Fannie Mae and Freddie Mac are taking note of the growing number of borrowers earning extra income outside of the traditional weekday, 9-to-5 job and look to make mortgage underwriting more accommodating to this demographic.The gig economy is made up of consumers providing on-demand services such as driving for Uber or Lyft, renting rooms in their homes via Airbnb type outlets, and providing personal services such as handyman tasks or deliveries. A recent survey by Fannie showed that 71 percent of lenders reported having had borrowers with gig employment income apply for a mortgage over the past year and about 89 percent expect this trend to grow over the next few years.
Fannie Mae recently warned lenders to be wary of misrepresentations of borrower employment on loan applications. In a fraud alert issued last week, the GSE published a list of 34 companies that were named on applications as the borrower’s place of employment. The problem came to light when Fannie was not able to confirm that any of the 34 companies located in Southern California actually existed.The GSE said a couple of red flags that drew attention to the issue were that the applications were third-party originator and broker loans. Moreover, Fannie said the borrowers’ occupation often didn’t sensibly coincide with the named borrower’s profile, including their age and experience.
The Federal Housing Finance Agency plans to propose a new risk-based capital rule for the GSEs based on current operations to replace the old Office of Federal Housing Enterprise Oversight capital regulation.But just like the OFHEO rules, the proposed ones will be suspended as long as Fannie Mae and Freddie Mac are in conservatorship. Having a capital framework is useful when it comes to evaluating business decisions, according to FHFA Director Mel Watt. But he was quick to emphasize that the proposal is not based on some grand scheme to promote recapitalizing the GSEs. In fact, it’s largely an exercise that Watt said is...
Brookings Encourages Fannie to Expand CRT Market. The Brookings Institute applauds Fannie Mae’s credit-risk transfer program in a paper published this week, but said the GSE should increase the amount of credit it transfers to investors. The think tank also noted that guaranty fees that Fannie mortgage originators chose should be based on the implied g-fee paid to investors. Moreover, Brookings said that Fannie should continue to examine how much risk they should transfer using the Connecticut Avenue Structure program and look at past losses during times of stress. Freddie Prices Largest STACR SPI Deal to Date. Freddie Mac had its second Structured Agency Credit Risk - Securitized Participation Interests (STACR SPI) deal of the year. The $263.5 million STACR 2018 and SPI2 securities are backed by participation...
Treasury counselor Craig Phillips advised meeting participants to assure their bosses and government affairs offices that Treasury is fully committed to the project. “If you have problems, tell them to call me,” he quipped.
The Consumer Financial Protection Bureau and Freddie Mac released separate reports in May suggesting that potential borrowers should talk to multiple lenders when seeking a mortgage. The organizations noted that a significant share of borrowers are missing out on thousands of dollars in savings by neglecting to consider offerings from a variety of lenders.
Over the years it seems as though commercial banks have basically ceded the multifamily market to nonbanks that use the GSEs as their secondary market takeout…
MBA: “An important recent example is the use of a single vendor for various aspects of a major enterprise technology project, thereby forcing many lenders to choose whether to retain their existing vendors or switch to the lone ‘approved’ vendor.”
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