Recruitment and retention of executives and staff at Fannie Mae and Freddie Mac remain a “principal risk management challenge” to the two GSEs, a problem that is likely only to worsen with time, according to Fannie and Freddie’s regulator. During a speech last week, Federal Housing Finance Agency Acting Director Edward DeMarco cited several recent key executive departures from both GSEs as a concern for both companies. “How does one preserve and conserve the value of a company’s human capital in the face of an uncertain future?” asked DeMarco. “For the duration of the conservatorships, I believe the best way to protect taxpayer interests in...

Testifying before the House Financial Services Subcommittee on Capital Markets and GSEs this week, the head of the Federal Housing Finance Agency took issue with some of the proposed bills in the legislative package intended to wind down Fannie Mae and Freddie Mac. “I appreciate the effort in these and other bills to begin moving towards a final resolution of the enterprises in conservatorship, but I also recognize the critical and contemporaneous need to provide market participants with greater clarity and assurance about the ultimate role of the government in housing finance beyond the issues surrounding the enterprises,” said...

A proposed bipartisan House bill that would dissolve Fannie Mae and Freddie Mac but retain an explicit government guarantee for certain mortgage-backed securities appears poised to go nowhere fast, despite vocal trade group support. Earlier this month, H.R. 1859, the Housing Finance Reform Act of 2011, was filed amid a splash of headlines by Rep. John Campbell, R-CA, and co-sponsor Rep. Gary Peters, D-MI. The bill would empower the Federal Housing Finance Agency to issue charters establishing privately held and funded housing finance guarantee associations. The associations would be empowered to deal in conventional mortgages only for the purpose of...

The Government Accountability Office noted there is a little room for improvement in the Federal Housing Finance Agency’s internal controls and accounting procedures but the Finance Agency is otherwise operating well. Mandated by the Housing and Economic Recovery Act of 2008, the GAO said its audit of the FHFA’s fiscal years 2010 and 2009 financial statements revealed deficiencies in the way the Finance Agency disposed of its information technology property and equipment. The GAO also found that the FHFA did not always verify vendor invoice amounts prior to payment. Although the two issues do not represent “material weaknesses or significant deficiencies” on an order that...

Fannie Mae and Freddie Mac mortgage-backed securities remained a preferred investment for the Federal Home Loan Banks during the first quarter of 2011 with only a negligible decrease from the previous quarter, according to a new analysis and ranking by Inside The GSEs based on data from the Federal Housing Finance Agency.Meanwhile, Ginnie Mae securities continued to grow in popularity within the FHLBank system during the first three months of this year. GSE MBS still accounted for 66.7 percent of combined FHLBank MBS portfolios. The Finance Agency’s data do not separately break out Fannie Mae and Freddie Mac volume or share. Ginnie MBS grew by... [Includes one data chart]

Mortgage servicers have made little headway trying to de-bunk the widespread belief that foreclosures are profitable transactions for lenders, but a new Mortgage Bankers Association report tries to explain the impact of defaults on servicing income. Servicing advances are reimbursed when a modification is completed within 45 days, the study notes. Because they occur earlier than a foreclosure, mods limit the amount of money the servicer has to advance to investors on delinquent accounts, the trade group said. “The servicer’s reimbursement is at the top of the waterfall, meaning the servicer’s advances, which may have been from...

The Federal Housing Finance Agency last week issued a final rule regarding the FHLBanks which limits the Banks’ mortgage-backed securities holdings, especially non-agency MBS. In its notice, published in the May 20 Federal Register, the FHFA said it is re-organizing and re-adopting existing investment regulations that were previously issued by the Federal Housing Finance Board. The final rule will retain the Finance Board’s Financial Management Policy provision limiting MBS holdings to 300 percent of a Bank’s capital. “Contrary to suggestions that the 300 percent of capital limit was inflexible and outdated, FHFA believes the limit reasonably serves to control Bank investment activity that does not...

Mortgage lenders that are anxious about complying with the call report requirements of the National Mortgage Licensing System might want to consider a new automated solution developed by LendingSpace, a Fulton, MD-based technology firm. “Lenders who find themselves using a patchwork of their existing technologies to meet these requirements will spend a great deal of time and resources to ensure impeccable compliance,” said Ravi Varma, CEO of LendingSpace. “With a click of a mouse, the Automated Mortgage Call Report function in our ComplianceOne suite gathers the information from the loan origination system, and formats it so that it’s ready for...

Fannie Mae and Freddie Mac are pulling out all the stops to speed along sales of their ample real estate owned inventory of homes by offering special sweeteners to buyers and sellers alike even as REO dispositions for the two GSEs reached record levels during the first three months of 2011, according to an Inside The GSEs analysis. At 218,383 units, the combined REO inventory for Fannie and Freddie decreased by 7 percent during the first quarter of 2011. It’s the second straight quarter of declines following the record peak of 241,684 units during the third quarter 2010. Both Fannie and Freddie posted record levels of REO disposition during... [Includes one data chart]

Lenders clamoring for a hand hold around the slippery issue of “strategic defaulters” do have options in the form of technology and legal leverage to tackle the issue even as the problem may not be as pronounced as first thought, say experts. The problem of borrowers who otherwise have the capacity to make their mortgage payments but instead opt to walk away from the loan was once a fringe issue in the industry. But strategic default became a bigger concern as more and more borrowers found they owed more on their home than the house was worth, according to Brent Taggart, senior vice president at Green River Capital, a Utah-based real estate owned management and...