GSEs

Browse articles from all of our Newsletters related to GSEs.

February 17, 2017 - Inside Nonconforming Markets

Sales Help Reduce GSE Nonprime Holdings

Sales of mortgages and non-agency mortgage-backed securities helped reduce the government-sponsored enterprises’ exposure to nonprime mortgages in 2016. As of the end of the year, Fannie Mae and Freddie Mac held a combined $141.45 billion in purchased/guaranteed nonprime mortgages and nonprime MBS. The holdings were down by 5.8 percent from the end of the third quarter and 22.0 percent below the level at the end of 2015 ... [Includes one data chart]


February 17, 2017 - IMFnews

What We’re Hearing: Huge GSE Profits, Don’t Get Used to It / The Perfect (Earnings) Storm / A Ginnie Solution for the GSEs? / PHH’s New Strategy / Aide to HUD Nominee Ben Carson Fired for Writings Critical of Trump

One former Fannie Mae official told us that stellar profits posted by the two are “just about done.”


February 17, 2017 - Inside MBS & ABS

Key Players in GSE Reform: Treasury Secretary Mnuchin, Commerce Chief Wilbur Ross, Craig Phillips and Others

Now that investment banker Steven Mnuchin has been installed as the Treasury secretary, work can begin on finding a solution to Fannie Mae and Freddie Mac, the giant government guarantors that serve as the linchpin to housing and mortgage markets. For the most part, senior mortgage officials who have been in the business for a decade or more applauded President Trump’s choice of Mnuchin, pointing to his days as the head of MBS trading at Goldman Sachs & Co. “At the very least, this is...


February 17, 2017 - Inside MBS & ABS

OCC’s Denial of Favorable Capital Treatment for Chase Portfolio Risk-Transfer MBS May Deter Others

The Office of the Comptroller of the Currency’s denial of favorable capital treatment to a non-agency MBS issued by JPMorgan Chase last year could hinder efforts aimed at convincing banks to return to the non-agency MBS market, according to industry analysts. JPMorgan Chase issued two unique non-agency MBS last year with a total unpaid principal balance of $4.53 billion. The so-called portfolio risk-transfer deals accounted for a whopping 48.6 percent of the prime non-agency MBS issued in 2016. Chase packaged...


February 17, 2017 - IMFnews

Fannie Mae Has a Blowout 4Q16: Net Profit Hits $5 Billion; A Perfectly Good Storm?

Fannie Mae CEO Timothy Mayopoulos is setting the table for challenging times ahead, issuing caution about the GSE’s dwindling capital position…


February 16, 2017 - IMFnews

A Blowout 4Q16 Profit for Fannie Mae: $5 Billion; $3.9 Billion in Gains from Derivatives

In a conference call with reporters Friday morning, Fannie CEO Tim Mayopoulos noted: “While we expect to remain profitable on an annual basis for the foreseeable future, due to our declining and limited capital reserves and the potential for significant volatility in our financial results, we could experience a net worth deficit in a future quarter.”


February 16, 2017 - Inside Mortgage Finance

UI Report says Credit Access Tight, Harder to Obtain Mortgage Loan Today than Pre-Crisis

Despite some reports of credit access loosening, it’s harder to get a mortgage today than it was during the housing bubble, according to the Urban Institute. With borrowers being denied at a much higher rate than in the past, lower-credit mortgage applicants are dropping out of the housing market. As access to credit tightened after the financial crisis, many lower-credit applicants were discouraged from applying, the UI study noted. That led to a higher-credit applicant pool, which in turn led to a lower rejection rate. This caused...


February 16, 2017 - IMFnews

Freddie Mac Hits an Earnings Grand Slam in 4Q16: $4.8 Billion in Net Income; Gains from Derivatives Top $6.3 Billion

In a few weeks, almost all of that profit will be swept into the coffers of the U.S. Treasury, which supported the GSE during its money losing years...


February 15, 2017 - IMFnews

Freddie Mac Hits an Earnings Grand Slam in 4Q16: $4.8 Billion in Net Income; Gains from Derivatives Top $6.3 Billion

When Freddie makes that next “dividend” payment, its “account surplus” with Treasury will total $34.6 billion: federal assistance of $71.3 billion since September 2008 versus dividend payments of $105.9 billion.


February 15, 2017 - IMFnews

Sen. Crapo, Fed Chair Yellen Agree Housing Finance Reform is Urgent

Fed Chairman Janet Yellen on the future of Fannie and Freddie: “…I would hope that Congress would decide explicitly on what the government’s role is and if there are guarantees, that they would be recognized and priced appropriately.”


February 14, 2017 - IMFnews

Inching Up Ever So Slightly: The Percentage of GSE Loans With Lower Credit Scores

The apparent easing of credit terms in the Fannie/Freddie market has been moving at a glacial pace…


February 13, 2017 - IMFnews

Short Takes: Mark Calabria, a Player in GSE Reform? / Don’t Worry, Commercial Banks Will Fill the Void / What’s an ‘Excess Reserve’ To Do? / Fed Governor Tarullo Calls it Quits

The Cato Institute is a conservative think tank and a quick read of Calabria’s blog makes it sound like he favors getting the government out of the MBS guaranty business...


February 13, 2017 - IMFnews

Are GSE Loan Sellers Finally Easing up on Credit Standards?

In the purchase market, GSE sellers appeared to reach to qualify more borrowers…


February 10, 2017 - Inside The GSEs

Judge Rejects Government Efforts To Keep Docs Privileged

After the government stalled on a September ruling to turn over close to 60 documents regarding the GSEs’ net worth sweep, a judge rejected its appeal. The court ordered the government to disclose the bulk of the documents to the plaintiff’s attorneys in Fairholme Funds Inc. v. United States. The U.S. Court of Appeals ruled in favor of Fannie Mae and Freddie Mac investors, upholding Judge Margaret Sweeney’s earlier decision. The government is to release all…


February 10, 2017 - Inside The GSEs

GSE Roundup

FHFA PLS Actions Update. The Federal Housing Finance Agency published an update on litigation it initiated against 18 financial institutions for securities law violations and fraud regarding private-label securities sales. Seventeen cases were settled in 2013 and 2014. JP Morgan Chase settled for $4 billion, Deutsche Bank settled for $1.9 billion and Goldman Sachs for $1.2 billion. A case against the Royal Bank of Scotland remains. The settlement money ultimately goes to the Treasury through the dividend sweeps. Fannie Exec Tapped for CFPB? Brian Books, Fannie Mae’s general counsel, is being considered by the White House to head the Consumer Financial Protection Bureau, according to a...


February 10, 2017 - Inside The GSEs

Fannie SFR Pilot Stirs Reaction From Trade, Consumer Groups

Fannie Mae’s recent dip into testing the single-family rental market in an agreement to fund up to $1 billion of collateral owned by Invitation Homes has caught the industry’s attention, and not necessarily in a good way. This is the first time the GSE has financed a large institutional single-family rental home investor. The Dallas-based company is a subsidiary of The Blackstone Group and has about 50,000 homes in its portfolio that it acquired from foreclosure auctions. However, some are now accusing Fannie of mission creep. The National Community Stabilization Trust President Robert Grossinger said, “I am perplexed to see Fannie Mae place a taxpayer guarantee behind the same private interests whose risky practices led to...


February 10, 2017 - Inside The GSEs

MH RFI Extended, Industry Said DTS Shouldn’t be Optional

The Federal Housing Finance Agency this week extended the deadline for public input on a potential chattel-loan pilot to support manufactured housing. The reactions so far to the manufactured home portion of the final duty-to-serve rule, which included a request for input on chattel lending, have been mixed. In December, the FHFA gave the green light for Fannie Mae and Freddie Mac to begin pilot programs for the loans. Since then, the agency issued the RFI and extended the original deadline of Feb. 17 to March 21, 2017. The FHFA also hosted several listening sessions on the topic to get input. During the first session in Chicago, one organization called the FHFA’s DTS rule on manufactured home lending “intolerable.”


February 10, 2017 - Inside The GSEs

Senator Criticizes Fannie’s Dallas Regional Headquarters Cost

Fannie Mae’s new regional headquarters under construction in the Dallas metro area is the target of criticism from Sen. Chuck Grassley, R-IA.He questions the Federal Housing Finance Agency’s management of the project in which the GSE is combining three locations into the one leased building. This comes on the heels of the FHFA Office of the Inspector General issuing a management alert late last year raising concerns about the cost of the consolidation and relocation of Fannie’s high-rise offices in Plano, TX. Grassley wants answers as to how the agency plans to address the issues identified in the IG management alert.


February 10, 2017 - Inside The GSEs

FICO Says All 700 Credit Scores Are Not Equal in Lending Decisions

Competition is brewing between FICO and VantageScore Solutions as lawmakers continue to push the Credit Score Competition Act. The bill enables Fannie Mae and Freddie Mac to consider alternative credit scoring models when making mortgage-purchase decisions, something the GSEs are currently exploring. VantageScore recently updated its score range to match FICO. Nevertheless, FICO argues that a VantageScore of 700 is not comparable to a 700 FICO score. The VantageScore model previously ranged from 501 to 990, but now with VantageScore 3.0, released late last year, the score is in the more commonly used 300 to 850 range. “The fact that these scores are now on the same range, however, does not mean that these scores are...


February 10, 2017 - Inside The GSEs

Fannie Mae Updates Requirements For Appraisal Review and Comps

Fannie Mae recently made changes to its appraisal process and financial eligibility requirements for seller/servicers. In order to be able to use its discretion to enforce breaches of financial eligibility requirements that apply to seller/servicers, the GSE said it had to change certain polices. This allows Fannie, when warranted, to determine whether a breach of the lender contract should be called. “The changes include how lenders can comply with our requirements for maintaining minimum acceptable levels on capital,” said Jude Landis, Fannie’s vice president of credit policy. Prior to the change, explicit criteria in its selling guide limited Fannie’s ability to apply enforcement discretion.


February 10, 2017 - Inside The GSEs

MBA Proposal Raises Competition, Government Guarantee Questions

Uneconomic price competition coupled with Congressional discord are some of the concerns analysts have expressed about the Mortgage Bankers Association’s newly released plan for GSE reform. The MBA’s proposal recommends multiple privately owned guarantors, preferably more than two, to increase competition in the market. Fannie Mae and Freddie Mac would be the first two and the MBA suggests that new guarantors receive a charter to enhance competition. “The more market participants that compete, the better for consumers, the economy and the system,” said Rodrigo Lopez, MBA chairman. GSE Reform Principles and Guardrails also suggests that Congress sanction an “explicit government guarantee for eligible securities in order to entice domestic and foreign investors to keep buying...


February 10, 2017 - Inside The GSEs

Fairholme Defends ‘Recap and Release’ Concept for GSEs

Fairholme Capital Management, in a new letter to clients, once again lays out its argument for investing in Fannie Mae and Freddie Mac stock, but also takes a subtle, but polite, swipe at those opposed to a “recap-and-release” plan for the GSEs. “Only the disingenuous would assert that recapitalization of these companies would take decades and come at taxpayers’ expense, as if retaining earnings precluded the ability of each company to raise equity from private investors,” the mutual fund manager writes. Fairholme also notes that it owns GSE junior preferred shares – as opposed to common – because “…the provisions of the preferred stock contracts that...


February 10, 2017 - Inside The GSEs

Reform Still a Treasury Priority, Weighing Administrative Options

Treasury secretary nominee Steve Mnuchin still has GSE reform high on his list, according to one of President Trump’s top economic advisors. Meanwhile, speculation abounds as to whether there’s an administrative solution to GSE reform absent any legislative action. After some back and forth on the topic since the announcement of Mnuchin’s nomination his subsequent comments on the GSEs, economic advisor Gary Cohen said in national media outlets late last week that GSE reform is definitely a priority for Mnuchin. In fact, he said that it’s something Mnuchin’s spent a lot of time working on. “Once he gets approved and confirmed, Steve will be taking that on as one of this early priorities. So we definitely have some plans...


February 10, 2017 - Inside The GSEs

Are GSE Sellers Finally Easing Up On Credit Standards?

One month does not a trend make, but early indicators hint that mortgage lenders may be stretching the credit box to boost volume. Fannie Mae and Freddie Mac issued $91.71 billion of single-family mortgage-backed securities in January, a stiff 18.3 percent drop from the previous month. Some of the decline was the result of Fannie’s heavy volume in December, when its business flow was catching up from an unusually slow November. But mortgage interest rates have edged up, and there is widespread expectation in the industry that refinance volume in 2017 will drop sharply from last year. Higher rates could also tarnish a housing market that’s bumping up against affordability and supply issues.


February 10, 2017 - Inside Mortgage Trends

Data: Top Agency Purchase-Mortgage Sellers and Agency Purchase Mortgages by State: 12M2016

A ranking of the top 100 agency purchase-mortgage sellers in 2016 and a ranking of agency purchase mortgages by state.


February 10, 2017 - Inside Mortgage Trends

GSE Sellers Edge Toward Higher-Risk Mortgages, Nonbanks More Daring

Mortgage lenders that deliver loans to Fannie Mae and Freddie Mac mortgage-backed securities continued to do gradually more business with borrowers with lower credit scores, according to an exclusive new Inside Mortgage Trends analysis of MBS data. In 2016, 21.4 percent of purchase mortgages securitized by the two government-sponsored enterprises had credit scores ranging from 620 to 699. That was up from 20.6 percent in 2015 and 20.5 percent ... [Includes two data charts]


February 10, 2017 - Inside MBS & ABS

MBA Reform Plan Seeks to Preserve TBA Market, But Analyst Says Explicit Guarantee Questionable

The need to preserve liquidity and transparency in the existing to-be-announced market was an important component of the Mortgage Bankers Association’s newly-released plan for housing finance reform, according to Deutsche Bank Securities. Jeana Curro, research analyst with Deutsche, said a handful of provisions in the MBA’s latest proposal stand out as improvements from the industry group’s previous ideas on how to reform Fannie Mae and Freddie Mac. She agreed...


February 10, 2017 - Inside MBS & ABS

Higher Interest Rates May Prompt Banks to Unload Fixed-Rate Product, Result in Fewer GSE Refis

Analysts at DBRS anticipate some notable changes in the residential mortgage securitization market this year, mostly as a result of expected higher interest rates. “Despite a healthy housing market recovery, post-crisis non-agency RMBS issuance has remained stagnant for several reasons,” said Quincy Tang, managing director of RMBS structured finance, in a new research report issued early this week. In addition to the dominance of Fannie Mae and Freddie Mac and bank balance-sheet capacity, “a persistently low interest rate environment has rendered...


February 10, 2017 - IMFnews

The Benefits of Owning Fannie/Freddie Preferred Stock Over Common

The two GSEs were placed in conservatorship in September 2008 by Treasury and the Federal Housing Finance Agency. At the time, their common and junior preferred shares were considered worthless.


February 9, 2017 - IMFnews

Short Takes: Time to Sell GSE ‘Juniors’? / Bruce Berkowitz, True Believer / What Fannie, Freddie and Sears Have in Common / Whatever Happened to Sears Mortgage? / Texas Capital Accumulating MSR Assets / First Franklin Settles FHA Charges

Besides the GSEs, one Fairholme’s most speculative investments is Sears Holdings Corp., the struggling retailer…


February 9, 2017 - IMFnews

BlackRock Executive Craig Phillips Could Play a Role in GSE Reform

Phillips, managing director of financial markets/client solutions at BlackRock, is well known in MBS circles for his early days at First Boston…


February 8, 2017 - IMFnews

Growing Concern that Trump’s Tax Cut Could Hammer Fannie and Freddie

The DTAs are available to the GSEs as future deductions against taxable income. A reduction in the corporate tax rate would reduce existing DTAs for not just Fannie and Freddie but for other U.S. businesses as well.


February 3, 2017 - Inside MBS & ABS

Fed Judge Puts an End to the Stall: Government Must Release Documents to GSE Shareholders in Legal Case

A federal appeals court has rejected government efforts to reverse a September ruling by Federal Claims Court Judge Margaret Sweeney ordering the government to turn over various memos, emails and presentations to investors in litigation involving the Fannie Mae and Freddie Mac net worth sweep. On Jan. 30, the U.S. Court of Appeals for the Federal Circuit ruled in favor of investors in the two government-sponsored enterprises, upholding Sweeney’s earlier decision, and ordered the government to release 48 of the 56 documents because they don’t merit privilege treatment. Eight of the documents were...


February 3, 2017 - Inside MBS & ABS

Fannie Mae’s $1 Billion Commitment to Invitation Homes Has a Few Critics, But What’s the Big Deal Anyway?

Fannie Mae’s recent decision to provide a $1 billion financing commitment to single-family rental operator Invitation Homes has raised a few eyebrows, but for the most part it appears to be a fairly benign transaction that should benefit both parties. The arrangement was sanctioned by the Federal Housing Finance Agency, which views the relationship as just another way for Fannie to finance rental housing. The rental units are 50,000 single-family residences scattered around the country – not apartment buildings. “Given the growth in the single-family rental market, FHFA considered...


February 3, 2017 - IMFnews

Agency MBS Issuance Tumbles by Almost 16 Percent in January

Fannie Mae saw the biggest drop in refi volume, a 30.2 percent decline from December…


February 2, 2017 - Inside Mortgage Finance

MBA Housing Finance Reform Plan Recommends Multiple Guarantors to Increase Competition

The Mortgage Bankers Association this week released an updated proposal to establish multiple privately owned guarantors to promote competition in the marketplace. In the MBA’s blueprint, the guarantors would be organized as privately-owned utilities with a regulated rate of return. “The more market participants that compete...


February 2, 2017 - IMFnews

A Different GSE Dilemma: Not ‘Too Big to Fail’ but ‘Too Big to Sell’

When it comes to cashing out of large blocks of GSE common stock, sellers face the ‘Roach Motel’ syndrome: investors check, but can’t necessarily check out…


February 1, 2017 - IMFnews

Fairholme Letter: We’re Not Speculators; Only the ‘Disingenuous’ Would be Against a GSE Recap

Fairholme: “Only the disingenuous would assert that recapitalization of these companies would take decades and come at taxpayers’ expense…”


January 31, 2017 - IMFnews

MBA’s New GSE Plan Looks a Little Like Its Old Plan; Slams Door on ‘Recap and Release’

The trade group’s blueprint also throws cold water on any piecemeal “recap and release” plan for Fannie and Freddie.


January 31, 2017 - IMFnews

Nonbank GSE Servicing Growth for 2016: A Whopping 18.5 Percent

The largest Fannie/Freddie servicers are still Wells Fargo, JPMorgan and Bank of America, but all three continue to shrink their exposure to GSE product...


January 27, 2017 - Inside The GSEs

GSE Roundup

Fannie Prices $1.351B CAS Deal. Fannie Mae priced its first credit risk-sharing transaction of 2017 last week, under its Connecticut Avenue Securities program. CAS Series 2017-C01, a $1.351 billion note offering, was scheduled to settle on Jan. 26, 2017.  Laurel Davis, vice president of credit risk transfer, said “We saw an overwhelmingly positive response to our first deal of the year from a broad range of investors.” …


January 27, 2017 - Inside The GSEs

KBW Dishes on GSE Reform Scenarios in Weekly Podcast

Keefe Bruyette & Woods questioned what would happen if the GSEs were dismantled in its recent financial podcast. Bose George, analyst with KBW, said, given the increase in guaranty fees, it’s clear that at least for higher quality loans, the private sector is ready to price just as competitively. “But we see two risks if the GSEs go away,” he said. George noted that the five trillion dollars worth of GSE MBS guarantees, which currently have no capital behind them, will need capital if that moves over to the banking system. And he said it’s safe to assume that will translate into higher mortgage rates.


January 27, 2017 - Inside The GSEs

Upcoming Investor Reporting Changes Eliminate MBS Call-In

Marking one of the first major GSE changes of the new year, Fannie Mae’s new investor reporting requirement goes into effect next week on Feb. 1. Fannie said that servicers must use the updated transaction types and formats when reporting loan activity for the February 2017 reporting period. To minimize challenges during the transition, Fannie announced a temporary moratorium on post-delivery servicing transfers with effective dates from Feb.1, 2017, through March 31, 2017. …


January 27, 2017 - Inside The GSEs

GSE Lawsuit Plaintiffs Hopeful New Administratin is on Their Side

With the Trump administration now officially in office, GSE shareholders are optimistic about their cases against Fannie Mae and Freddie Mac being resolved. Investors Unite hosted a call last week during which legal experts weighed in on the outlook for GSE shareholder cases. Plaintiffs have been arguing that a government bailout of the GSEs and the subsequent Treasury sweep were unnecessary and illegal. John Yoo, Heller Professor of Law at the University of California Berkley School of Law, said he thinks the election makes a big difference because it gives an incoming president the opportunity to review the constitutional claims of the last president and decide whether to change them.


January 27, 2017 - Inside The GSEs

SCOTUS Ruling Limits Fannie's Access to Federal Court

The Supreme Court of the United States ruled last week that Fannie Mae does not have the right to automatically transfer a case from state court to federal court under the “sue-and-be-sued” clause. In the ruling from the Lightfoot v. Cendant Mortgage Corp. case, the court rejected an argument stating that the GSE’s federal charter creates federal jurisdiction. The case was argued in November. The ruling by Justice Sonia Sotomayor reversed an earlier Ninth Circuit Court decision which stated that Fannie’s sue-and-be-sued clause in the charter enabled it to transfer state-filed lawsuits against it to federal court. But that’s not the case anymore. “Fannie Mae’s sue-and-be-sued clause is most naturally read not to grant...


January 27, 2017 - Inside The GSEs

FHFA Seeks Input on Chattel Loans for Manufactured Housing

The Federal Housing Finance Agency is taking steps to explore financing personal property loans for manufactured housing and is seeking input on initiating a pilot program. Manufactured housing advocates have been pushing for greater support from Fannie Mae and Freddie Mac, especially in the form of establishing a secondary market for chattel lending, in which the home is not permanently affixed to the real estate and titled as personal property. The Manufactured Housing Institute has been in talks for some time with the GSEs and FHFA, making the case that chattel loan performance demonstrates that the GSEs can purchase chattel lending safely and profitably.


January 27, 2017 - Inside Mortgage Trends

Data: Top Sellers of TPO Originations - 12M2016

A ranking of the top 100 agency sellers of third-party originations in 2016.


January 27, 2017 - Inside The GSEs

Freddie Says Prepare for UCD Deadline, Suggests Timeline

Freddie Mac recommends that lenders begin preparing now for the Uniform Closing Dataset mandate that takes effect on Sept. 25, 2017. The Federal Housing Finance Agency directed Fannie Mae and Freddie to provide a common industry dataset to support the Consumer Financial Protection Bureau’s closing disclosure. As a result, the pair developed the UCD to make sure the disclosures were accurate and to facilitate sharing of the data. Andy Higginbotham, Freddie’s senior vice president of ...


January 27, 2017 - Inside Mortgage Trends

Bulk MSR Transfers Up Sharply in Late 2016, But Co-Issuance Sector Cooled Off

Agency mortgage servicers last year transferred some $369.44 billion of mortgage-servicing rights tied to mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae, according to an exclusive new Inside Mortgage Trends analysis. Thanks to an end-of-year surge, bulk MSR transactions accounted for most of the market. During the fourth quarter, some $76.69 billion of servicing changed hands in bulk transfers, a 76.5 percent jump from ... [Includes three data charts]


January 27, 2017 - Inside The GSEs

FHFA Takes Over as Plaintiff in GSE Shareholder Lawsuit

A federal court ruled that GSE shareholders can no longer sue Fannie Mae’s accounting firm, Deloitte & Touche, and that the Federal Housing Finance Agency will take over as plaintiff in the Edwards et al v. Deloitte & Touche case. The ruling, handed down last week in the U.S. District Court of Florida, distanced shareholders from the case, and said any claims against Deloitte are the sole responsibility of ...


Poll

With rates higher this year, there has been talk of lenders liberalizing their underwriting standards in an effort to increase volume and make up for lower refis.

Do you think your shop will loosen standards over the coming three months?

Yes, but not by much.
Yes, by a lot.
Yes and, heck, we may even do non-QM lending.
No, not at all.
No and we may even tighten credit.

vote to see results