Uneconomic price competition coupled with Congressional discord are some of the concerns analysts have expressed about the Mortgage Bankers Association’s newly released plan for GSE reform. The MBA’s proposal recommends multiple privately owned guarantors, preferably more than two, to increase competition in the market. Fannie Mae and Freddie Mac would be the first two and the MBA suggests that new guarantors receive a charter to enhance competition. “The more market participants that compete, the better for consumers, the economy and the system,” said Rodrigo Lopez, MBA chairman. GSE Reform Principles and Guardrails also suggests that Congress sanction an “explicit government guarantee for eligible securities in order to entice domestic and foreign investors to keep buying...

Fannie Mae recently made changes to its appraisal process and financial eligibility requirements for seller/servicers. In order to be able to use its discretion to enforce breaches of financial eligibility requirements that apply to seller/servicers, the GSE said it had to change certain polices. This allows Fannie, when warranted, to determine whether a breach of the lender contract should be called. “The changes include how lenders can comply with our requirements for maintaining minimum acceptable levels on capital,” said Jude Landis, Fannie’s vice president of credit policy. Prior to the change, explicit criteria in its selling guide limited Fannie’s ability to apply enforcement discretion.

Fannie Mae’s new regional headquarters under construction in the Dallas metro area is the target of criticism from Sen. Chuck Grassley, R-IA.He questions the Federal Housing Finance Agency’s management of the project in which the GSE is combining three locations into the one leased building. This comes on the heels of the FHFA Office of the Inspector General issuing a management alert late last year raising concerns about the cost of the consolidation and relocation of Fannie’s high-rise offices in Plano, TX. Grassley wants answers as to how the agency plans to address the issues identified in the IG management alert.

The Federal Housing Finance Agency this week extended the deadline for public input on a potential chattel-loan pilot to support manufactured housing. The reactions so far to the manufactured home portion of the final duty-to-serve rule, which included a request for input on chattel lending, have been mixed. In December, the FHFA gave the green light for Fannie Mae and Freddie Mac to begin pilot programs for the loans. Since then, the agency issued the RFI and extended the original deadline of Feb. 17 to March 21, 2017. The FHFA also hosted several listening sessions on the topic to get input. During the first session in Chicago, one organization called the FHFA’s DTS rule on manufactured home lending “intolerable.”

Fannie Mae’s recent dip into testing the single-family rental market in an agreement to fund up to $1 billion of collateral owned by Invitation Homes has caught the industry’s attention, and not necessarily in a good way. This is the first time the GSE has financed a large institutional single-family rental home investor. The Dallas-based company is a subsidiary of The Blackstone Group and has about 50,000 homes in its portfolio that it acquired from foreclosure auctions. However, some are now accusing Fannie of mission creep. The National Community Stabilization Trust President Robert Grossinger said, “I am perplexed to see Fannie Mae place a taxpayer guarantee behind the same private interests whose risky practices led to...

FHFA PLS Actions Update. The Federal Housing Finance Agency published an update on litigation it initiated against 18 financial institutions for securities law violations and fraud regarding private-label securities sales. Seventeen cases were settled in 2013 and 2014. JP Morgan Chase settled for $4 billion, Deutsche Bank settled for $1.9 billion and Goldman Sachs for $1.2 billion. A case against the Royal Bank of Scotland remains. The settlement money ultimately goes to the Treasury through the dividend sweeps. Fannie Exec Tapped for CFPB? Brian Books, Fannie Mae’s general counsel, is being considered by the White House to head the Consumer Financial Protection Bureau, according to a...

Only 69.1 percent of home mortgages originated in 2016 wound up in agency or non-agency MBS issued last year, according to a new Inside MBS & ABS analysis. It was the second-lowest annual mortgage-securitization rate on record, and the third year in a row that the rate failed to reach the 70.0 percent mark. The low securitization rate mostly results from the fact that relatively few jumbo mortgages get out of bank portfolios and into the non-agency MBS market. According to Inside Mortgage Finance estimates, some $381.0 billion of jumbo mortgages were originated...[Includes one data table]

The average daily trading volume in agency MBS increased to $229.8 billion during January, the second best reading of the past year, and a sign that liquidity is improving, thanks in part to higher interest rates. According to figures compiled by the Securities Industry and Financial Markets Association, the January reading was better than the daily trading averages posted for the past four years, which ranged from a low of $178.0 billion in 2014 to a high of $222.8 billion in 2013. Agency trading volumes peaked...

Analysts at DBRS anticipate some notable changes in the residential mortgage securitization market this year, mostly as a result of expected higher interest rates. “Despite a healthy housing market recovery, post-crisis non-agency RMBS issuance has remained stagnant for several reasons,” said Quincy Tang, managing director of RMBS structured finance, in a new research report issued early this week. In addition to the dominance of Fannie Mae and Freddie Mac and bank balance-sheet capacity, “a persistently low interest rate environment has rendered...

The need to preserve liquidity and transparency in the existing to-be-announced market was an important component of the Mortgage Bankers Association’s newly-released plan for housing finance reform, according to Deutsche Bank Securities. Jeana Curro, research analyst with Deutsche, said a handful of provisions in the MBA’s latest proposal stand out as improvements from the industry group’s previous ideas on how to reform Fannie Mae and Freddie Mac. She agreed...