The bulk of the House Financial Services Committee hearing last week focused on the lack of reform and how the GSEs’ growing role in the housing market makes them more of a liability to taxpayers today than they were before the housing crisis. The hearing was held on September 6, the 10-year anniversary of the conservatorship that has lasted longer than anyone expected. Retiring chairman of the committee Rep. Jeb Hensarling, R-TX, called the date the “not so happy anniversary” and said while reform is critical, it’s proven illusive.Hensarling introduced a bipartisan bill during the hearing, the Bipartisan Housing Finance Reform Act of 2018, but implied it likely won’t go anywhere in this Congress.

Freddie Mac is developing an exchange path in preparation for the single security initiative that will combine the Freddie and Fannie Mae markets into one Uniform Mortgage-Backed Security. To make that transition easier for the June 2019 single security launch, Freddie teamed up with Tradeweb to create a simple, standardized transaction entry point to submit valid legacy MBS for exchange. The platform will also accept float compensation and choose a settlement date. Investors will be able to request exchanges through their order management systems integration with Tradeweb or enter them directly into Tradeweb. The platform will provide a direct-to-Freddie path for...

More than two dozen trade groups signed an open letter to the administration and Congress urging them to preserve what works in the current housing-finance system and get more private capital back into the market. “There is a pressing need to ensure that the existing progress is cemented rather than cast aside,” said the groups, which include the Mortgage Bankers Association, the Community Home Lenders Association, the Community Mortgage Lenders of America, Independent Bankers of America and the Credit Union National Association. The groups want to make sure that any effort to change the role the GSEs play doesn’t result in market disruptions that reduce access to credit in the single-family and multifamily space.

Dropping the debt-to-income cap for qualified mortgages is one way to level the playing field between the GSEs and the private market, according to the Urban Institute. With the somewhat controversial GSE patch in qualified mortgages expiring in January 2021, talk has turned to coming up with alternatives for retaining or replacing this special treatment given to Fannie Mae and Freddie Mac loans. The GSE patch allows Fannie and Freddie to purchase loans with debt-to-income ratios exceeding 43 percent as long as they meet other QM rule requirements set forth by the Consumer Financial Protection Bureau.

Fannie’s Latest NPL Sale. Fannie Mae announced its latest sale of non-performing loans this week, including the company’s 14th Community Impact Pool. The five larger pools include approximately 10,700 loans totaling $1.95 billion in unpaid principal balance. The Community Impact Pool contains approximately 80 loans totaling $28.7 million in UPB. The Community Impact Pool consists of loans geographically located in New York City. Bids are due on the five larger pools on October 4 and on the Community Impact Pool on October 23. Investors Unite on 10-Year Conservatorship Anniversary. The GSE shareholders group said 10 years later, the GSEs remain wards of the state. “After...

As an industry, real estate investment trusts managed to boost their holdings of residential MBS during the second quarter of 2018, but many firms were unable to build their portfolios, according to a new Inside MBS & ABS analysis of earnings reports from publicly traded REITs. [Includes one data chart.]

The Federal Housing Finance Agency this week moved to further cement its existing policies that require Fannie Mae and Freddie Mac to move in lockstep on matters that affect MBS prepayment speeds as a federal regulation.

In anticipation of the single-security launch in June 2019, Freddie Mac is working on exchange paths to make the transition from two markets to one go much more smoothly.

SG Capital Partners, a boutique investment banking firm chock full of former Goldman Sachs executives, has launched a new wholesale lender to originate non-qualified mortgages, most of which will wind up in MBS deals.

Federal regulators should issue regulations that would help banks sell loans and maintain the marketplace lending business model, according to lawyers representing the financial institutions. It’s not every day that lenders seek federal regulation, but preemption of state regulations and unfavorable court rulings can prompt calls for help.