Although the question of when the conservatorship status of the GSEs will be resolved is still up in the air, a new administration has many speculating that change is on the horizon for Fannie Mae and Freddie Mac. The November election gave Republicans both houses of Congress and the executive branch. This seemed to lend itself to more talks on when and how to reform the GSEs as they approach close to a decade in conservatorship. But, while the sentiment to do something is apparent, agreeing on the best path forward is a different story. And, as in the past, there is no shortage of competing thought processes and proposals.
With increased talk of privatizing Fannie Mae and Freddie Mac, Investors Unite wants reassurance that shareholders will be treated fairly. The GSE shareholders rights trade group said, “Now everybody is talking about ending the conservatorship,” in a recent blog posting. While that may be an exaggeration, since the presidential election there has been a renewed interest in bringing the GSEs out of its eight-plus years conservatorship, where they’ve been since September 2008. Recent talks began with and snowballed after Treasury-secretary designee Steve Mnuchin said that getting the GSEs out of government control would be a top priority for the new presidential administration. And Mnuchin said that he plans to do this “reasonably fast.”
Fannie Mae invited several real estate investors to its first quarterly meeting of the year this month to discuss single-family rental loans. Tom Wilson of Wilson Investment Properties and Bruce Norris of the Norris Group attended and spoke from the investor’s perspective on single-family rental loans, which have become harder to obtain since the housing downturn. Wilson said that as a result it’s been more difficult for investors and landlords to be “economically motivated” to provide sufficient housing. Discussions at the meeting with the two California-based real estate investors centered on Fannie’s limit on the number of loans to a...
Fannie Mae is eliminating the mortgage-backed securities call-in requirement in preparation for the upcoming integration with the Common Securitization Platform. The change is part of several modifications to the GSE’s investor reporting requirements that servicers must implement by Feb. 1 when reporting borrower activity. The GSE referred to the MBS call-in as a “non-industry standard and redundant practice” that requires servicers to report their monthly pool balances for MBS swaps and loan activity data reports. In addition to preparing servicers for when Fannie integrates with the CSP, the change will help simplify policies and procedures. “Fannie Mae can rely on existing loan level data from servicers to drive security balance processing. Servicers will no longer have...
As the guard prepares to change in a week, Treasury Secretary Jacob Lew said in an exit memo released last week that only legislation can comprehensively address “the ongoing shortcomings of the housing finance system.” In the memo, Lew documents the Treasury’s progress over the last eight years and outlines his goals for the future of the department. He said that fixing the housing finance system remains the major unfinished piece of work of post-financial crisis reform. While he said the housing market has improved, Lew acknowledged that many homeowners and neighborhoods continue to struggle. “A starting point for such legislation should be the principles President Obama laid out in 2013, which stressed a clearly-defined role for the...
A recent audit showed that the Federal Housing Finance Agency needs to do a better job at managing nonbank risks such as mortgage servicing transfers. In response, the FHFA said it will finalize a risk-based proposal to examine how well the GSEs manage that and other risks by the end of this month. The FHFA’s Inspector General said that the agency has not made sure that both Fannie Mae and Freddie Mac are tackling potential risks. The IG noted that out of three advisory bulletins issued that addressed nonbank servicer risk, one of the GSEs only complied with one of the bulletins.The heavily redacted report doesn’t mention which GSE failed to comply with the bulletins, but a...
Moody’s says HAMP Replacement Program Credit Neutral for CRTs. The GSEs’ new Flex Modification foreclosure prevention program that will replace the expired Home Affordable Modification Program has a neutral credit impact on GSE risk-risk transfer deals. Moody’s said that the volume of modifications and the re-default performance under the Flex program will be comparable to modification levels and performance under the current programs. The firm also noted that the new program will not result in increased modification volume. Servicers have until Oct. 1, 2017, to implement the new program.Freddie’s Recent ACIS Transaction. Last week, Freddie Mac announced its last Agency Credit Insurance Structure of 2016 in the form of a $285 million offering. The GSE said it...
In 2016, a mere $42.93 billion of non-agency MBS were issued, down 32.5 percent from the previous year, according to a new Inside MBS & ABS ranking and analysis. It was the second-lowest annual output since 2012. The picture would look a bit brighter if Fannie Mae and Freddie Mac credit-risk transfer deals were included, as well as single-family rental securitizations, which both compete for the investors that might be interested in non-agency MBS. But the government-sponsored enterprise CRT deals are debt issues and they couldn’t be any more “agency,” while the SFR securitizations look a lot more like commercial MBS than residential MBS. The prime jumbo market hit...[Includes three data tables]
Fannie Mae and Freddie Mac last year issued a combined $12.93 billion of debt notes that pay investors based on the performance of reference pools, according to a new Inside MBS & ABS analysis of their credit-risk transfer programs. That was up just 2.8 percent from the 2015 volume of new issuance in Fannie’s Connecticut Avenue Securities program and Freddie’s Structured Agency Credit Risk program. It brought total issuance in the two platforms, which started issuance in late 2013, to $38.08 billion. Interestingly, total new single-family MBS production by the two government-sponsored enterprises was...[Includes one data table]
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