The Federal Housing Finance Agency agreed to disclose the total cost of the common securitization platform after a Dec. 15 audit by the FHFA Office of Inspector General revealed issues in transparency.The auditors said that while the FHFA committed to be transparent in its development of the multiyear project in 2014, the FHFA has not disclosed detailed costs or associated risks in its public reports. Instead, it only discloses the costs incurred though mid-2015. FHFA only disclosed specific CSP cost data once in a September 2015 status report, in which it announced that, from 2012 through mid-2015, the GSEs spent $146 million to develop the actual CSP platform. Then, their 2015 10-Ks revealed the amount increased to $218 million by year-end 2015.
Whether to privatize Fannie Mae and Freddie Mac continues to be a topic up for debate ever since Steven Mnuchin, president-elect Donald Trump’s pick for Treasury secretary, said getting the GSEs out of conservatorship is a priority. This week the Community Home Lenders of America applauded Mnuchin’s recent comments about promptly returning Fannie and Freddie to the private sector. The group told President-elect Trump that he should permit the GSEs to retain a capital buffer and submit a recapitalization plan to end their conservatorship and re-privatize them. In the letter, which included other recommendations of what should be done in Trump’s first 30 days, the CHLA noted that because...
Two House bills introduced last week focus on making sure Fannie Mae and Freddie Mac broaden their scope of credit risk-sharing transactions through pilot programs and the use of deeper mortgage insurance coverage. The “Taxpayer Protections and Market Access for Mortgage Finance Act of 2016” would require the Federal Housing Finance Agency to push the GSEs to transfer at least 400 basis points of their total risk. Meanwhile, the “Moving Housing Forward Act” would set up a system for Fannie and Freddie to sell off some of the “catastrophic” risk retained by the GSEs on mortgage-backed securities issued in the to-be-announced market.
Fannie Mae’s Desktop Underwriter has been updated this month to include an employment and asset verification service under its Day 1 Certainty initiative announced in October. Day 1 was created to alleviate buyback fears on some loan components for lenders using its underwriting and appraisal tools. The GSE said that lenders would be relieved from most representations-and-warranty risk when it comes to verifying a borrower’s income, assets and employment. When a lender opts in to use the DU validation service, Fannie said that DU will use third-party vendor data to perform calculations and validate information entered by the lender.
FHLBank Topeka President to Retire. The Federal Home Loan Bank of Topeka announced on Dec. 20 that Andrew Jetter, president and CEO, will begin serving as senior advisor on Jan. 1, 2017, until his retirement date in the first quarter of 2017. Mark Yardley, executive vice president and chief risk officer, will serve as interim president and CEO until a new one is appointed. CBO Suggests Higher G-Fees, Lower Loan Limits. The Congressional Budget Office is looking for ways to reduce the budget impact of government-backed mortgage programs and recommends that Fannie Mae and Freddie Mac increase their guarantee fees and/or significantly lower their loan limits.
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