There was a significant increase in deliveries to the GSEs of home loans with high debt-to-income ratios during the second half of 2017, according to a new Inside The GSEs analysis of Fannie Mae and Freddie Mac single-family mortgage-backed securities.The two GSEs securitized $52.90 billion of mortgages with DTI ratios ranging from 46 percent to 50 percent over the last six months of the year. That was up 72.6 percent from the first half of 2017, and the annual total was up 37.6 percent from 2016.
Fannie Mae and Freddie Mac both have initiatives that link homebuyer education counselors to their automated underwriting tools to better determine a buyer’s homeownership readiness. The Federal Housing Finance Agency this week released its 2017 Scorecard Progress Report detailing work on strategic goals for the duo. Under the goal of maintaining credit access, the FHFA said the GSEs have been exploring ways to improve the effectiveness of pre-purchase and early delinquency counseling.Last month, Fannie, the Housing Partnership Network and other housing counseling agencies announced plans to develop a new client case management system. This system will connect Fannie’s automated underwriting products, Desktop Originator and Desktop Underwriter, to housing counseling agencies.
The Federal Housing Finance Agency announced plans to officially launch the “common” uniform mortgage-backed security collateralized by Fannie Mae and Freddie Mac loans on June 3, 2019. The regulator confirmed the exact date this week after previously only revealing the common security would be issued in the second quarter of 2019. The new UMBS will replace the current offerings of to-be-announced-eligible MBS and will be issued through Common Securitization Solutions, a joint venture equally owned by Fannie and Freddie. The Bethesda, MD-based CSS has been working on the project for several years now at a cost of hundreds of millions of dollars.
Freddie Mac loans under the Home Affordable Refinance Program will continue to perform better than pre-crisis mortgages, which Moody’s said bodes well for credit-risk transfers with exposure to those loans, but they will underperform more recent loans. According to an analysis by Moody’s, HARP borrowers benefited from significant payment reductions, were already showing good performance, and are likely to be more credit savvy. Freddie loans originated in 2005-07 that went through HARP had a 60-plus day delinquency rate of just 1.14 percent, as of March 2017. Moody’s said that’s well below the 6.84 percent 60-plus day delinquency rate for loans in that same period that did not go through HARP. But, the delinquency rates for HARP loans are...
Over the past few months, the share price of Fannie Mae and Freddie Mac common has steadily declined – along with the prospects for housing finance reform. As Inside The GSEs went to press this week, Fannie shares were trading for roughly $1.30. The mortgage giant’s 52-week high is $3.31, its low $1.25. Freddie’s common stock currently sells for $1.30. However, midweek, on Wednesday, Freddie lost 8.89 percent of its value with Fannie declining by 7.97 percent. In subsequent days, the prices improved somewhat. Both are traded on the Over-the-Counter market, having been kicked off the New York Stock Exchange.
Self-employed borrowers will have an easier time applying for a mortgage as part of a new initiative from Freddie Mac and LoanBeam. Research shows that about 44 million in the U.S. are either self-employed or working for the self-employed. Last week, the GSE announced that calculating income for a self-employed borrower will be automated and simpler for those using Freddie’s automated underwriting system. The GSE said this will expedite the process by reducing the amount of time it takes to gather information. LoanBeam is a software solution that uses technology to extract data from tax documents to automatically calculate income. It does so by using optical character recognition technology.
The Federal Housing Finance Agency Office of Inspector General worries that the GSEs aren’t reporting potential fraud in a timely manner as their statute stipulates.In a recent audit, the IG reviewed the FHFA’s oversight of how Fannie Mae and Freddie Mac report fraud. They found a possible disparity between the fraud- reporting requirement in the statute and the FHFA’s regulation and guidance. The FHFA’s definition of fraud appears to have a higher reporting threshold, meaning it allows for more time before a report must be made. The GSE is expected to make a “timely report” to the...
More Fannie Mae and Freddie Mac shareholders have initiated lawsuits against the government for the Treasury sweep of the mortgage giants’ profits. Each of the plaintiffs in the three new cases were owners of the GSEs’ junior preferred stock. The cases, Akanthos v. U.S., CSS v. U.S. and Appaloosa v. U.S., have been assigned to Judge Margaret Sweeney, who is also handling other similar complaints. They were filed in the U.S. Court of Federal Claims. According to court documents, Akanthos Opportunity Master Fund owned more than $137 million in junior preferred stock as of Aug. 16, 2016. Akanthos complained of suffering from “severe economic loss” to its holdings.
Fannie Announces Community Impact NPL Winners. Fannie Mae announced this week that the winning bidder for its 11th and 12th Community Impact pools of non-performing loans was VRMTG ACQ, LLC (VWH Capital Management, LP), a minority- and woman-owned business. The transaction is expected to close on May 22, 2018, and includes approximately 182 loans totaling $34.25 million in unpaid principal balance, divided between two pools focused in the Orlando and Tampa areas of Florida. GSE Foreclosure Preventions Surpass 4M. The Federal Housing Finance Agency reported this week that the GSEs completed 67,569 foreclosure prevention actions in the fourth quarter of 2017, bringing the total number of homeowners helped to 4.04 million since 2008. But, thanks to the fall...
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