An FHA proposal for new legislative authority to transfer servicing has raised concerns among industry participants, particularly in the Ginnie Mae market. Authorizing the FHA to shift mortgage-servicing rights from one servicer to another could have a ripple effect on Ginnie Mae servicing rights and also adversely impact state mortgage servicing and origination licenses, some say. The bottom line is that Congress should consider FHA’s request for new statutory authority with great care, said Larry Platt, a compliance attorney and a partner at the Washington law firm K&L Gates. “We would hope that ...

Reverse mortgage lenders, consumer groups and certain advocates for the elderly are urging Congress to enact legislation passed recently by the House of Representatives granting the FHA additional authority to govern its reverse mortgage program. Testifying before the Senate Banking Subcommittee on Housing, Transportation and Community Development, the groups said the most productive action Congress can take is to pass H.R. 2167 to allow HUD to make expeditious changes to the Home Equity Conversion Mortgage program through mortgagee letters. The bill, which the House approved on June 12, would ...

Secondary market reform legislation formally introduced in the Senate this week provides more detail on key elements of an ambitious proposal to replace Fannie Mae and Freddie Mac with a new government MBS program, but it’s still widely seen as a starting point in a long process. The Housing Finance Reform and Taxpayer Protection Act of 2013, introduced by Sens. Bob Corker, R-TN, and Mark Warner, D-VA, includes a new section that would protect investors in MBS that carry guaranties from the Federal Mortgage Insurance Corp. from civil liability under federal and state law. Under the bill, S. 1217, the FMIC would sell...

The veteran Congressman who would be the first permanent, Senate-confirmed director of the Federal Housing Finance Agency was vague and at times on the defensive during his confirmation hearing this week as Republican senators repeatedly questioned what in his resume makes him qualified to preside as regulator and conservator of Fannie Mae and Freddie Mac. Rep. Mel Watt, President Obama’s nominee to succeed FHFA Acting Director Edward DeMarco, told members of the Senate Banking, Housing and Urban Affairs Committee that the Finance Agency under his leadership would “rigorously follow” the agency’s statutory role in an “open and transparent manner working with all stakeholders.” “You can also be assured...

Republican and Democrat lawmakers in the Senate formally unveiled their ambitious plan to replace Fannie Mae and Freddie Mac with a new federal entity providing backstop guaranties for securities backed by high-quality conventional mortgages. Although they made a variety of changes to a “discussion draft” version of the legislation that has been widely circulated in recent weeks, the proposal still faces a huge hurdle in the House despite winning generally favorable reactions from industry groups. As it was introduced this week, S. 1217, the Housing Finance Reform and Taxpayer Protection Act of 2013, would create...

A new “pragmatic” secondary market reform plan released by four housing experts closely resembles the bipartisan legislation being drafted by key members of the Senate, including an ambitious implementation timeline that says the overhaul could be accomplished in about three years. Sponsored by the Milken Institute, the Urban Institute and Moody’s Analytics, the “Pragmatic Plan for Housing Finance Reform” features a new government MBS guaranty that would cover catastrophic losses after private credit enhancement is exhausted. Like the legislation being drafted by Senators Bob Corker, R-TN, and Mark Warner, D-VA, it would create a new Federal Mortgage Insurance Corp. to manage the new government MBS guaranty. Under the proposal, MBS insurers would be...

Fannie Mae and Freddie Mac would cease to exist while the Federal Housing Finance Agency would be repurposed into a new incarnation as a “capable and empowered” regulator of a “pragmatic” housing finance system as envisioned in a new blueprint released this week by four industry experts. Spearheaded by Moody’s Analytics Chief Economist Mark Zandi – most recently on the White House’s short list to head the FHFA – the group’s white paper calls for the federal government to play an “explicit and transparent” role in the new housing finance system and to act as an insurer that covers catastrophic losses. The blueprint calls for an emphasis on mortgage funding diversity.

Fannie Mae and Freddie Mac would be wound down and terminated in the housing finance system of the future that combines greater private sector participation with a clearly delineated emergency government backstop, according to a reform plan released this week by four industry experts. Sponsored by the Milken Institute, the Urban Institute and Moody’s Analytics, the “Pragmatic Plan for Housing Finance Reform” would see the government play an “explicit and transparent” role to cover catastrophic losses but with an emphasis on mortgage funding diversity. The authors envision...

“As lawmakers, it is time to open up our eyes and open up our minds to alternative models and a pathway forward,” said Rep. Jeb Hensarling, R-TX, chairman of the House Financial Services Committee, at the beginning of a hearing he convened this week to consider housing finance models without explicit government guaranties. Hensarling, along with many Republicans in his committee, is angling to replace the government-sponsored enterprises with some sort of a non-agency market. However, a number of obstacles exist in that path, including the preference among Democrats and a significant portion of industry players for the GSEs’ functions to be replaced with some form of government guaranty. Most of the witnesses at the hearing provided...

The Department of Housing and Urban Development’s Office of the Inspector General is drafting legislative recommendations to strengthen the FHA’s ability to mitigate risk and recover losses to the insurance fund. Testifying recently before Senate appropriators, HUD Inspector General David Montoya said he strongly agrees with HUD on the need for legislation to help the FHA act more quickly and decisively in response to market changes and avoid losses that can accrue during a long rulemaking process. He said the FHA has been too slow in addressing its financial problems. Based on past experience with the FHA over the years, Montoya said ...