The recent actuarial report that showed the FHAs insurance fund is underwater to the tune of $16.3 billion ought to sound an alarm for policymakers to refocus the agency on its original public mission, some leading policy experts say, and perhaps even motivate them to resolve Fannie Mae and Freddie Mac while theyre at it. I think FHAs financial condition is extremely precarious much worse than FHA and HUD are making it out to be, said long-time critic Edward Pinto, a resident fellow at the American Enterprise Institute, a conservative think tank in Washington, DC, and a former official at Fannie Mae. As he sees it, todays very low interest rate environment means the economic value of FHAs forward mortgage fund really is a far worse at a negative $31 billion. And when you throw in the negative on the reverse [mortgage] program, you get close to $35 billion. Compounding the problem is...
The Federal Housing Finance Agency is feeling some serious pushback from lawmakers, industry groups and even homeowners over its plan to impose a guaranty fee hike on several slow foreclosure states. The FHFA proposed to target five states Connecticut, Florida, Illinois, New Jersey and New York for an additional, one-shot g-fee of between 15 and 30 basis points in 2013. The fees, the FHFA contends, are intended to allow Fannie Mae and Freddie Mac to recover costs associated with foreclosures. The five states singled out are all judicial states where it is necessary to obtain court approval before foreclosure is completed. The National Association of Federal Credit Unions urged...
The Federal Housing Finance Agency should go back and make additional tweaks to the revised representation and warranty framework for Fannie Mae and Freddie Mac to address significant industry concerns while also enabling greater industry input for future government-sponsored enterprise guidelines prior to issuance, according to the Mortgage Bankers Association. In a letter dispatched to the agency earlier this month, the MBA lauded the FHFA for its efforts through the framework to create clarity but said further changes need to be made to avoid adding to lenders confusion rather than alleviating it. MBA is concerned...
The Making Home Affordable program might not tap even half of the $29.9 billion in Troubled Asset Relief Program funds allocated for it, according to new estimates from the Treasury Department. Recently loosened requirements for the Home Affordable Modification Program Tier 2 could increase activity, though initial signals suggest that the increase will not be significant. Some 1.30 million MHA actions had been implemented as of the end of the third quarter of 2012, up from 1.22 million at the end of the second quarter, according to an Inside Mortgage Finance analysis. First-lien mods as part of HAMP Tier 1 dominated MHA activity, which also included second-lien mods, short sales and unemployment forbearance plans and other programs. There were...
Securitization market professionals are jointly promoting the practice of margining transactions involving Fannie Mae, Freddie Mac and Ginnie Mae MBS, despite the costs involved, to reduce counterparty and systemic risks. Last week, the Treasury Market Practices Group revised its existing best practices for Treasury, agency debt and agency MBS markets to include a recommendation that forward-settling agency MBS transactions be margined in order to prudently manage counterparty exposures. In order to allow market participants to develop...
Refinancing of underwater and nearly submerged Fannie Mae and Freddie Mac mortgages continued to spur business at the government-sponsored enterprises during the third quarter. During the third quarter of 2012, the two GSEs securitized a total of $66.91 billion of refinance mortgages with loan-to-value ratios exceeding 85 percent, a proxy for business originated under the Home Affordable Refinance Program. That was up 13.3 percent from the second quarter, according to an Inside MBS & ABS analysis of loan-level securitization data. Official HARP data are reported...[Includes two data charts]
Look for the 113th Congress and to a lesser extent a second-term Obama administration to become more engaged in seeking a resolution to Fannie Maes and Freddie Macs future role in the mortgage market, although implementation of such a solution remains years away, say industry observers. In the short term, following a hard-fought 2012 election that left the balance of power and the political party makeup unchanged, official Washington will be primarily focused on averting the looming fiscal cliff of tax hikes and automatic spending cuts.
Speculation abounds across Capitol Hill and within mortgage industry circles about how long the temporary head of the Federal Housing Finance Agency will remain at his post following the post-election shake out. However, it remains to be seen whether President Obama, flush from re-election, will seek a replacement for FHFA Acting Director Edward DeMarco, either by nominating a permanent agency director to the Senate or by the more politically problematic recess appointment.
In the wake of last weeks election, two congressional committees key to mortgage and housing issues face significant reorganization while the pending fiscal crisis will cause execution of Fannie Mae and Freddie Mac policy to remain on the backburner before lawmakers begin to reexamine GSE reform in earnest.The hard-fought electoral contest resulted in the status quo with Democrats in control of the White House and Senate, while Republicans retain their hold on the House. The House Financial Services Committee was poised for a leadership change no matter which political party prevailed with current chairman Spencer Bachus, R-AL, term-limited by House Republican Conference rules.
Fannie Mae and Freddie Mac each emerged from the third quarter of 2012 with a healthy profit, reporting a combined $4.74 billion in net income, a 41.7 percent decline from the second quarter but still well enough into the black to forgo taxpayer assistance to stay solvent. Fannies third quarter net income of $1.81 billion compared to a net loss of $5.1 billion in the same quarter a year ago but much more in line with the $2.72 billion it earned during the first quarter of 2012.