ...

January 30, 2015 - Inside The GSEs

FHFA Weighing Input On FHLBank Proposal

“Obviously we’ve touched a nerve,” Mel Watt, director of the Federal Housing Finance Agency, said of the FHFA’s proposal to revise standards for membership in the Federal Home Loan Bank System. At a hearing this week by the House Financial Services Committee, a number of Congressmen raised concerns about the proposed rule the FHFA issued in September. Rep. Frank Lucas, R-OK, was skeptical of the FHFA’s intentions, asking what problem the FHFA was trying to fix. “There are some potential problems that we are trying to fix, to make sure that the FHLBanks meet the statutory purposes that have been set,” Watt replied. “First of all, you don’t want anybody to be a member of the FHLBank system and get ...

January 30, 2015 - Inside The GSEs

GOP Questions Claim That HERA Authorizes GSE Funding for Trust

Republicans in the House Financial Services Committee and Mel Watt, director of the Federal Housing Finance Agency, clashed regarding funding of affordable housing funds by the GSEs at a hearing this week. In November, the FHFA directed Fannie Mae and Freddie Mac to begin setting aside funds in 2015 to be allocated to the Housing Trust Fund and the Capital Magnet Fund. The contribution formula calls for Fannie and Freddie to send amounts equal to 4.2 basis points of the principal balance of their new business to the funds, about $290 million based on the GSEs’ activity in 2014. Watt’s directive reversed a suspension that his predecessor, Ed DeMarco, had implemented. Watt repeatedly cited the Housing and Economic Recovery Act ...

January 30, 2015 - Inside The GSEs

Fannie, Freddie Have Wiggle Room To Cut Fees on Higher LTV Loans

Fannie Mae and Freddie Mac can reclaim their pricing edge on mortgages with higher loan-to-value ratios, although it’s not at all clear whether they will. Up until the FHA this week slashed its annual insurance premiums on most loans by 50 basis points, Fannie and Freddie had a fairly clear pricing advantage on higher LTV loans regardless of credit score, according to a new analysis by Deutsche Bank Securities. On loans with LTVs ranging from 90 percent to 95 percent, for example, GSE pricing was better for all borrowers with credit scores over 620. The same was true for loans with LTVs ranging from 95 percent to 97 percent, a program just put in place this year. Things are different ...

January 30, 2015 - Inside The GSEs

Plenty of Talk, Little Momentum For GSE Reform in Congress

Members of Congress on both sides of the aisle continue to work on legislation to reform the GSEs but with strong differences between the parties, there remains little optimism that GSE reform legislation will be enacted in the next two years. “While I realize the odds are long and the political issues to overcome are immense, I do believe that reforming this broken marketplace must remain a priority of this committee,” said Rep. Scott Garrett, R-NJ, at a hearing this week by the House Financial Services Committee. Garrett chairs the subcommittee on capital markets and GSEs. Garrett said previous GSE reform bills introduced on both sides of the aisle in Congress in recent years provide a foundation for what he ...

January 30, 2015 - Inside MBS & ABS

GSEs Halfway Towards Reaching the Prescribed Optimum Level for Retained Portfolio Holdings

Fannie Mae and Freddie Mac are more than halfway towards reaching their goal of reducing their retained mortgage portfolios to no more than $250 billion each by 2018, according to Federal Housing Finance Agency Director Mel Watt. Testifying before the House Financial Services Committee this week, Watt said the two government-sponsored enterprises have developed plans to meet their investment targets, $250 billion each, in accordance with terms of their conservatorship. As of Sept. 30, 2014, Freddie’s portfolio stood...

January 30, 2015 - Inside MBS & ABS

Commercial MBS Activity Falls Just Short of Post- Crash High Thanks to Fourth-Quarter Stumble

Securitization of income-property mortgages continued to post strong new issuance numbers in 2014, with the non-agency commercial MBS sector doing particularly well, according to a new market analysis by Inside MBS & ABS. A total of $164.77 billion of securities backed by commercial mortgages were issued last year, down just 0.6 percent from 2013’s level, which was the high-water mark since just before the financial collapse. And non-agency CMBS production was up 11.6 percent in 2014, at $96.48 billion. Agency MBS issuance fell...[Includes one data chart]

January 29, 2015 - Inside Mortgage Finance

Watt Defends GSEs’ Low Downpayment Offerings, Offers Few Clues on Where G-Fees Are Heading

The government-sponsored enterprises’ new low downpayment programs received a vigorous defense from Melvin Watt, the director of the Federal Housing Finance Agency, at a hearing this week by the House Financial Services Committee. Republicans on the committee attacked the programs from a number of angles, including raising concerns about default rates on mortgages with lower downpayments and fears of a “race to the bottom” with the FHA. “If you carefully look at other considerations and take them into account in deciding whether to back that credit, you can ensure...

January 23, 2015 - Inside FHA Lending

Low Rates, High Demand Power VA’s 3Q14 Surge

Production of loans with a VA guaranty was moderately strong in the third quarter of 2014, thanks to lower rates and increased demand for the no-downpayment loans, according to Inside FHA Lending’s analysis of the latest agency data. A 14.1 percent quarter-to-quarter surge helped the industry end last year’s first nine months with a total of $76.3 billion in VA loans, mostly purchase home mortgages taken out by a younger generation of war veterans. VA streamline refinancing also accounted for a substantial chunk of originations, 19.2 percent. Volume jumped from $19.5 billion in the first quarter of 2014 to $26.5 billion the following quarter. Lenders closed out the third quarter with $30.2 billion. Stanley Middleman, chief executive officer of Freedom Mortgage, said VA lending is on the upswing, driven by low interest rates. He thinks the VA home loan guaranty program has been ... [ 1 chart ]

January 23, 2015 - Inside Nonconforming Markets

REITs Pick Apart FHFA’s FHLBank Proposal

The Federal Housing Finance Agency’s proposal to prohibit captive insurers from joining the Federal Home Loan Bank system included generalizations and inaccuracies, and it overstepped rulemaking boundaries, according to real estate investment trusts. The FHFA issued a proposed rule in September that would prohibit captive insurance companies from joining the FHLBank system. At least seven REITs have used captive insurers to gain access to ...

January 16, 2015 - Inside The GSEs

Critics Oppose Using GSE Revenue To Fund Affordable Housing

Although the Federal Housing Finance Agency’s interim final rule is about prohibiting Fannie Mae and Freddie Mac from passing on the cost of Housing Trust Fund allocations to lenders, critics used the comment period to lambast the FHFA for allowing the allocations in the first place. “I don’t believe a company that is 100 percent shareholder-owned should give money to a charity before paying shareholders a dividend,” said Joe Johnson, affiliation undisclosed. “If Fannie and Freddie were released from conservatorship and were able to keep their own profits, then it would be fine to use them to fund the affordable housing fund.” Chris Roberts, affiliation also unknown, believes the FHFA’s action is a clear violation of the mandate to place ...

January 16, 2015 - Inside The GSEs

FHLBanks Oppose FHFA’s Proposal on Membership

The Federal Home Loan Banks have mounted strong opposition to a proposal from the Federal Housing Finance Agency that would revise standards for membership in the FHLBank system. “The proposed rule, if finalized, will fundamentally alter the FHLBanks’ relationship with their members and impair the FHLBank system’s ability to advance its congressionally-mandated mission of providing liquidity to support housing finance markets and the U.S. financial markets generally,” said John Bowman, a partner at the Venable law firm, in a comment letter submitted on behalf of the Council of FHLBanks. The FHFA issued the proposed rule in September and the comment deadline closed this week. More than 1,200 comments were submitted with community banks, real estate investment trusts, state regulators and ...

January 16, 2015 - Inside The GSEs

FHFA 2015 Scorecard Reflects Minor Shifts for Fannie, Freddie

The Federal Housing Finance Agency threw a few new wrinkles into its 2015 marching orders for Fannie Mae and Freddie Mac while sticking to major themes from 2014. Under the broad heading of maintaining credit availability, the two GSEs are expected to finish making improvements to their representation-and-warranty framework regarding loan originations, as well as continue clarifying their expectations regarding servicer performance and remedies. A new assignment for Fannie and Freddie is to assess the use of alternative credit scoring models, including operational and systems issues. The GSEs are expected to be ready to implement new duty-to-serve requirements when the FHFA implements a final rule. The Housing and Economic Recovery Act of 2008 directed the agency to issue regulations describing ...

January 16, 2015 - Inside MBS & ABS

SCOTUS Allows NCUA MBS Lawsuit to Proceed, JPMorgan Poised to Settle, Citigroup Gets Summons

The U.S. Supreme Court this week denied a petition by major banks to reject a lower court decision to allow a National Credit Union Administration MBS lawsuit to go forward. The SCOTUS chose not to hear the case, a lawsuit filed by the NCUA to recover damages suffered by five now-defunct federal credit unions as a result of investments in non-agency MBS sold by the banks. The suit is...

January 16, 2015 - Inside MBS & ABS

After a Booming Risk-Sharing Performance in 2014, Fannie/Freddie Goals Jump to $270 Billion for 2015

Fannie Mae and Freddie Mac had a stellar year for their risk-sharing transactions in 2014, selling off portions of the credit risk associated with $369.7 billion of MBS, greater than four times the $84.7 billion amount seen in the prior year, according to Fitch Ratings. Meanwhile, “performance of the transactions remains exceptionally clean,” analysts at Fitch said in a new report this week. The performance seen in 2013 was based...

January 15, 2015 - Inside Mortgage Finance

Analysts Debate Short- and Long-Term Effects of FHA’s Reduced Annual Premium on Private MI Providers

Now that the hurrahs and uproar over FHA’s reduced annual premiums have died down, analysts are having mixed views regarding its short- and long-term effects on private mortgage insurers. Some analysts predict FHA’s 50 basis-point reduction of the annual mortgage insurance premium charged on 30-year forward loans should have a modest impact on private MI business. The cut should benefit the lower FICO brackets – borrowers with credit scores of 679 and lower – a segment in which private MIs write little business, they suggest. “We believe...

January 15, 2015 - Inside Mortgage Finance

Final PMIER Rules From FHFA Could be Released Along With New Regulatory Language on LLPAs

The Federal Housing Finance Agency is expected to unveil final rules on Private Mortgage Insurer Eligibility Requirements (PMIERs) by the end of March, but there could be a surprise in the works. According to industry lobbyists and MI executives interviewed by Inside Mortgage Finance this week, the FHFA may publish the PMIER rules in tandem with new guidelines on loan-level price adjustments or LLPAs. “The MI industry is...

January 15, 2015 - Inside Mortgage Finance

REITs Push Back Against Proposal to Exclude Captive Insurers from FHLBank Membership

The Federal Housing Finance Agency overstepped its authority when it proposed excluding captive insurers from obtaining membership in the Federal Home Loan Bank System, according to captive insurance companies. Real estate investment trusts – including Redwood Trust and Two Harbors Investment – have used captive insurance companies to gain access to FHLBank financing. “The proposed membership regulations would needlessly exclude an entire category of statutorily permitted members that can further the FHLBank System’s mission as the mortgage finance market continually evolves,” Redwood Trust said in a comment letter to the FHFA. The FHFA issued...

January 9, 2015 - Inside Nonconforming Markets

GSE Deals Crowding Out Some Jumbo MBS

The risk-sharing transactions that Fannie Mae and Freddie Mac started offering in 2013 have drawn some investors away from buying new jumbo mortgage-backed securities, according to industry participants. The government-sponsored enterprises say the deals that share credit risk with investors help reduce taxpayer risk. However, the returns and risk profile of Freddie’s Structured Agency Credit Risk deals and Fannie’s Connecticut Avenue Securities deals have caused some investors to abandon jumbo MBS and instead invest in the GSEs’ offerings. Aaron Pas, a senior vice president of non-agency portfolio management at American Capital Mortgage Investment, said...

January 8, 2015 - Inside Mortgage Finance

Obama Administration Cuts FHA Premiums, Says Insurance Fund Won’t Be Damaged

President Obama this week announced a substantial price cut in FHA mortgage insurance premiums, although agency officials aren’t sure yet when the change will take effect. The FHA will lower its annual insurance payment from 1.35 percent to 0.85 percent, according to a White House fact sheet released in advance of the president’s speech as Inside Mortgage Finance was going to press late this week. According to the administration, the price cut won’t hurt...

January 8, 2015 - Inside Mortgage Finance

Ocwen Financial’s Exit from Agency Mortgage Servicing Business Could be a Long Goodbye

Ocwen Financial’s massive exit from the agency servicing market is expected to be a multi-year phase-out complicated by its past regulatory problems and a weak market for legacy product, according to industry advisors. If the company follows through on its promise to exit all segments of the agency market – Fannie Mae, Freddie Mac and Ginnie Mae – it will wind up selling a hefty $182.51 billion of residential mortgage servicing rights, based on third quarter survey numbers submitted to Inside Mortgage Finance. At Sept. 30, the nonbank serviced...

December 30, 2014 - Inside The GSEs

FHFA Fights to Keep GSEs In Front on Foreclosures

The Federal Housing Finance Agency is fighting state-level court actions that threaten the first-lien status of loans backed by Fannie Mae and Freddie Mac, including a recent ruling in Nevada granting a homeowners association priority in collecting unpaid HOA fees ahead of the mortgage lender in a foreclosure. The regulator has filed separate actions in federal court in Nevada seeking to overturn recent state court rulings allowing HOAs to jump to the front of the creditor list with ...

December 30, 2014 - Inside The GSEs

Changes to GSE Servicing Standards Seen as ‘Promising’

The high cost of servicing delinquent mortgages for Fannie Mae and Freddie Mac is one of the factors that prompt lenders to implement underwriting overlays, according to Laurie Goodman, director of the Urban Institute’s Housing Finance Policy Center. However, recent changes to the GSEs’ standards for servicing delinquent mortgages along with a potential adjustment to repurchase requirements are promising, she said. “In order to broaden access to credit, servicing issues ...

December 30, 2014 - Inside The GSEs

GOP Lawmakers Suggest Fannie And Freddie Are Lobbying Again

The head of the House Financial Services GSE Subcommittee called on the Federal Housing Finance Agency to look into whether Fannie Mae and Freddie Mac have resumed lobbying and other political activities, which were barred when the GSEs were put in conservatorship in 2008. Political activity by Fannie and Freddie has long been a bone of contention for many GOP members of Congress, who believe that lobbying, campaign contributions and advertising ...

December 30, 2014 - Inside The GSEs

Bankers Seek Recall of FHLB Membership Proposal

The American Bankers Association is urging the Federal Housing Finance Agency to withdraw its proposed amendments to membership eligibility in the Federal Home Loan Bank System, saying the proposal would make the liquidity provided by the 12 FHLBs subject to uncertainty and add regulatory burden to member institutions. The ABA, in a Dec. 19 comment letter, took particular exception to the measures requiring a member’s mortgage holdings be reviewed annually instead of ...

December 30, 2014 - Inside The GSEs

Seattle and Des Moines FHLBanks Merger Cleared by Regulator

The Federal Housing Finance Agency in December cleared the merger of the Federal Home Loan Bank of Seattle and the FHLB Des Moines, which will create the largest FHLB by membership, serving 1,500 institutions in 13 states. The first voluntary merger in the FHLB System’s 82-year history has been approved by the boards of both FHLBs and must now be voted on by members of the two institutions, which will occur in January and February. “This is a critical milestone in the ...

December 30, 2014 - Inside The GSEs

FHFA Seeks End to Another Fannie/Freddie Investor Suit

An attorney representing the Federal Housing Finance Agency called on a federal judge in Iowa to dismiss a third federal suit brought by affiliated entities challenging the terms of the 2012 Fannie Mae and Freddie Mac net worth sweep. “There is gamesmanship going on here, your honor,” said Howard Cayne, an attorney with Arnold & Porter who is representing the FHFA in its motion for summary judgment. Investors say the net worth sweep, authorizing the Treasury to ...

December 30, 2014 - Inside The GSEs

Treasury Called on to Rebuild GSEs’ Net Worth, Retain Profits

With Fannie Mae and Freddie Mac on solid financial footing in terms of earnings, some factions of the mortgage industry believe the two should be allowed to rebuild capital by retaining some of their profits. But getting there would require a hard push from the White House, and the approval of the Treasury Department, which controls the senior preferred stock of the two. In a recent letter to Treasury Secretary Jacob Lew and Federal Housing Finance Agency Director Melvin Watt ...


The FHA is cutting its annual premium by 50 basis points. How much of a difference will this cut make in your FHA business?

Not much at all—maybe 10 percent at best.
Modestly. We expect a 10 percent to 25 percent gain in applications.
This is a real game changer, 25 percent or better.
Hard to say. This cut may just steal business away from the new Fannie/Freddie 97 LTV effort.

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