Fannie Mae and Freddie Mac could have a harder time recapitalizing if their deferred tax assets are negatively impacted by corporate tax reform, according to one GSE spectator. The Trump administration said it plans to restructure taxes before housing reform. Industry observers, like former Fannie Mae CFO Tim Howard, speculate on what impact that would have on Fannie and Freddie. Howard said that putting housing reform behind tax reform adds a “complication to the task of ultimately recapitalizing the companies, should that be what [Treasury Secretary Steven] Mnuchin chooses to do.” Mnuchin recently made public comments on network news stating that while housing reform is one of his priorities, it’s going to take more time.

Freddie Mac implemented a few underwriting changes that went into effect this week regarding a borrower’s self-employment status, retirement accounts and commission income. The GSE announced that the documentation required for self-employed borrowers will be revised based on the number of years the borrower has been self-employed and the business has been in existence. Borrowers self-employed for less than five years will face greater scrutiny under the new requirement. Borrowers who are self-employed and have had a business operation for at least five years will require one year of personal and business returns. But those who have been self-employed with business in operation for less...

Preventing GSE guarantee fees from being used as income for unrelated government spending has been an ongoing battle. In the latest attempt to block this from happening, more than a dozen mortgage and housing groups sent a joint letter in support of the Risk Management and Homeowner Stability Act. H.R. 916, introduced by Reps. Mark Sanford, R-SC, and Brad Sherman, D-CA, was created to stop g-fees from being tapped for non-housing programs. The Mortgage Bankers Association, Community Mortgage Lenders of America, the American Bankers Association and U.S. Mortgage Insurers are among the 14 groups that signed the letter. They argue that increasing g-fees for other purposes imposes an...

Fannie Mae and Freddie Mac multifamily lending is booming and hit a record high in 2016, but how long will that streak last? Some say the supply and demand dynamics are changing as developers rushed to build to meet a growing demand that may be leveling off some this year.Fannie ended last year having provided $55.3 billion in financing and support of the multifamily market. In 2016, Freddie financed $56.8 billion in loan purchases and bond guarantees. “Credit performance of the book of business was strong in 2016. The number of multifamily foreclosed properties held for sale remained low at 13 properties as of December 31, 2016,” reported Fannie.

The number of Freddie Mac mortgages that have fallen seriously delinquent or are in foreclosure dropped below 1 percent in January, the first time in close to a decade. Last week Freddie reported that the rate is significantly below the 3.13 percent rate for the entire mortgage market. The last time it was under 1 percent was in 2008, when it was .93 percent. It peaked at 4.20 percent two years later in 2010. It has gradually come down in subsequent years with the rate falling to 3.25 percent in 2012 and 1.88 percent in 2014. The seriously delinquent rate is for mortgage loans that are three or more monthly payments past due or are in foreclosure.

Fannie Mae’s second front-end credit risk sharing transaction is much larger than its first deal as it shifts a portion of the risk on about $15 billion worth of single-family loans. The inaugural front-end CRT announced in October, involved about $3.7 billion of single-family loans. These two transactions use credit insurance risk transfer on the front end of the transaction. Most of the GSEs’ CIRT transactions have involved insurance contracts on pools of loans that have already been securitized. This deal, like the first, will be completed on a flow basis with the risk transfer taking place before Fannie acquires the covered loans. And the insurance coverage will begin immediately after acquisition.

Freddie Hosts Employee Panel on Affordable Housing. In commemoration of Black History Month, Freddie Mac’s ARISE employee resource group invited all employees to a panel discussion on the company's commitment to affordable housing, particularly in the African-American community. The GSE said that the panelists began by discussing the importance of homeownership in all communities, while recognizing that there is a gap between white and non-white homeownership rates. Panelists discussed ways that Freddie is helping close this divide via programs including Home Possible mortgages that offer low downpayment options for low- to moderate– income homebuyers, reducing one of the financial barriers that impede African-American families from homeownership. And they talked about the GSE’s commitment to financing affordable rental properties. Investors Unite Podcast Launch.

The U.S. banking industry is a steady, but not a huge, supporter of the non-mortgage-ABS market, accounting for 17.4 percent of the supply of ABS outstanding at the end of 2016, according to a new call-report analysis by Inside MBS & ABS. By comparison, banks and thrifts held about 26.5 percent of MBS outstanding at yearend. Although ABS issuance since the financial crisis has dwarfed production of non-agency MBS, the market still hasn’t fully recovered. The Securities Industry and Financial Markets Association reports that total ABS outstanding – not including collateralized debt obligations – declined by 0.3 percent during the fourth quarter to $712.1 billion. That’s still well below the total outstanding at the end of 2007, $899.8 billion. Commercial banks and thrifts reported...[Includes two data tables]

The deal-agent role that some investors are pushing for in new non-agency MBS will complete or oversee many of the tasks that are already present in transactions with one important caveat: the deal agent has a responsibility to protect investors. A deal agent will oversee various participants in an MBS, oversee enforcement of representations and warranties, and have a fiduciary duty to investors. Yehudah Forster, a vice president and senior credit officer at Moody’s Investors Service, said...

A transparency feature included in the Dodd-Frank Act aimed at helping MBS and ABS investors understand the representations and warranties on a transaction has created a significant amount of work for rating services with little benefit for investors, according to officials at ratings firms. Since June 2015, rating services have been required by the DFA to compare the reps and warrants on a transaction they’re rating with a benchmark set of reps and warrants for that asset class. These 17g-7 reports often span hundreds of pages, detailing similarities and differences between the reps and warrants on a specific transaction compared with a set of benchmarks established by the rating services. Claire Mezzanotte, a group managing director and head of global structured finance at DBRS, said...