Federal Housing Finance Agency Director Mel Watt touted the evolution of the GSEs’ credit-risk transfer programs and said they continue to make progress on exploring new types of ways to transfer risk to the private sector.During remarks at the Mortgage Bankers Association’s annual conference in Denver last week, Watt said Fannie Mae and Freddie Mac now transfer a significant amount of credit risk on at least 90 percent of their targeted single-family loans. “The enterprises’ credit-risk transfer programs have leveraged a receptive private sector market and have made an incredible amount of progress in a really short period of time,” he said. Since 2013, they have transferred a portion of credit risk on $1.6 trillion of mortgages.
The Mortgage Bankers Association is worried about blurred lines between primary and secondary market activities when it comes to Federal Housing Finance Agency objectives, especially in the wake of new technologies. The trade group said there should be a clear separation of the two market activities. In response to the FHFA’s strategic plan for 2018 through 2022, the MBA said it will be important for the agency to make sure the GSEs only undertake activities that support secondary market liquidity, and not displace lenders and vendors operating in the primary single-family and multifamily finance markets.
Fannie Mae announced several new technologies last week, including one that will let lenders validate a borrower’s primary information in one step. Single Source Validation is currently in the pilot testing phase and will be incorporated into the GSE’s Desktop Underwriter tool in 2018. Through the program, lenders can validate a borrower’s income, assets and employment using a single asset report as the source data instead of scanning through a multitude of paper documents. Fannie said that this not only makes it easier to originate loans but it also helps curb costs. Speaking at the annual Mortgage Bankers Association convention in Denver last week, Fannie CEO Timothy Mayopoulos said...
The Federal Housing Finance Agency’s annual report on housing showed that Fannie Mae fell short of meeting two of its affordable housing goals for 2016. The GSE came close at 5.2 percent but did not meet the 5.4 percent benchmark goal for very-low income buyers purchasing single-family homes. Fannie also did not meet the goal for low-income buyers refinancing their mortgages. The goal was 19.8 percent and Fannie topped out at 19.5 percent. However, Fannie did meet the 22.9 percent low-income home-purchase goal and surpassed its low-income area home-purchase goal of 19.7 percent by 0.5 percent.
The Federal Housing Finance Agency, despite opposition, will go ahead with its plan to add a language-preference question to the redesigned loan application for GSE loans. Although use of the form won’t be required by lenders until February 2020, one law firm is weighing in on its possible impact.The FHFA announced late last month that the question will be added to the loan application to enable borrowers who prefer to communicate in a language other than English to identify that language. The Fannie Mae and Freddie Mac regulator also said the revision is part of a broader, multi-year effort to improve language access for limited English proficiency (LEP) borrowers.
There have been a number of moving parts in GSE shareholder cases recently, including oral arguments heard this week in one case and three separate lawsuits asking the Supreme Court of the United States to review the constitutionality of the structure of the Federal Housing Finance Agency. Attorney and managing partner David Thompson with Cooper & Kirk in Washington, D.C., who represents the shareholders in Christopher Roberts vs. FHFA, participated in this week’s oral arguments in the Seventh Circuit Court. He called the net-worth sweep unlawful because it imposed a “mandatory zero-capital regime and violated its own statutory commands to preserve and conserve assets and restore them to soundness.”
Federal Housing Finance Agency Director Mel Watt said the agency is reviewing the possibility of having Fannie Mae and Freddie Mac update their credit score model requirements. But first he has questions. Although it wouldn’t be implemented until late 2019, Watt, while speaking at the Mortgage Bankers Association’s annual conference last week, reminded that it’s not an easy decision. The FHFA plans to issue a request for input sometime this month to get stakeholder feedback on the issue and make an informed decision about the GSEs’ future credit score model requirements in 2018 as soon as it completes reviewing responses to the RFI.
Nearly half of the loans securitized by Fannie Mae, Freddie Mac and Ginnie Mae during the third quarter came from lenders’ retail platforms, a new Inside Mortgage Trends analysis shows. Correspondents generated 38.8 percent of the market and posted the highest purchase-mortgage concentration, 77.8 percent. Mortgage brokers were involved in 11.6 percent of agency business, with a relatively high 35.9 percent refinance distribution ... [Includes one data chart]
Hensarling to Retire After Term Ends. House Financial Services Committee Chairman Jeb Hensarling, R-TX, announced that he will not run for re-election and is retiring to spend more time with his family. Some think Hensarling’s departure could speed up Congressional efforts to enact housing finance reform. However, Cowen and Company said this is ultimately negative for Fannie Mae and Freddie Mac as Hensarling now becomes the top contender to replace Mel Watt as FHFA director in January 2019. “Hensarling has previously proposed liquidating the enterprises. At the least, we would expect him to shrink the GSE share of the market,” said analyst Jaret Seiberg. MBA President to Retire. Mortgage Bankers Association President and CEO David Stevens...
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