Fannie Mae’s $759 million new headquarters has been the centerpiece of public criticism over the past week. A Federal Housing Finance Agency Office of the Inspector General report criticized the FHFA for allowing what it called excessive spending on the downtown Washington, DC, headquarters, which broke ground in mid-May. The review stemmed from an anonymous hotline complaint alleging overspending on the project. The IG questioned the FHFA’s oversight and recommended the agency closely scrutinize the building’s plans and budget. The problem arose when the cost to build out the new space to Fannie’s specifications increased by 54 percent from January 2015. Costs rose from $164.32 square feet to $252.81 square feet. Then back down some in May 2016 to $223.35/square foot.
An Arkansas Congressman introduced a bill last week that would require the Treasury Department to annually exam the possibility of ending the GSE conservatorship.Rep. French Hill, R-AR, said H.R. 5505, the GSE Review and Reform Act, would require Treasury Secretary Jack Lew to lead the reform of Fannie Mae and Freddie Mac. It would amend the Consumer Financial Protection Act of 2010 to require annual studies on ending the conservatorship of the GSEs. He noted that outside of a study done in 2011, the administration has had little engagement with Congress on a path toward ending the eight-year conservatorship and reforming the “broken” housing finance system. Hill added that the...
The increase in first-time homebuyer volume and market share has occurred without looser underwriting in terms of credit scores and loan-to-value ratios…
The Structured Finance Industry Group late last week published a final draft of the standards for due diligence firms to use when testing loans for compliance with the Truth in Lending Act/Real Estate Settlement Procedures Act disclosure rule. “The underlying premise of this documentation is to establish a best practices approach to pre-securitization testing logic that will drive the due diligence conducted by third-party review firms,” SFIG said. The RMBS 3.0 TRID Compliance Review Scope documentation addresses...
The Securities and Exchange Commission will re-propose a rule addressing conflicts of interest regarding certain securitizations, according to SEC Chair Mary Jo White. The rule required by the Dodd-Frank Act was originally proposed by the SEC in 2011. “It’s proved to be much more complicated than our experts in the agency envisioned,” White said last week at a hearing by the Senate Committee on Banking, Housing and Urban Affairs. Section 621 of the DFA requires...
Fannie Mae and Freddie Mac MBS guarantee fees are too high, given the strong credit profile of new business since the financial crisis, according to a diverse collection of real estate, banking and consumer interest groups. The groups called on the Federal Housing Finance Agency to lower MBS guarantee fees charged by the two government-sponsored enterprises, and to reduce or eliminate the loan-level pricing adjustments that are typically wrapped into the consumer’s note rate. The average g-fee has jumped from 22 basis points in 2009 to 58 bps in 2014, including the 10 bps surcharge that Congress mandated in 2011 to cover a payroll tax cut. Loan-level pricing adjustments can total...[Includes one data table]
Ginnie Mae is once again getting anxious about the growing – and large – presence of nonbanks that service the agency’s MBS, fearing a liquidity crisis could erupt because some firms rely too heavily on “non-traditional and very sophisticated funding mechanisms.” In a statement issued to Inside MBS & ABS this week, Ginnie contrasted nonbanks to depositories “who traditionally were the primary issuers of Ginnie Mae MBS.” The agency added...[Includes one data table]
The Federal Deposit Insurance Corp. this week revised its securitization safe-harbor rule to clarify loss mitigation standards for mortgage servicers to synchronize it with the similar requirements issued by the Consumer Financial Protection Bureau. The FDIC safe-harbor rule sets standards under which the agency will not attempt to capture assets of a failed bank that are transferred to qualifying securitizations. Under the previous rule, servicers of residential mortgages backing MBS that enjoy safe-harbor status were required to take loss mitigation action within 90 days after the loan becomes delinquent. In January 2013, the CFPB adopted...
Mortgage-finance reform doesn’t look to be anywhere on the horizon, but at some point government policymakers will have to figure out what to do with trillions of dollars of Fannie Mae and Freddie Mac MBS if the two government-sponsored enterprises are put out to pasture. In fact, the transition to a new GSE single security that’s scheduled to start in 2018 could become a test run of sorts for the even bigger changes ahead, according to a paper published by the Urban Institute. Crafted by five mortgage-industry veterans, “A More Promising Road to GSE Reform” is centered on the creation of a new government corporation that would replace Fannie and Freddie. The National Mortgage Reinsurance Corp. would issue...
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