Browse articles from all of our Newsletters related to GSEs.

October 21, 2016 - IMFnews

BofA Expands and Doubles Commitment to Low-Downpayment Program

Bank of America is expanding its “Affordable Loan Solution” mortgage product.

October 21, 2016 - Inside MBS & ABS

Industry Groups Say GSE Credit-Risk Sharing Needs to Develop Front-End Transactions, Improve Transparency

Trade groups representing a broad spectrum of mortgage and securitization businesses generally support an effort by Fannie Mae and Freddie Mac to develop more credit-risk transfer options, but some cautioned that the government-sponsored enterprises should maintain a level playing field. In response to a Federal Housing Finance Agency request for comments on the CRT program, the Mortgage Bankers Association and U.S. Mortgage Insurers repeated their calls for programs to allow loan sellers to buy deeper private MI in exchange for reduced GSE guaranty fees. To date, the vast majority of Fannie and Freddie CRT deals have been...

October 21, 2016 - Inside MBS & ABS

Freddie Mac and Dealers Begin Testing Portal For Exchanging Legacy PCs for Single Securities

Freddie Mac has begun pilot testing its new Dealer Direct system for swapping legacy participation certificates for new single securities with a select group of dealers, the government-sponsored enterprise said in an update issued this week. In transitioning to the single security, Freddie will give all investors in its existing MBS that have a 45-day payment cycle the option to exchange them for the new 55-day securities. That process will be transacted through the Dealer Direct electronic platform. Holders of legacy MBS will work...

October 20, 2016 - IMFnews

Short Takes: Planning Season for 2017 Has Begun / Applications Inch Up / The Ginnie Mae Acknowledgment Agreement Version 2.0? / GSEs Score a Victory in Chicago

If rates rise enough, will refis fall by 50 percent?

October 20, 2016 - IMFnews

FHFA Issues Guidelines for Internal Audits at Fannie, Freddie and the FHLBanks

The FHFA said internal audits at the housing GSEs should cover the entire audit universe over a four-year period…

October 19, 2016 - IMFnews

CRT Comment Letters Focus on Front-End vs. Back-End Arrangements

Fannie Mae’s Connecticut Avenue Securities program and Freddie Mac’s Structured Agency Credit Risk program have accounted for the bulk of GSE activity since the CRT initiative was launched three years ago.

October 18, 2016 - IMFnews

GSE Credit-Risk Transfers Kept Chugging Along in 3Q16

Fannie Mae had the bigger quarter in CRT activity, more than doubling its second-quarter total with a record $2.52 billion of issuance…

October 14, 2016 - Inside The GSEs

GSE Roundup

Freddie names NPL winners while Fannie announces another NPL sale. With all Message Manager reports now available on Fannie Mae Connect, the old system is about to sunset. The FHLBanks report on their 2015 low-income housing activity. FHFA tapped into social media for a last-ditch effort to make sure struggling homeowners knew about its principal modification program before deadline passed. Fannie's economists score a repeat award victory. And New York clergy speak out against GSE reform.

October 17, 2016 - IMFnews

Could the Judge’s Ruling in the PHH-CFPB Case Ultimately Affect the FHFA?

The court’s reasoning in the case casts doubt on the validity of the FHFA’s structure, according to a report from Compass Point Research & Trading.

October 14, 2016 - Inside The GSEs

Guidance Issued on GSE Data Management and Usage

The Federal Housing Finance Agency recently issued guidance on data management and usage and said it expects Fannie Mae and Freddie Mac to have the appropriate policies, procedures and standards in place.The advisory bulletin noted that the architecture of the data should provide easy access and effective utilization across the GSE as appropriate. Each GSE should also establish data quality requirements so that data used for decision-making are relevant, accurate, complete, timely and consistent. Five different areas concerning data were highlighted in the bulletin. Under data governance, the FHFA said that the GSEs should each establish a data...

October 14, 2016 - Inside The GSEs

Chicago Prohibited From Collecting Fannie, Freddie Transfer Taxes

A judge ruled that the city of Chicago cannot impose a real estate transfer tax on buyers who purchased homes sold by the GSEs. Even though federal law does not allow local governments to collect taxes to property held by federal lenders, the GSE accused the city of circumventing the law by waiting for properties to be sold then sending the buyers a tax bill. This ruling stems from a federal court case last October in which Fannie Mae and the Federal Housing Finance Agency sued the city for trying to collect taxes from buyers who purchased foreclosed homes from the GSE.

October 14, 2016 - Inside The GSEs

FHFA Details 2017 Goals in Annual Performance Plan

The Federal Housing Finance Agency has included more details regarding how it will monitor the examinations of Fannie Mae and Freddie Mac in its annual performance plan for fiscal year 2017, released last week. Over the past year, the FHFA’s Office of Inspector General has blasted the regulator for not completing targeted examinations on time and inadequate follow-up on what were deemed matters requiring attention (MRAs). The new plan noted that the GSEs will continue to address MRAs by submitting remediation plans to FHFA for review. Each non-objected remediation plan will include a timeframe for completion within the fiscal year the MRA was issued or beyond. FHFA added that Fannie and Freddie management are responsible for...

October 14, 2016 - Inside The GSEs

OIG Finds FHLBank Examiners Not Following Up on Found Deficiencies

The supervision of examiners in the Division of Federal Home Loan Bank Regulation has been lax when it comes to making sure deficiencies within the FHLBanks are corrected, according to a recent Federal Housing Finance Agency Office of the Inspector General report. The IG reviewed a sample of nine matters requiring attention (MRA) that the division issued from January 2014 through December 2015. When it comes to correcting serious supervisory matters, the IG said that the bank regulator has been inconsistent in following FHFA requirements. For two of the MRAs, examiners determined that the affected FHLBank made no progress in remediating the deficiencies and reissued MRAs with the same exact terms.

October 14, 2016 - Inside The GSEs

FHFA Issues Guidelines for Fannie, Freddie, FHLBank Internal Audits

The Federal Housing Finance Agency issued guidance for the GSEs and Federal Home Loan Banks to establish independent internal audit (IA) functions. This is so they can relay timely information and make the appropriate corrections when it comes to elevated risks. The agency requires the boards of Fannie Mae, Freddie Mac and the FHLBanks to have an audit committee and a chief audit executive (CAE) solely responsible for the IA function. The FHFA said that the CAE must establish internal audits that are independent and objective so that they effectively identify and assess risks. Internal audits should cover the entire audit universe over a maximum four-year period.

October 14, 2016 - Inside The GSEs

Federal Home Loan Bank MBS Investments Remain Strong

Fannie Mae and Freddie Mac securities remained the preferred investment choice of the 11 Federal Home Loan Banks during the first half of 2016, according to a new ranking by Inside The GSEs based on data from the Federal Housing Finance Agency. GSE MBS accounted for $110.6 million of the total $138.4 million in business. There was a 2.0 percent quarterly increase from the first to the second quarter. GSE MBS accounted for 79.9 percent of combined MBS portfolios. The FHFA data does not separately break out Fannie and Freddie volume or share.

October 14, 2016 - Inside The GSEs

Two Different Twists on GSE Housing Finance Reform

In the latest round of housing reform proposals, the Milken Institute recommends the best way forward is to just amend the charters of the GSEs, Federal Housing Finance Agency and Ginnie Mae. This is a different twist on the Urban Institute’s proposal earlier this year, which suggests completely merging Fannie Mae and Freddie Mac into a government corporation that pushes its credit risk into the private market. Authors Michael Bright, director in the Milken Institute’s Center for Financial Markets, and Ed DeMarco, senior fellow at the institute and former FHFA acting director, said those amendment changes include turning the GSEs into mutuals owned and operated by their seller-servicers and making Ginnie Mae a stand-alone government corporation.

October 14, 2016 - Inside The GSEs

Ruling on Government Documents in GSE Shareholder Case Causes Concern

Documents revealed to plaintiffs’ attorneys in a prominent GSE shareholder case is causing some to question what President Obama was told about Fannie Mae’s and Freddie Mac’s profitability when the Treasury sweep took place in 2012. Judge Margaret Sweeney released her 80-page opinion last week and it gave more insight into her decision. While only a short summary sentence of each of the 56 documents is available now, it does show communication between high-level officials at the Treasury Department, Federal Housing Finance Agency and the White House regarding the Treasury’s sweep of Fannie and Freddie profits. Investors Unite, a GSE shareholder group, noted that the government might have been trying to keep the documents hidden because...

October 14, 2016 - Inside The GSEs

Industry Groups Express Varying Views in CRT RFI Comments

The comment period on credit risk transfers ended Oct. 13 and letters from industry groups have been pouring in this week, with many primarily focusing on the issue of front-end versus back-end credit-risk transfers. While some advocate for more front-end risk- sharing deals, instead of the back-end ones that account for more than 80 percent of CRTs to date, others warned that “winners and losers” should not be picked. Back in June, the FHFA asked for industry feedback on various aspects of its CRT program. It also extended the deadline from August to October because industry stakeholders wanted more time to evaluate the questions raised in the request for input.

October 14, 2016 - Inside The GSEs

Could Judge's Ruling on CFPB Structure Ultimately Affect FHFA?

The ruling handed down this week that concluded the structure of the Consumer Financial Protection Bureau is unconstitutional has led to industry chatter that the Federal Housing Finance Agency, which is similarly structured, could be more closely examined. In PHH Corp. v. Consumer Financial Protection Bureau, a DC Circuit Court judge found that the bureau’s single-director structure was unconstitutional and dismissed a $109 million penalty against PHH for violations of the Real Estate Settlement Procedures Act. Robert Maddox, financial services litigation attorney with Bradley Arant Boult Cummings LLP, told Inside The GSEs, “While the court did not address the constitutionality of FHFA, the framework of FHFA may possibly lend itself to the same constitutional scrutiny as the CFPB.”

October 14, 2016 - Inside Mortgage Trends

Market Tilt Toward Purchase-Mortgage Lending Boosts Correspondent Share

Fannie Mae and Freddie Mac saw a robust 29.7 percent jump in single-family mortgage business during the third quarter, with most of the gain coming from the purchase-mortgage side of the business. And more purchase-mortgage business usually means a bigger share for correspondent lenders. Correspondent originations accounted...[Includes two data tables]

October 14, 2016 - Inside The GSEs

Big Banks Claim Larger Share of GSE Business During 3Q16

Reversing at least temporarily a long-running trend in the mortgage market, the four biggest banks in the U.S. expanded their presence in the GSE single-family market in the third quarter of 2016. Together, Wells Fargo, Chase, Bank of America and Citigroup delivered $61.88 billion of single-family loans into Fannie Mae and Freddie Mac mortgage-backed securities during the third quarter, according to a new Inside The GSEs analysis and ranking. That was up a hefty 45.0 percent from the second quarter, well above the 29.7 percent increase in overall MBS issuance by the two GSEs. The four megabanks, all with over $1 trillion in assets, expanded their combined GSE footprint by 2.2 percent from the second quarter.

October 14, 2016 - Inside MBS & ABS

Judge’s Ruling Revealed in GSE Case, False Claims of Privilege Raise Questions

U.S. Court of Federal Claims Judge Margaret Sweeney’s ruling, released last week, raises new questions about the validity of government efforts to keep thousands of other documents secret in a Fannie Mae and Freddie Mac shareholder case over the net worth sweep imposed by the Treasury Department and the Federal Housing Finance Agency, according to shareholder advocates. In Fairholme Funds Inc. v. United States, et al, shareholders argue that the net worth sweep of the government-sponsored enterprises’ profits is unfair, and they have scored significant victories in getting access to various written communications to prove their claim. The recent batch of documents Sweeney released to the plaintiff’s attorneys show...

October 14, 2016 - Inside MBS & ABS

GSE Credit-Risk Transfers Keep Chugging Along in 3Q16, Bank of America Merrill Lynch Tops in Underwriting

Fannie Mae and Freddie Mac sold $3.78 billion of credit-risk transfer bonds during the third quarter, a 7.8 percent increase from the previous period, according to a new Inside MBS & ABS analysis of CRT disclosures made by the two government-sponsored enterprises. That brought year-to-date issue in Fannie’s Connecticut Avenue Securities program and Freddie’s Structured Agency Credit Risk program to $10.73 billion, up 13.3 percent from the first nine months of last year. Fannie had...[Includes one data table]

October 13, 2016 - Inside Mortgage Finance

GSE Nonperforming Loan Activity Update, Fannie Mae Surpasses 2015 Offerings

Fannie Mae has significantly ramped up its nonperforming loan sales in 2016, while Freddie Mac is running slightly behind the pace it set in 2015. Fannie offered $4.69 billion of NPLs through the first nine months of this year, compared to $2.78 billion for all of 2015. The government-sponsored enterprise announced five more pools totaling $1.39 billion up for sale this week, moving the year-to-date total to $6.08 billion. The latest sale is...

October 13, 2016 - Inside Mortgage Finance

Flow of Private MI Loans Into GSE MBS Kept Pace With Overall Increase in Fannie/Freddie Business in 3Q16

Trends in the agency mortgage-backed securities market suggest that private mortgage insurers may have gained some market share from government MI programs during the third quarter of 2016, according to a new Inside Mortgage Finance analysis. Fannie Mae and Freddie Mac securitized a total of $75.89 billion of insured single-family mortgages during the third quarter, an increase of 29.5 percent from the previous period. That was a tad below the 29.7 percent increase in overall MBS production by the two government-sponsored enterprises, but it kept the private MI share at 26.8 percent for the third quarter. Meanwhile, the booming Ginnie Mae market showed...[Includes two data tables]

October 13, 2016 - IMFnews

MBA Pushes for ‘Front-End’ Risk Transfers on GSE Loan Sales

“It is critically important for the GSEs to develop and implement additional CRT structures that are accessible to lenders of all sizes and business models in order to avoid reconcentration of the origination and servicing market,” writes MBA President Dave Stevens.

October 10, 2016 - IMFnews

In Crafting the Deal Agent Concept for Non-Agency MBS, Investors Looked to the GSEs

Clayton Holdings is one firm that’s interested in providing deal-agent services to the industry…

October 7, 2016 - Inside Nonconforming Markets

High Volume at GSEs from Non-Agency-Like Loans

Special treatment for the government-sponsored enterprises regarding debt-to-income ratios on qualified mortgages and “emergency” high-cost loan limits accounted for about 25.0 percent of the single-family business that passed through the GSEs in the first half of 2016, according to an analysis by affiliated publication Inside The GSEs. In the first six months of 2016, Fannie Mae and Freddie Mac securitized $64.52 billion of single-family mortgages with DTI ratios ...

October 7, 2016 - Inside MBS & ABS

Milken Institute Authors Suggest Housing Finance Reform via Agency Charter Amendments for GSEs, Ginnie and the FHFA

The Milken Institute suggests simply amending the charters of Fannie Mae, Freddie Mac, Ginnie Mae and the Federal Housing Finance Agency for a smooth transition toward a new secondary mortgage market. Those changes include turning the government-sponsored enterprises into mutuals owned and operated by their seller-servicers and making Ginnie Mae a stand-alone government corporation. Amending the charters could accomplish a wide range of objectives that have eluded legislators and policymakers since the conservatorships, the authors said. Michael Bright, director in the Milken Institute’s Center for Financial Markets, and Ed DeMarco, senior fellow at the institute and former FHFA acting director, said...

October 7, 2016 - Inside MBS & ABS

When Crafting Deal Agent for Non-Agency MBS, Investors Looked to GSEs’ Oversight, Enforcement and Performance

Non-agency MBS investors looked to the practices of the government-sponsored enterprises when establishing the standards for a deal agent, according to Alessandro Pagani, a portfolio manager and head of securitized assets at Loomis Sayles. “The GSEs were very effective in enforcing their rights as owners of the collateral; they had access to information and real enforcement power to put back loans that needed to be put back and direct servicers,” he said at the recent ABS East conference produced by Information Management Network. The Deal Agent Committee released...

October 6, 2016 - Inside Mortgage Finance

NY Clergy Express Concern About GSE Reform that Would Favor Big Banks, Shortchange Minority Communities

A group of New York Baptist clergy, mostly in Harlem and the Bronx, has joined the chorus of those raising concerns about potential Fannie Mae and Freddie Mac reform efforts that would compromise affordable housing goals. In a letter to Sen. Charles Schumer, D-NY, the 38 religious leaders echoed fears raised by other groups that Congress might hand the government-sponsored enterprises’ business over to big banks. They contend that the biggest banks have “consistently displayed a disinterest” in lending to minority-based communities and lack a “duty to serve” commitment comparable to the one the GSEs have. “Efforts to transfer the mortgage securitization platforms of Fannie Mae and Freddie Mac into the hands of the big banks create...

October 6, 2016 - Inside Mortgage Finance

GSE Purchase-Mortgage Business Hits Post-Crash High in 3Q16, While Refi Sector Keeps Percolating

Fannie Mae and Freddie Mac securitized $135.69 billion of single-family purchase mortgages during the third quarter, according to a new Inside Mortgage Finance analysis of mortgage-backed securities disclosures by the two government-sponsored enterprises. That was up a hefty 26.2 percent from the previous quarter, and it represented the biggest quarterly flow of purchase mortgages to the GSEs since the housing market collapse. Although the loans were pooled in MBS issued during the third quarter, a significant number of them were actually originated during the April-June cycle. The third quarter typically has...[Includes three data tables]

October 6, 2016 - IMFnews

Fairholme Says GSE Document ‘Floodgate’ About to Open; At Stake: $2.4 Billion of Fannie/Freddie Jr. Preferred

In a letter to its shareholders, Fairholme called the GSEs “two of the best businesses ever owned by the funds.”

October 6, 2016 - IMFnews

GSE Purchase Business Hit Post-Crash High in 3Q16

Freddie Mac’s third-quarter MBS business was up 36.0 percent from the previous period, thanks to a whopping 43.6 percent jump in purchase-mortgage business…

October 5, 2016 - IMFnews

Judge’s Ruling in GSE Shareholder Case Finds No Reason to Keep Government Docs Hidden

Fairholme, which won this round, controls roughly $2.4 billion of GSE junior preferred…

October 4, 2016 - IMFnews

Money Market Funds Continue to Show the Love for GSE Debt

Fund managers have a significant preference for Freddie paper over Fannie instruments…

October 3, 2016 - IMFnews

New York Clergy Worries About GSEs Being Dismantled. Resurrect and Release?

“We hope that you will help us to push back on current efforts to gift the proprietary infrastructure of Fannie Mae and Freddie Mac to the big banks,” the clergymen write.

October 3, 2016 - IMFnews

Analysis: GSE ‘Patch’ and High Cost Limits Account for 25% of their Business

In the first six months of 2016, Fannie and Freddie securitized $64.52 billion of single-family mortgages with DTI ratios exceeding 43 percent.

September 30, 2016 - Inside The GSEs

GSE Roundup

Fannie Mae Names Small Pool Winning Bidder. The Community Loan Fund of New Jersey, Inc., an affiliate of New Jersey Community Capital, a non-profit community development financial institution, is the winning bidder of Fannie Mae’s fifth Community Impact Pool of non-performing loans. The transaction is expected to close on Nov. 22, 2016, and includes 120 loans secured by properties located in the Miami area with an unpaid principal balance of approximately $20.3 million. In collaboration with Wells Fargo Securities, LLC and The Williams Capital Group, L.P., Fannie Mae began marketing this Community Impact Pool to potential bidders on Aug. 10, 2016.

September 30, 2016 - Inside The GSEs

Low Downpayment Spin-Off Pilot Loosens Eligibility Requirements

In an attempt to cater to more diverse communities and likely drum up more business for its low downpayment program, Freddie Mac unveiled a new mortgage pilot with two lenders last week that loosens eligibility requirements. The program, Your Path, is different in that it is based on certain borrower characteristics and trends. It was launched with two nonbank lenders that specialize in serving the Hispanic community and low-income borrowers. It was announced during the national convention of the National Association of Hispanic Real Estate Professionals. New American Funding, headquartered in Dallas, and Las Vegas-based Alterra Home Loans are building on Freddie’s low downpayment Home Possible mortgage platform to create the pilot.

September 30, 2016 - Inside The GSEs

Fannie and Freddie Execs Talk CSP Misperceptions, Alignment

Representatives from Fannie Mae and Freddie Mac discussed misperceptions about the common securitization platform and the goal of aligning policies of the two GSEs at last week’s ABS East conference in Miami. Mark Hanson, Freddie’s senior vice president of securitization, said the importance of the CSP is that it’s “shareable,” during one of the panel sessions.“That opens up a lot of thinking and potential for down the road. But in it being shareable there are some requirements that come with all that,” he said. Hanson added, “A lot of what’s required and a lot of what’s taken so much time in all this is to get alignment between Freddie and Fannie.

September 30, 2016 - Inside The GSEs

Industry Groups Worry About Possible CSP Control Transfer

Several special interest groups are worried that the common securitization platform could become part of a backdoor effort to “piecemeal” GSE reform via possible provisions to transfer CSP control to the private sector. The Community Home Lenders Association, Community Mortgage Lenders of America, and six other trade and civil rights groups penned a letter to Congress last week urging the House to not adopt individual provisions as riders to an FY 2017 funding bill or other “must-pass” legislation that they say could bias the final outcomes of an ultimate comprehensive GSE reform bill. Provisions to transfer control of the CSP to the private sector, and most likely the largest private financial institutions have not...

September 30, 2016 - Inside The GSEs

FHFA Proposes Revised Idemnification Policy

The Federal Housing Finance Agency recently redrafted the proposed indemnification payments rule to make it easier to understand. The proposed rule looks to replace a provision concerning indemnification payments by regulated entities in conservatorship with one that clearly states that the regulation does not apply to such entities. This issue has been brewing since 2008 when the FHFA published an interim final rule on severance agreements and indemnification payments. It then re-proposed the proposed amendment on indemnification payments in 2009. Now the agency said it wants to clarify the fact that it does not consider indemnification payments to be subject to FHFA rules and procedures related to compensation.

September 30, 2016 - Inside The GSEs

Frustrated Judge Orders Treasury, FHFA to Produce Additional Docs

Federal Claims Court Judge Margaret Sweeney appears to be annoyed with the government’s executive privilege pleas and ordered the U.S. Treasury Department and Federal Housing Finance Agency to turn over another heap of documents in a prominent GSE shareholder case. Some see this as a possible legal coup for Fannie Mae and Freddie Mac shareholders in the Fairholme Funds Inc. v. United States, et al. net worth sweep case. The agencies have attempted to keep the documents, containing various memos, emails, presentations and other communications, tucked away under executive privilege. But last week, Sweeney, once again, made it mandatory that the government agencies produce more documents, close to 60 this time, for the plaintiff’s attorneys.

September 30, 2016 - Inside The GSEs

Freddie Launches MI Pilot, Fannie to Follow, PMIs Not Excited

Freddie Mac introduced a front-end credit risk-transfer pilot program this week, but industry observers say it doesn’t include some of the features that many private mortgage insurers and mortgage bankers have been looking for. Guarantee fees will not be lowered because of the deep MI pilot and lowering them is something that the Mortgage Bankers Association has been advocating. Moreover, it’s not the deep-cover primary insurance that private MIs were hoping to write. The GSE is purchasing additional coverage beyond the primary MI contract from a group of four MI firms on 30-year fixed-rate mortgages with loan-to-value ratios of 80 to 95 percent. The coverage is then placed immediately as loans are sold to the GSE.

September 30, 2016 - Inside The GSEs

3Q16 Originations May Translate to Strong Fannie, Freddie Earnings

The third quarter is about to end and most GSE watchers can agree on one thing: Fannie Mae and Freddie Mac should turn in stellar earnings for the period. According to preliminary estimates from Inside The GSEs, all lenders could wind up funding $570 billion in 3Q, compared to $510 billion and $380 billion in 2Q and 1Q, respectively. The higher production figures should translate into a jump in guaranty fee income, which will feed the coffers of the GSEs. The “wild card” in their performance will be the yield on the 10-year Treasury, which was slated to close 3Q16 at 1.57 percent, 9 basis points higher than June 30.

September 30, 2016 - Inside The GSEs

IG Report says FHFA Lacks Proper Follow-Up on 'High Priority' Risk

The Federal Housing Finance Agency’s risk assessments were not a proper follow-up to targeted risk, according to the FHFA’s Office of the Inspector General. The IG noted that between 2012 and 2015, the examiners’ assessments often had little to do with the high-priority risk they are supposed to be supervising. …

September 30, 2016 - Inside The GSEs

Fannie Initiates First Widespread Use of Trended Credit Data

Fannie Mae’s implementation of its updated loan origination tool, Desktop Underwriter 10.0, this week, represents the first widespread use of trended credit data in the mortgage industry and mortgage bankers are optimistic. It was one of the most anticipated changes in the rollout and was designed to give lenders a better understanding of a potential borrower’s creditworthiness...

September 30, 2016 - Inside The GSEs

FHFA Concerned About G-Fee Pricing Aimed at Market Share

The Federal Housing Finance Agency ordered Fannie Mae and Freddie Mac to require minimum guaranty fees on their mortgage-backed securities because of concerns about buying market share through pricing. The GSEs were required to charge the same “minimum” guaranty fee for single-family guaranty commitments issued on or after Aug. 1. For 30-year mortgages, the minimum fee is 44 basis points, and it’s 30 bps for 15-year loans, according to documents obtained by Inside MBS & ABS, an affiliated newsletter, under the Freedom of Information Act. The minimum g-fees apply only to Fannie and Freddie swap business and not their cash windows. Inside MBS & ABS estimated that roughly 60 percent of single-family MBS issuance is through swaps.

September 30, 2016 - Inside The GSEs

GSE 'Patch' and High-Cost Limits Account for 25% of GSE Business

Roughly a quarter of the single-family business that passed through Fannie Mae and Freddie Mac during the first half of 2016 resulted from special treatment bestowed on the GSEs following the housing market collapse. The biggest factor is the so-called GSE patch, which exempts Fannie and Freddie from underwriting restrictions on “qualified mortgages” that are part of the ability-to-repay rule promulgated by the Consumer Financial Protection Bureau. For mortgages to get QM status, the debt-to-income ratio has to be 43 percent or less. However, the CFPB rule waives that requirement for Fannie and Freddie as long as they remain in conservatorship, up to a point.


After the November elections, how long will it take for a new Congress and White House to pass GSE reform legislation?

I’m confident a bill will be passed the first year.


2 to 3 years. GSE reform is complicated.


Sadly it won’t happen in a Clinton or Trump first term.


Not in my lifetime.


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