Rep. Jeb Hensarling, R-TX, wrote Federal Housing Finance Agency Director Mel Watt demanding he explain why Fannie Mae and Freddie Mac will continue to make contributions to affordable housing funds while needing a draw from the Treasury to stay afloat. He called Watt’s refusal to automatically stop GSE payments to the funds “unjustifiable.” In the letter, the House Financial Services Committee chairman reminded Watt of his earlier statement saying he won’t make payments to the Housing Trust Fund and Capital Magnet Fund if a draw from Treasury is needed. In the wake of the Tax Cuts and Jobs Act of 2017, the GSEs had to reduce their deferred tax assets by...
With three mortgage insurers providing about two-thirds of the mortgage insurance coverage to Fannie Mae and Freddie Mac, the Federal Housing Finance Agency Office of Inspector General warned of potential risk down the road. Meanwhile, mortgage insurers seek to confirm their place in housing-finance reform discussions. Although mortgage insurers are more stable today, emerging trends point to a number of potential risks to the GSEs that warrant monitoring. One of the OIG’s concerns is that relying on a small number of counterparties increases the GSEs’ exposure to any individual counterparty. The report noted that although six PMIs are approved to provide coverage for the GSEs as of the end of September 2017, three insurers provided the bulk of their coverage.
Concerns have begun to mount for the Senate housing-finance reform draft proposal being developed by Sen. Bob Corker, R-TN, as the Center for Responsible Lending and National Urban League warned the plan would cost more and deliver less. The groups published a new research paper on March 1 outlining how the proposed legislation would be a blow to affordable housing by replacing current public interest mandates with “weak incentives.”“A doubtful structure of guarantors awarded unenforceable duties is simply not in our nation’s best interest. Nor is supporting systemic changes that omit community banks, credit unions, and other small lenders,” said Mike Calhoun, CRL’s president.
CRT Market Better Able to Warn of Downturn. The credit-risk transfer market created in recent years by Fannie Mae and Freddie Mac is better poised to warn of systemic risk than the MBS market was prior to the financial crisis, according to new research by Susan Wachter of the University of Pennsylvania’s Wharton School. The Wharton professor noted that the future structure of the housing-finance market, in particular the number of issuers of government-backed MBS, may change how the CRT market functions.A multiple-guarantor model, with each offering its own CRT deals, may be less liquid than the current market with just two issuers, Wachter suggested. Fannie Hires New Communications VP. Fannie Mae has hired Duncan Burns as vice president of...
Economists and real estate executives warn that getting rid of the GSEs’ affordable housing goals, as suggested in some housing-finance reform proposals, will most likely lead to fewer options for underserved borrowers. Currently, Fannie Mae and Freddie Mac have affordable housing goals that work in tandem to their duty-to-serve underserved markets mandates. But a draft reform proposal by Sen. Bob Corker, R-TN, would replace the affordable housing goals with a new fee-based incentive system.“A potential reduction in federal backing for home loans issued to underserved borrowers as a result of ongoing GSE reform efforts is likely to decrease lending in these communities,” said...
Alternatives to traditional appraisals are attracting increasing interest among U.S. mortgage market participants, which would potentially weaken the credit quality of new residential MBS, according to rating service analysts.
Fannie Mae and Freddie Mac reduced their combined mortgage portfolios to $484.2 billion during the fourth quarter of 2017, according to an Inside MBS & ABS analysis.
Fannie Mae and Freddie Mac shareholders who are contesting the government’s net worth sweep may have few options left now that the Supreme Court of the United States has rejected their plea for appeal of lower court rulings that went against them.
A few years back, Pinto and AEI unveiled a new mortgage product called the Wealth Building Home Loan, which was intended to provide an affordable mortgage option for low- and middle-income borrowers.
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