The draft of the housing-finance reform proposal from Sen. Bob Corker, R-TN, appears to have morphed out of both the Mortgage Bankers Association plan and a proposal put forth by Michael Bright and Ed DeMarco. A recent analysis by the Structured Finance Industry Group compared the Senate discussion draft with the other two proposals. SFIG noted that all three proposals advocate an explicit mortgage-backed securities guarantee, preserving the to-be-announced market and the 30-year fixed-rate mortgage. But when it comes to the cash window, the Senate draft deviates from the MBA and Bright/DeMarco plans, which suggested maintaining the cash window operations through the GSEs. Corker’s draft would maintain the cash window through the guarantors
Small lenders and affordable housing groups are not fans of the draft of housing-finance reform from Sen. Bob Corker, R-TN. Corker’s plan calls for having five or more guarantors to promote competition in the marketplace, but some worry about the big banks becoming the primary benefactors of this plan.With several private companies purchasing and securitizing mortgages, advocates of the 80-page draft said it would help end the duopoly of Fannie Mae and Freddie Mac. The proposal includes winding down the GSEs to establish the new guarantors of which none would be able to control more than 20 to 25 percent of the market.
Rep. Jeb Hensarling, R-TX, sounded off on what may happen if Congress doesn’t act on housing- finance reform this year and implied that it doesn’t look good for affordable housing efforts. During a House Financial Services Committee hearing last week, the committee chair fired off a series of questions to Treasury Secretary Steve Mnuchin asking for confirmation on the Federal Housing Finance Agency’s powers. With FHFA Director Mel Watt’s term expiring in January 2019, Hensarling’s concern was that the Trump administration will name a replacement that could do away with some of the GSEs’ affordable housing initiatives.
Fannie Mae will now allow rental payments from Airbnb properties to be used as income when refinancing a home. In a new initiative with Airbnb and three financial institutions, lenders can consider home-sharing income earned on borrowers’ properties when applying to refinance their primary residence mortgage. Prior to this initiative, lenders usually wouldn’t consider income from renting out a home or rooms in a home as a part of a borrower’s regular income stream. Airbnb hosts can apply to refinance their mortgages with Quicken Loans, Citizen Bank or Better Mortgage and have that earnings counted.
Freddie Mac CEO Donald Layton said that home prices have been reasonably strong over the past five years or so, but a new construction lag is what’s really contributing to the lack of affordable housing.He also said there’s been a noticeably higher rate of home price growth than in average or median family income. Layton said, in the long-term, the U.S. has produced 1.5 million housing units a year, both multifamily and single-family. And with a small population growth adjustment, Layton said it should be about 1.6 million a year now. “I believe it has noticeably declined in the financial crisis and it has never returned to that level again,” he said in a phone interview.
GSE shareholders seeking to challenge the Federal Housing Finance Agency based on its single-director structure may now face an added challenge. The Federal Housing Finance Agency has asked the courts to review the decision of the DC Circuit in PHH Corp. v. Consumer Financial Protection Bureau as it relates to similar complaints against the agency. When a 2016 ruling found that the similarly structured Consumer Financial Protection Bureau is not constitutional, Fannie Mae and Freddie Mac shareholders filed lawsuits asking the courts to vacate the Treasury sweep of GSE profits altogether.
Fannie Mae re-entered the low-income housing tax credit market and this month closed on a $100 million fund focused on supporting affordable multifamily housing in hurricane-ravaged communities. The GSE collaborated with Raymond James Tax Credit Funds to create the fund. After being absent from the LIHTC market for almost a decade, Fannie closed on the fund on Feb. 5 and said it’s now part of an ongoing effort to provide a reliable source of capital for affordable rental housing and underserved markets. The Federal Housing Finance Agency announced late in the fourth quarter that both Fannie and Freddie Mac are allowed to re-enter the LIHTC market but with limitations so they’re not in direct competition with the private market.
At $600K a Year, Fannie Mae CEO Tim Mayopoulos is Underpaid. Although Fannie Mae reported pre-tax income of $18.4 billion in 2017, its CEO Timothy Mayopoulos took home, once again, a base salary of roughly $600,000, the limit for both GSE CEOs and a figure that seems exceedingly low when compared to financial services firms of similar size. A new 10-K filing from the company notes: “Our chief executive officer’s compensation in 2017 was more than 90 percent below the market median for comparable firms. Our inability to offer market-based compensation hinders our succession planning for our chief executive officer role, and potentially our ability to hire...
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