House Republicans’ proposed budget for next year would see Fannie Mae and Freddie Mac wound down as part of an effort to “end corporate welfare” in the housing sector. The GOP’s 91-page “Path to Prosperity” proposal for Fiscal Year 2014 gives scant mention to the two GSEs – less than two full paragraphs. House Budget Committee Chairman Paul Ryan, R-WI, the proposal’s author, seeks to “drastically decrease” Fannie’s and Freddie’s market dominance by gradually ending their government guarantees and taxpayer subsidies.
Outside vendors to Fannie Mae and Freddie Mac are enjoying the “salad” days of contracting – with promises of more work to come now that the GSEs are actively aiding in the creation of a separate but “outside” single platform to issue mortgage-backed securities. According to a recent Securities and Exchange Commission 10-K filing issued by Freddie Mac, the GSE spent $361 million on “professional services” last year, which is jargon for contract workers and outsourced…
The Treasury Department is on board with a risk-sharing mandate from the Federal Housing Finance Agency that sets a $30 billion goal this year for Fannie Mae and Freddie Mac. That’s the word from FHFA officials who discussed the matter with Inside The GSEs, but who did not want to be identified by name. “Treasury has taken a great interest in these things,” said one FHFA official. “They’re not ignoring what we’re doing.” The Treasury Department did not return telephone calls about the matter.
Fannie Mae announced it has replaced the company’s outgoing top finance executive from within. David Benson, 53, currently Fannie’s executive vice president of capital markets, securitization and corporate strategy, will be the GSE’s fourth chief financial officer since the company’s government takeover in September 2008. Benson replaces Susan McFarland, who joined the company as CFO in July 2011. She will step down as soon as Benson assumes the position and will remain employed by Fannie as a senior advisor for a transition period through June 30, 2013, according to a Securities and Exchange Commission filing.
The “near-term efforts” that the Federal Housing Finance Agency’s 2013 Conservatorship Scorecard take aim at include an update of mortgage insurance master policies and formulating eligibility standards, as well as developing a set of “aligned standards” for force-placed insurance, the FHFA announced last week. The announcement comes a month after the Finance Agency abruptly overruled a plan pushed by Fannie to buy force-placed insurance directly from a number of insurance companies at an estimated 30…
Despite recent improvements in the 12 Federal Home Loan Banks’ ability to manage their interest rate risk, several of the FHLBanks continue to maintain large mortgage asset portfolios and that poses “ongoing challenges” due to their large portfolios, according to the Federal Housing Finance Agency’s official watch dog. A white paper issued this week by the FHFA’s Office of Inspector General found that seven of the FHLBanks’ mortgage portfolios are greater than 25 percent of their total assets. “FHFA has expressed concern over the fact that certain assets in these portfolios, such as [non-agency] MBS and [agency] MBS, which are classified as ‘non-core’ mission activities, do not materially contribute to the FHLBanks’ housing mission and, over the years, have increased risks within the FHLBank system,” said the OIG white paper.
Banks and thrifts reported a sharp increase in the volume of home loans sold in their mortgage banking operations last year, hitting the highest level since 2009, according to a new Inside Mortgage Trends analysis of bank call report data. Mortgage banking units generated $1.553 trillion in loan sales during 2012, a 36.9 percent jump from the previous year. Activity peaked at $417.1 billion in the fourth quarter, a 3.9 percent increase over the third quarter. Some double counting ... [Includes one data chart]
The hundreds of billions of dollars – perhaps trillions of dollars – in recent and upcoming mortgage servicing acquisitions include significant regulatory risks, according to industry lawyers. Concerns include increased attention from regulators, outstanding liabilities and state licensing requirements. Up to $1.5 trillion in servicing could be transferred in the next two years, mostly from depository institutions to nonbanks, according to industry analysts. Most of the large banks are actively ...
Fannie Mae is having internal discussions regarding how it might change the way it holds mortgage seller/servicers responsible for losses when a deficiency is discovered on a delivered loan. A spokesman for Fannie told Inside The GSEs that under one scenario, a lender might take the “credit loss” on a mortgage with Fannie agreeing to keep the loan as opposed to forcing a buyback. A deficiency might include a mistake made during the underwriting process, such as borrower information being incorrectly punched into a computer. “If data were punched in wrong, there might be a pricing change,” said the spokesman.
Nearly all banks and thrifts gradually increased the fair market value they calculated for their mortgage servicing rights during the fourth quarter of 2012, according to a new Inside Mortgage Trends analysis of call report data. At the end of the year, banks and thrifts serviced a total of $5.323 trillion in home mortgages for other investors and they valued these MSRs at $41.43 billion. The ratio of fair market value of the MSRs to unpaid principal balance of loans serviced for others was ... [Includes one data chart]
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