Fannie Mae and Freddie Mac have sold 41,649 nonperforming loans through May 2016, according to the Federal Housing Finance Agency’s inaugural report on nonperforming loan sales and borrower outcomes. The report, released last week, is the first of two reports the FHFA plans to publish each year highlighting NPL sales activities. The loans had an aggregate unpaid principal balance of $8.5 billion and were delinquent 3.4 years on average. Freddie led the NPL sales market for the GSEs having sold 26,436 delinquent loans. Fannie was a distant second at 15,213. The average loan-to-value ratio was 98 percent. LSF9 Mortgage Holdings and Pretium Mortgage Credit Partners were the top...
Former Federal Housing Finance Agency Director Ed DeMarco said the GSEs should operate as lender-owned entities that sell insurance against borrower defaults. DeMarco, along with Michael Bright, director of the Milken Institute’s Center for Financial Markets, published the housing reform plan last week. They said a long-term housing finance decision is needed. “Meaningful reform must be achieved, the vast majority of policymakers say, yet the decade anniversary of the conservatorships of Fannie Mae and Freddie Mac looms,” they said. “The FHFA was never envisioned as the permanent manager of the enterprises.” DeMarco and Blight suggest turning the GSEs into mutual insurance companies. In this scenario...
The Federal Housing Finance Agency released detailed information on how much the GSEs pay to issue their popular credit-risk transfer debt notes and the types of investors that it has been attracting. The FHFA’s cost estimates included Fannie’s Connecticut Avenue Securities program and Freddie’s Structured Agency Credit Risk program, which have accounted for most GSE risk-transfer activity so far. The estimated cost of each credit-risk debt issuance depends on how private investors and the GSE divvy up the risk as well as the expected default rate and prepayment speed for the reference pool. At the low end of the scale, Fannie conceded an estimated 5 to 6 basis points of guarantee fee income in its second....
Freddie Mac expanded its re-performing loan program by introducing its first structured sale of seasoned loans last week. The $199 million pilot structured sale is comprised of seasoned loans that Freddie currently guarantees and holds in its portfolio. This includes option adjustable-rate mortgages as well as loans that were originally option ARMs but have been modified through a Home Affordable Refinance Program or other modification. Most of the loans are” less than six months current” or are moderately delinquent, according to Freddie. The transaction involves two steps. In the first step, Freddie sells the loans through a competitive bidding process, subject to a securitization term sheet.
The GSEs simplified their low downpayment mortgage programs and announced updates in their selling guides late last week. The formula to determine a borrower’s eligibility by income limits is the first change aimed at making the application process for Fannie’s HomeReady program easier. “We are simplifying the way that income limits are applied by establishing a single area median income limit of 100 percent,” said Fannie. This is a change from the previous limit, in which the total annual qualifying income could not exceed 80 percent or 100 percent of the area median income, depending on where the home was located.
The Federal Housing Finance Agency issued interim final rules last week on fraud and civil penalties that are open for comment through Aug. 1.The interim final rule amends rules of practice and procedure and other agency regulations to adjust each civil money penalty within its jurisdiction to account for inflation. This was done pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements of 2015. FHFA noted that the Adjustment Improvements Act provides that the initial catch-up adjustment must be implemented by an interim final rule.
Freddie Prices $950 Million Multifamily K-Deal. Freddie Mac recently priced a new offering of Structured Pass-Through Certificates (K Certificates), which are backed by underlying collateral consisting of fixed-rate multifamily mortgages with predominantly seven-year terms. The GSE expects to issue nearly $950 million in K-722 Certificates. Borrower Alleges Unfair Post-Bankruptcy Inquiry. A borrower recently filed a lawsuit seeking class-action status against Fannie Mae related to an inquiry made into his credit file after his bankruptcy process was completed. Some attorneys said the case hints at a new type of lawsuit on the horizon stemming from the Fair Credit Reporting Act. The former borrower alleges that the GSE made unauthorized inquiries into his...
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