FHFA

Browse articles from all of our Newsletters related to FHFA.

July 18, 2014 - Inside MBS & ABS

House Democrat Bill Would Put Ginnie in Charge of All Government-Backed MBS. No Chance This Year

A significantly bigger Ginnie Mae would be placed in charge of all MBS issued with a government backing while Fannie Mae and Freddie Mac would be wound down and stripped of their government sponsorship under a bill filed last week by House Democrats. The legislation – the Partnership to Strengthen Homeownership Act, H.R. 5055, sponsored by House Democrats John Delaney (MD), John Carney (DE) and Jim Himes (CT) – has zero chance of gaining traction this year. It would create a new Ginnie Mae MBS backed by conventional mortgages that would have the full faith and credit of the federal government while tapping private capital to absorb some of the risk. The new structure under the Delaney-Carney-Himes bill would create...


July 17, 2014 - Inside Mortgage Finance

The Dodd-Frank Act at Four: Helping to Prevent Mortgage Problems and Decreasing the Pool of Potential Borrowers

Mortgage industry participants suggest that the Dodd-Frank Act has helped to ensure that problems seen in the mortgage market in 2005 and beyond are unlikely to occur again. However, lenders suggest that the DFA has also limited access to credit for potential borrowers. Four years after the DFA was signed into law, a number of think tanks convened panels this week to analyze its impact. Predictably, consumer advocates are largely happy with the DFA while lenders have more mixed feelings about the law, which created the Consumer Financial Protection Bureau and a landslide of new mortgage regulations. “The mortgage market is...


July 17, 2014 - Inside Mortgage Finance

FHFA-OIG Report Cites Purchase Mortgage Risks To Fannie, Freddie From Nonbank, Smaller Lenders

The recent shift in direct mortgage sales by smaller and nonbank lenders has reduced Fannie Mae’s and Freddie Mac’s concentration risks, but the trend has led to an increase in counterparty credit risk, according to the Federal Housing Finance Agency’s official watchdog. The evaluation report issued this week by the FHFA’s Office of Inspector General said the regulator of the two government-sponsored enterprises needs to monitor Fannie’s and Freddie’s risk-management controls regarding smaller lenders and nonbanks. According to Inside Mortgage Trends, an affiliated newsletter, nonbank sellers accounted...


July 17, 2014 - Inside Mortgage Finance

FHFA MI Proposal Could Give a Competitive Edge To ‘Newbies,’ Narrow Gap With FHA Pricing

Private mortgage insurers that survived the housing market collapse are quietly gnashing their teeth over new eligibility rules proposed by the Federal Housing Finance Agency, which likely will cause some to reengineer their corporate structures and/or raise additional capital. The good news for the legacy firms – Genworth, Mortgage Guaranty Insurance Corp., Radian and United Guaranty – is that they have the financial ability to meet the new capital standards. The bad news – for this group and MI newcomers – is that the FHFA’s proposals would narrow the competitive gap between the private MIs and the FHA. One trade group official, speaking under the condition his name not be used, noted...


July 11, 2014 - Inside The GSEs

GSE Loss Mitigation Activity Declines in First Quarter 2014

Fannie Mae’s and Freddie Mac’ home retention activity declined for the most part during the first quarter of 2014, according to a new analysis of Federal Housing Finance Agency data by Inside The GSEs. Total loss mitigation activity – total home retention efforts and foreclosure alternatives combined – declined 8.9 percent from the first quarter of the year to 130,854 and was down 28.9 percent from year-ago levels.


July 11, 2014 - Inside The GSEs

GSE MBS Business Activity Rebounds in Second Quarter 2014

Fannie Mae and Freddie Mac generated $141.8 billion in single-family mortgage-backed securities during the second quarter of 2014, rebounding from the dismal first three months of the year, according to a new Inside The GSEs analysis. That was up 9.8 percent from the 14-year record low Fannie/Freddie MBS production of just $129.2 billion during the first quarter. However, the April-June cycle generated the second lowest quarterly volume since the end of 2008, and refinance volume continues to reach new lows – falling another 8.5 percent from the previous quarter.


July 11, 2014 - Inside Mortgage Trends

FHFA Weighs Capital for Nonbank Servicers

By now, the word is out: the Federal Housing Finance Agency is exploring codifying capital minimums for nonbank servicers as a way to help Fannie Mae and Freddie Mac better manage counterparty risk. Industry officials tracking the topic told Inside Mortgage Trends they don’t believe the FHFA is necessarily worried about the capital positions of the big three nonbanks: Nationstar Mortgage, Ocwen Financial, and Walter Investment Management ...


July 11, 2014 - Inside The GSEs

FHFA: ‘No Change’ in Opposition To Eminent Domain to Seize Loans

The Federal Housing Finance Agency remains committed under new management to deploy regulatory countermeasures against municipalities that move forward with proposed efforts to seize underwater mortgages via local eminent domain powers, agency officials say. After a quiet period when it appeared this issue was going away, eminent domain initiatives are cropping up again, including a recent push by a member of the San Francisco Board of Supervisors to get the city to partner with Richmond, CA.


July 11, 2014 - Inside The GSEs

HSBC Pays $10 Million to Settle Fraud Charges Against Fannie, FHA

HSBC failed to implement and maintain required quality controls and failed to oversee the foreclosure-related charges it submitted to the FHA and Fannie Mae, resulting in unspecified millions of dollars in taxpayer losses, according to federal investigators. Under the terms of the civil settlement announced last week by the Manhattan U.S. Attorney’s office and the Federal Housing Finance Agency’s Inspector General, HSBC will pay $10 million to settle charges that in 2009 and 2010 it failed to properly supervise foreclosure-related fees by outside lawyers and other service providers to the FHA and Fannie.


July 11, 2014 - Inside The GSEs

OCC: Freddie Re-Default Mods Perform Ahead of Fannie in 1Q14

Modified Freddie Mac mortgages performed somewhat better than Fannie Mae loans for up to two years after modification as the performance gap between the two GSEs 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 15.6 percent re-default rate six months after modification, while Fannie mods saw a 16.3 percent rate. At the 12-month mark, Freddie stood at 22.3 percent compared to Fannie’s 23.4 percent.


July 11, 2014 - Inside The GSEs

Freddie Announces Second ACIS Deal of 2014, Largest to Date

Freddie Mac last week announced its second Agency Credit Insurance Structure of 2014, through which it buys insurance to lay off risk. The GSE said its purchase of a number of insurance policies designed to cover some $285 million in potential losses from a pool of single-family loans acquired in the second quarter of 2013 was its largest credit risk transaction to date. …


July 11, 2014 - Inside The GSEs

FHFA-OIG Raises Red Flags About GSE Nonbank Servicers

A new audit issued last week by the Federal Housing Finance Agency’s official watchdog revealed that an unnamed nonbank special servicer raised red flags for Fannie Mae, Freddie Mac and their regulator. The report by the FHFA’s Office of Inspector General prompted the FHFA to issue guidance on the counterparty risk posed by nonbank servicers by year’s end. The OIG audit said the Finance Agency and the two GSEs “have responded well to specific problems at nonbank special servicers.”


July 11, 2014 - Inside The GSEs

New GSE Mortgage Insurance ‘Stand-In’ Takes Effect

Last week, new GSE repurchase requirements announced this spring took effect as a potential alternative to repurchase for certain mortgage loans for which the mortgage insurance has been rescinded. Among the requirements are an “MI stand-in,” which Fannie Mae defines as “the full mortgage insurance benefit that would have been payable under the original mortgage insurance policy if the mortgage loan liquidates.” In May, both Fannie and Freddie Mac announced that repurchase requests will no longer be an automatic response in the event that MI is rescinded.


July 11, 2014 - Inside The GSEs

FHFA Unveils ‘Eligibility’ Standards For Mortgage Insurance Firms

The Federal Housing Finance Agency late this week finally unveiled new eligibility standards for the mortgage insurance industry, introducing for the first time risk-based capital rules that are tied to a measurement called “available assets.” Immediately after the rule hit the market, several MI firms said they support the idea that Fannie Mae and Freddie Mac must have strong financial counterparties, while hinting they will have more to say on the topic in the near future.


July 11, 2014 - Inside The GSEs

House Dem Trio Files ‘Middle Ground’ GSE Reform Legislation

A GSE reform bill filed late this week by a trio of House Democrats is less a last ditch effort to push their measure across the finish line this year than a bid to have the first word in next year’s debate over housing finance reform, note industry observers. The Partnership to Strengthen Homeownership Act, H.R. 5055, by Reps. John Delaney (MD), John Carney (DE), and Jim Himes (CT), follows through on their January draft proposal to seek a “middle ground” between the existing, politically untenable legislative proposals.


July 11, 2014 - Inside MBS & ABS

Experts: FHFA’s HARP Campaign Won’t Attract Many More Refis, With or Without Eligibility Extension

The Home Affordable Refinance Program has nearly reached the practical limit of eligible homeowners willing and/or able to refi – whether or not the regulator of Fannie Mae and Freddie Mac further tweaks the program’s eligibility requirements, say industry observers. This week, Federal Housing Finance Agency Director Mel Watt met with community leaders in Chicago in a town hall-style meeting to discuss the benefits of HARP. Last fall, the agency launched a nationwide public awareness campaign to reach eligible borrowers and encourage them to participate in HARP, with little apparent success. “We are...


July 10, 2014 - Inside Mortgage Finance

Lender: New GSE Mortgage Insurance ‘Stand-In’ Does Nothing to Reduce Buyback Uncertainty of Legacy Loans

Recently implemented steps by the two government-sponsored enterprises to provide an alternative to repurchase when mortgage insurance is rescinded is a pleasant salve for a minor ailment, but it does nothing to address lenders’ chronic pain of sudden and unexpected buyback demands, according to a mortgage lender. Last week, new GSE repurchase requirements took effect, including the “MI stand-in” option, which Fannie defines as “the full mortgage insurance benefit that would have been payable under the original mortgage insurance policy if the mortgage loan liquidates.” In May, both Fannie and Freddie announced...


July 3, 2014 - Inside MBS & ABS

Freddie Announces $285 Million ACIS Deal; GSE Risk-Sharing ‘Stellar’ One Year Later

Freddie Mac announced this week it has obtained insurance to cover some $285 million of losses on a pool of home loans as part of a risk-sharing effort encouraged by the government-sponsored enterprises’ regulator. The performance of these deals has been “stellar,” according to one analyst. The policies, tied to loans the GSE bought or guaranteed in the second quarter of 2013, were obtained under Freddie’s Agency Credit Insurance Structure. First rolled out in November 2013, this week’s most recent ACIS deal – the largest to date – demonstrates...


July 3, 2014 - Inside MBS & ABS

Eminent Domain Comes Up for Air Again on East, West Coasts as Industry Groups Go Back on Defense

The issue of eminent domain is rearing its head again, compelling mortgage and securitization industry groups to once more mobilize their resources to deep-six the latest initiatives. The most recent manifestation of a resurgent interest in eminent domain is in California, where John Avalos, a member of the San Francisco Board of Supervisors, has sponsored a resolution seeking to enter the city into a joint powers authority agreement with Richmond, CA, a vehicle by which both cities could seize underwater but performing mortgages using eminent domain. Avalos’ resolution targets...


July 3, 2014 - Inside Mortgage Finance

FHFA-OIG Report Cites Risks to Fannie, Freddie From Nonbank Servicers Using Short-Term Financing

The Federal Housing Finance Agency agreed to provide guidance to Fannie Mae and Freddie Mac on how to manage the risks arising from their work with nonbank special servicers, the FHFA’s Office of Inspector General said in a report issued this week. The OIG said the FHFA and the government-sponsored enterprises “have responded well to specific problems at nonbank special servicers.” However, it said the FHFA “has not established a risk management process or overall oversight framework to handle some general risks” such servicers pose. The report cites...


July 3, 2014 - Inside Mortgage Finance

FHFA Readies Capital Rules for Mortgage Insurers; Parent Companies May Have to Put Assets Into Subs

The Federal Housing Finance Agency will soon unveil capital rules for private mortgage insurers, introducing a risk-based standard based on loan-to-value ratios and other factors, while requiring parent companies to pledge assets to their MI subsidiaries if necessary, according to officials close to the matter. “Financial strength will be measured by comparing insured risk, on a risk-adjusted basis, against available assets,” said one official commenting under the condition he not be identified. The phrase “available assets” is key because it portends that liquidity must reside at the MI level and not at an affiliate of a parent company. It’s...


June 27, 2014 - Inside The GSEs

FHLBank Agency MBS Investments Drop During First Quarter 2014

Fannie Mae and Freddie Mac mortgage-backed securities remained the preferred investment choice of the 12 Federal Home Loan Banks during the first quarter of 2014, with a very slight decline from the previous quarter, according to a new analysis and ranking by Inside The GSEs based on data from the Federal Housing Finance Agency. Meanwhile, Ginnie Mae securities posted an increase within the FHLBank system during the first three months of the year.


June 27, 2014 - Inside The GSEs

Enterprise Endnotes

DC Circuit Latest Court to Reject GSE Tax Collection Effort by Municipalities. A three-judge panel of the DC Circuit Court recently upheld a lower court ruling against Kay County in Oklahoma, which has been trying to collect real estate transfer taxes from Fannie Mae and Freddie Mac. In rejecting Kay County’s bid to get the GSEs to pay a 1 percent “documentary stamp tax,” the DC court’s finding became the latest in a growing number of…


June 27, 2014 - Inside The GSEs

GSE Investor Group Wants FHFA to Hike Fannie, Freddie Guaranty Fees

Any action that the Federal Housing Finance Agency takes in setting GSE guaranty fees should take into account the agency’s conservatorship duty to direct economic stakeholders, including shareholders, noted a coalition of Fannie Mae and Freddie Mac investors. In a letter to FHFA Director Mel Watt Wednesday, Investors Unite Executive Director Tim Pagliara urged the agency head to take into account “the critical purpose of setting appropriate guaranty fees,” noting that the Finance Agency does not have a mandate as conservator to run Fannie and Freddie as not-for-profit entities.


June 27, 2014 - Inside The GSEs

Federal, State Regulators Focus On Servicing, Including GSE MSRs

A recently issued advisory by Fannie Mae’s and Freddie Mac’s conservator noting that the two GSEs should only approve mortgage servicing sales where the transactions “are consistent” sound business practices comes as part of a renewed federal and state focus on servicing, officials note. Although Fannie and Freddie have, for years, had minimum capital requirements for mortgage companies that want to become seller/servicers, the Federal Housing Finance Agency and state regulators are now exploring codifying a capital minimum for nonbanks, according to industry officials and state regulators.


June 27, 2014 - Inside The GSEs

Banking Committee Moves FHFA-IG Nomination to Full Senate for Vote

The Senate Banking, Housing and Urban Affairs Committee this week approved Laura Wertheimer to be inspector general of the Federal Housing Finance Agency, moving her nomination forward for full Senate consideration. Werthheimer, a Washington, DC, securities lawyer in private practice, would replace Steve Linick, who resigned last summer to serve as the State Department’s IG. During her nomination hearing before the committee last week, Wertheimer pledged to exercise her duties “aggressively and independently.


June 27, 2014 - Inside The GSEs

Forecast: GSE Risk-Sharing Deals To Exceed FHFA’s 2014 Goal

Fannie Mae and Freddie Mac are expected to continue issuing more risk-transfer deals even though both GSEs have effectively reached their 2014 targets. But some of the potential upside for investors has dissipated, according to separate analyses by Fitch Ratings and Wells Fargo Securities. Tight pricing on mortgage risk transfer securities issued by Fannie and Freddie indicates a “growing appetite for this relatively new and unique form of mortgage risk,” noted Fitch.


June 27, 2014 - Inside The GSEs

FHLBanks Place Moratorium on Captive Insurers Used by REITs

The presidents of all 12 Federal Home Loan Banks are in talks with the Federal Housing Finance Agency over a newly issued moratorium on nonbank mortgage firms – mostly mortgage real estate investment trusts – gaining access to the system’s borrowing window through a captive insurance affiliate. The 90-day moratorium was voluntarily put in place by the FHLB presidents on June 12, said a spokesman for the Council of Federal Home Loan Banks, a trade group of sorts for the 12 regional government-sponsored enterprises.


June 27, 2014 - Inside The GSEs

RBS Agrees to Pay FHFA $99.5M To Settle Non-Agency MBS Lawsuit

The Federal Housing Finance Agency late last week announced it reached a nearly $100 million settlement with RBS Securities to settle allegations tied to non-agency MBS bought by Freddie Mac from 2005 to 2007, but the deal represents just a fraction of the firm’s remaining exposure. The $99.5 million settlement only resolves claims against RBS in FHFA v. Ally Financial Inc. in the Southern District of New York. Ally Financial is the successor company to GMAC-RFC, a now defunct non-agency MBS issuer.


June 27, 2014 - Inside The GSEs

OIG: FHFA Should Sue To Recover LPI Overcharges on GSE Coverage

A new audit released this week by the Federal Housing Finance Agency’s official watchdog found that Fannie Mae and Freddie Mac suffered $158 million of “financial harm” due to excessively priced lender-placed or “force-placed” insurance policies in 2012 alone. The FHFA-OIG audit notes that several state financial regulators found that the LPI rates in their states were excessive. The excessive costs were driven up by “profit-sharing arrangements under which servicers were paid to steer business to LPI providers. Such arrangements often took the form of commission structures and reinsurance deals,” according to the OIG.


June 27, 2014 - Inside MBS & ABS

RBS to Pay FHFA $99.5 Million to Settle Non-Agency MBS Lawsuit; MBIA Demands Documents from Credit Suisse

The Federal Housing Finance Agency late last week announced it reached a nearly $100 million settlement with RBS Securities to settle allegations tied to non-agency MBS bought by Freddie Mac from 2005 to 2007, but the deal represents just a fraction of the firm’s remaining exposure. The $99.5 million settlement only resolves claims against RBS in FHFA v. Ally Financial Inc. in the Southern District of New York. Ally Financial is the successor company to GMAC-RFC, a now defunct non-agency MBS issuer. Last week’s deal is...


June 26, 2014 - Inside Mortgage Finance

Will Your Bank be Ready for the CFPB’s New TILA/RESPA Integrated Mortgage Disclosures?

There’s still more than a year left before the Consumer Financial Protection Bureau’s integrated mortgage disclosure final rule takes effect. But top industry representatives are urging lenders to begin preparations now, if they haven’t already done so, because of the depth and breadth of the new regulation – and the central role it will play in the origination process. During a general session of the American Bankers Association’s annual regulatory compliance conference, held in New Orleans earlier this month, Rod Alba, senior regulatory counsel for the trade group, said that the CFPB’s TILA/RESPA integrated disclosure – known as TRID – is a massive project. “We cannot take it lightly,” Alba said. He also emphasized...


June 26, 2014 - Inside Mortgage Finance

IG Audit: Fannie, Freddie Overcharged at Least $158M For ‘Force Placed’ Insurance, FHFA Should Sue to Recover

The Federal Housing Finance Agency will “assess the merits of litigation” against Fannie Mae’s and Freddie Mac’s servicers and lender-placed insurance providers to recover premium overpayments by the government-sponsored enterprises following a pointed suggestion to do so by the agency’s official watchdog. A new audit released by the FHFA’s Inspector General found that Fannie and Freddie could have overpaid about $158 million in 2012 alone for lender-placed or “force-placed” insurance policies. The IG said it calculated its $158 million figure as the difference between the amount the GSEs actually paid in premiums – $360 million – and a “reasonable” price for such coverage – $202 million. “Our retrospective analysis suggests...


June 26, 2014 - Inside Mortgage Finance

FHFA Spearheading Effort on Capital Standards for Nonbank Servicers, States Looking at the Issue as Well

Although Fannie Mae and Freddie Mac have, for years, had minimum capital requirements for mortgage companies that want to become seller/servicers, the Federal Housing Finance Agency and state regulators are now exploring codifying a capital minimum for nonbanks, according to industry officials and state regulators. During a webinar this week sponsored by Inside Mortgage Finance, participants highlighted the “hot topic” nature of capital requirements for nonbanks. John Prendergast, vice president of non-depository supervision for the Conference of State Bank Supervisors, indicated that capital requirements for nonbanks are more of a matter of when, not if. However, participants who have been tracking the matter caution...


June 20, 2014 - Inside Nonconforming Markets

Changes to GSEs’ G-Fees Likely a Long Way Off

In December, the Federal Housing Finance Agency was set to increase the guaranty fees charged by the government-sponsored enterprises. However, Melvin Watt, the new director of the FHFA, put a hold on the planned g-fee increase and is taking a much more deliberate look at the fees, including a potential decrease in g-fees. The FHFA this month released a request for input regarding the g-fees charged by Fannie Mae and Freddie Mac, including questions about ...


June 20, 2014 - Inside MBS & ABS

Treasury Official: It Would Take 20 Years to Recapitalize Fannie, Freddie; White House Committed to Wind Down

A senior Treasury Department official pushed back against the idea of rehabilitating the two government-sponsored enterprises, noting in a speech late last week that the firms cannot be re-capitalized and reiterating the Obama administration’s commitment to wind down Fannie Mae and Freddie Mac. Mary Miller, the Treasury’s undersecretary for domestic finance, said that even if the two GSEs were allowed to stay in business and build up capital, it could take “at least” 20 years to recapitalize Fannie and Freddie. “During these 20 years, the taxpayer would remain...


June 19, 2014 - Inside Mortgage Finance

HUD Submits Final Housing Trust Fund Rule for OMB Review Despite Uncertain Funding Prospects

The Department of Housing and Urban Development recently submitted to the Office of Management and Budget a draft final rule that would determine how the controversial national Housing Trust Fund would work. It remains highly uncertain that the trust fund will ever get any money; one potential source is annual contributions by Fannie Mae and Freddie Mac. The Federal Housing Finance Agency under former Acting Director Ed DeMarco determined that the government-sponsored enterprises would not contribute to the fund, but housing advocates and Democrats on Capitol Hill have called for that decision to be reversed. In its annual strategic plan released earlier this year, the FHFA said...


June 19, 2014 - Inside Mortgage Finance

CFPB Director Cordray Defends National Mortgage Database Data Collection Efforts

Consumer Financial Protection Bureau Director Richard Cordray came under sustained partisan criticism from Republicans on the House Financial Services Committee this week over the joint National Mortgage Database the CFPB is working on with the Federal Housing Finance Agency. “We have learned since Director Cordray was last before the committee that the joint database project by the CFPB and the FHFA will undeniably collect personally identifiable information on millions of Americans in the National Mortgage Database,” said Committee Chairman Jeb Hensarling, R-TX. “I’m not speaking merely of names, addresses and phone numbers – though the database will certainly include those – but shockingly also people’s Social Security numbers, their race, religion, personal financial information, and even the GPS coordinates of their homes. If this is not considered personally identifiable information by the CFPB, then I don’t know what is.” A breach of this database could cause...


June 19, 2014 - Inside Mortgage Finance

FHFA: Freddie Struggling to Hit 2013 Affordable Housing Benchmark; Neither GSE in ‘Sound Financial Condition’

Fannie Mae’s and Freddie Mac’s housing goal performance exceeded the benchmark levels for all of the single-family and multifamily goals set for the two government-sponsored enterprises in 2012, but preliminary figures show that Freddie is struggling to hit the mark for 2013, according to a new Federal Housing Finance Agency report. The FHFA’s annual report to Congress, released late last week, reveals official figures on each GSE’s goal performance in 2012 and preliminary data on goal performance in 2013. Both GSEs hit...[Includes one data chart]


June 19, 2014 - Inside Mortgage Finance

Are Fannie Mae and Freddie Mac Being Engineered to Be Barely Profitable?

In a few weeks, Fannie Mae and Freddie Mac will release second quarter results, likely posting positive earnings, but the revenue figures will not include any major boost from legal settlements or the recapture of previously set-aside loan loss reserves. In short, what the two government-sponsored enterprises report in earnings for the second quarter should reflect what their operating profits might look like going forward, given normal market conditions. However, over the past six months, the CEOs of Fannie and Freddie and top officials at the Treasury Department – the owner of its senior preferred shares – have consistently argued...


June 13, 2014 - Inside The GSEs

GSE MBS Business Activity Plunge Year-Over-Year in May

Fannie Mae and Freddie Mac issued $44.8 billion in single-family mortgage-backed securities during the month of May, a slight 1.3 percent dip from April, but it reversed the brief rebound following a year-long streak of declines, according to an Inside The GSEs analysis. However, May’s MBS issuance was down a much steeper 62.4 percent from the same period a year ago. Top-ranked Wells Fargo’s Fannie and Freddie securitization, at $5.97 billion, dropped by 4.9 percent on a monthly basis and by 73.6 percent year-to-date.


June 13, 2014 - Inside The GSEs

FHFA Seeks Public Input on Proposed GSE Guaranty Fee Hikes

After months of anticipation, the Federal Housing Finance Agency last week issued an official call for public comment, particularly from the mortgage industry, on how Fannie Mae’s and Freddie Mac’s conservator should calculate both guaranty fees and loan-level price adjustments. The FHFA’s “request for input” specifically seeks guidance regarding the optimum level of g-fees and their implications for mortgage credit availability, but the agency does not provide any specific proposals as some had expected. One of the first things that FHFA Director Mel Watt did when he assumed office in January was delay implementation of a planned GSE g-fee increase set into motion by his predecessor, Acting Director Edward DeMarco.


June 13, 2014 - Inside The GSEs

Enterprise Endnotes

Cantor Loss Unlikely to Advance Hensarling, PATH Act Opportunity? House Republican Majority Leader Eric Cantor’s defeat this week by his GOP primary Tea Party challenger Dave Brat is already shaking up the House leadership with implications for key lawmakers affecting the GSE reform debate. Cantor, R-VA, will close out his term at the end of this year but has announced he will give up his post as House majority leader effective July 31. Republican leadership could hold elections to replace Cantor as early as next week. Cantor has endorsed Majority Whip Kevin McCarthy, R-CA, to succeed him as majority leader.


June 13, 2014 - Inside The GSEs

Bill Would Mandate FHFA Deny Credits to Anti-Affordable Housing

Rep. Carolyn B. Maloney, D-NY, last week reintroduced legislation that would “sharply curtail” the ability of Fannie Mae and Freddie Mac to invest in future transactions that reduce the availability of affordable housing both in New York and nationwide. Maloney’s legislation, the Responsible GSE Affordable Housing Investment Act of 2014, initially introduced in 2010, would require the Federal Housing Finance Agency to deny affordable housing goals credits when a project’s debt is disproportionate to its income.


June 13, 2014 - Inside The GSEs

Urban Institute: GSE Denial Rates Higher for Weaker Credit Profiles

A new analysis by the Urban Institute released last week found that GSE denial rates for weaker credit profile applicants, including many minority applicants, were much higher than denial rates for all applicants. The UI’s analysis of Home Mortgage Disclosure Act data found at least 16 percent of applicants were denied Fannie Mae or Freddie Mac loans for purchase of an owner-occupied property in 2012. However, when compared to CoreLogic’s data, the UI also found the denial rate for low credit GSE applicants was at least 54 percent.


June 13, 2014 - Inside The GSEs

House Bill Amendment Would Block GSE Trust Fund Payments

A noted GSE hawk successfully pushed through a legislative amendment that would block Fannie Mae and Freddie Mac from paying into the National Housing Trust Fund “at a time when they still owe money to the American people.” The amendment by Rep. Ed Royce, R-CA, to H.R. 4745, the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act of 2015, would prohibit the GSEs from using funds for the NHTF, which was established under the Housing and Economic Recovery Act of 2008.


June 13, 2014 - Inside The GSEs

Lawyers for GSE Shareholders Move To Vacate ‘Illegal” Profit Sweep

Attorneys for Fannie Mae and Freddie Mac junior shareholders have doubled down in their assertions that the government had no authority to initiate a “net-worth sweep” of nearly all GSE profits. They say a federal court should not only decline Uncle Sam’s recent motion to dismiss but also “vacate the illegal sweep amendment.” In a joint rebuttal motion filed last week in the U.S. District Court for the District of Columbia, attorneys for Perry Capital and Fairholme Funds note that in attempt to evade judicial scrutiny, the Treasury Department and the Federal Housing Finance Agency raise “a host of frivolous and irrelevant challenges” to the plaintiffs’ legal standing while ignoring investors” core assertion that the 2012 sweep was illegal.


June 13, 2014 - Inside The GSEs

Massachusetts Sues FHFA, GSEs Over State Foreclosure Law

Massachusetts Attorney General Martha Coakley last week filed suit against Fannie Mae, Freddie Mac and their regulator, the Federal Housing Finance Agency, alleging that the GSEs are violating state law by failing to let non-profits buy foreclosed homes to sell them back to their former homeowners. In 2012, Massachusetts lawmakers passed An Act to Prevent Unnecessary and Unreasonable Foreclosures, which prohibits creditors from blocking or placing conditions on home sales to non-profits that intend to resell those properties back to their former owners. The AG’s complaint, filed in Suffolk Superior Court, says the GSEs failed to comply with the Bay State law by “blocking foreclosure buyback programs” designed to help residents keep their homes.


June 13, 2014 - Inside The GSEs

Experts Differ on Fannie, Freddie Conservatorship Exit Strategies

It would either require an act of Congress or a commitment from Fannie Mae’s and Freddie Mac’s regulator to bring the two GSEs out of government conservatorship, depending on which expert you believe, and perhaps who is heading the Treasury Department. Investment banker Jim Millstein is once again pushing for a plan to deal with the future of Fannie and Freddie, saying the two GSEs should be allowed to rebuild capital. In a recent report, Millstein – who at the Treasury Department oversaw the restructuring of bailed-out insurer American International Group – says if the two firms are allowed to recapitalize, they could create a cash cushion that can be placed in front of Treasury’s existing backstop.


June 13, 2014 - Inside The GSEs

Expert: Rehabilitated GSEs Better Than Senate’s Misguided Fix

Fannie Mae and Freddie Mac can be rehabilitated and returned to the private sector, with or without Congressional action, an expert noted this week, adding his voice to the growing chorus of those calling to retain the GSEs. Speaking at a GSE forum sponsored by Investors Unite, Joshua Rosner, managing director at Graham Fisher & Co., said that GSE reform “shouldn’t reinvent a wheel that has driven the secondary market successfully for generations.”


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Home-equity lending is beginning to show new life. My company (pick one):

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Is already making home equity loans and hopes to increase the offerings.
Is in the market but don’t expect much growth.
Is not making second liens and has no plans to do so.

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