This week, Fannie Mae launched an initiative that guarantees to alleviate buyback fears on certain loan components for lenders using its underwriting and appraisal tools. Fannie will also automate key processes of verifying loans, including income, through Desktop Underwriter’s new validation service.Under Day 1 Certainty, Fannie said lenders would be relieved from most representations-and-warranty risk related to verifying a borrower’s income, assets and employment using DU. “Those are the big ones,” a Fannie spokesman told Inside The GSEs. He said, “It validates right there and they are good to go,” adding that this is the kind of innovation that helps makes possible programs like Quicken’s Rocket Mortgage.

Lenders will be able to use technology to verify a borrower’s income, assets and credit worthiness in 2017 in Freddie Mac’s Loan Advisor Suite. The announcement was made this week on the heels of Fannie Mae announcing changes to its Desktop Underwriter. With the cost of originating a mortgage more than doubling since pre-crisis times, the GSE said the enhancements were designed to help lenders validate the quality of the loans they originate and help keep costs at a minimum. David Lowman, Freddie’s executive vice president of single-family business, said, “We’re collaborating with lenders to create innovative tools that reduce the costs of producing and selling high-quality loans to us.”

The Congressional Budget Office said allowing the GSEs to retain a portion of their earnings could help stabilize the mortgage market and the federal budget.In a recent report studying the effects of recapitalizing Fannie Mae and Freddie Mac, the CBO concluded that while it may limit competition in the market, the benefits outweigh any potential concerns. With GSE capital levels scheduled to be depleted by 2018, there have been several legislative proposals over the past year advocating a recap. The CBO published a report in response to the proposals but put a different spin on it. The CBO created an “illustrative policy option” in which Fannie and Freddie would retain an average of $5 billion of their profits annually.

The GSEs said treating items like payoffs, holdbacks and principal curtailments as closing costs in the Consumer Financial Protection Bureau’s disclosures would just confuse borrowers. Fannie Mae and Freddie Mac submitted comments to the CFPB last week in response to the bureau’s proposed amendments to the integrated disclosure requirements under the Truth in Lending Act and Real Estate Settlement Procedures Act. The comments focused primarily on aspects of the proposed rule that may potentially affect the Uniform Closing Dataset developed by the GSEs. The GSEs disagreed with the proposed rule’s plan to lump non-closing cost fees under...

The Cato Institute recently filed an amicus brief challenging the Federal Housing Finance Agency’s denial of compensation benefits to a former Freddie Mac CFO at the start of the conservatorship. The FHFA terminated Anthony Piszel two weeks after the government took over the GSEs in September 2008. The primary issue was whether a government prohibition on making golden parachute (severance) payments to terminated Freddie employees was illegal or not. Piszel appealed a judgment from the U.S. Court of Federal Claims dismissing his complaint that Freddie breached its contract and owed him payment for his golden parachute compensation.

The U.S. mortgage market produced an estimated $580.0 billion of first-lien originations during the third quarter of 2016, according to a new Inside Mortgage Finance analysis and ranking. That was up 13.7 percent from the second quarter, and it marked the strongest origination cycle since the fourth quarter of 2012, when $584.0 billion of new loans flowed through the pipes. The robust third quarter brought year-to-date originations to $1.470 trillion, up 8.9 percent from the first nine months of 2015. Lender feedback and agency mortgage-backed securities data suggest...[Includes two data tables]

Fannie Mae and Freddie Mac featured new technologies aimed at streamlining the loan production process and further limiting lender repurchase risk during this week’s annual convention of the Mortgage Bankers Association in Boston. Top officials of the two government-sponsored enterprises said that 2017 will bring further efforts to expand affordable housing opportunities, a theme underscored by their chief regulator. Melvin Watt, director of the Federal Housing Finance Agency, said...

Late this week or early next, Ginnie Mae is expected to release a new and improved acknowledgement agreement, a move intended to allow nonbanks to borrow more easily against the asset value of their mortgage servicing rights. But the big question remains: Will the agency’s tweaks have much of an impact on liquidity? There is...

The share of home sales that experienced a delayed closing because of appraisal-related issues remained elevated in September, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. Industry participants suggest that the strong market for purchase mortgages has led to a backlog of appraisals. Appraisal issues accounted...

Fannie Mae and Freddie Mac sent the Consumer Financial Protection Bureau a joint comment letter addressing the bureau’s TRID clarifying rulemaking that have to do with the government-sponsored enterprises’ Uniform Closing Dataset, supporting some provisions and opposing others. The UCD is the data standard the pair developed to support accurate disclosures on the closing disclosure and to facilitate the sharing of that information. “The GSEs believe...