The GSEs are picking winners, not helping to level the playing field and they are blurring the lines between primary and secondary market activities, according to panelists expressing concern over the mortgage giants’ growing market share. As Fannie Mae and Freddie Mac continue to introduce and test pilot programs, the industry questions why the GSEs appear to be expanding their activities instead of shrinking them. During a panel sponsored by the American Enterprise Institute late last week, six participants from several think tanks and the mortgage industry discussed some of the alleged...

The deadline for comments on the Federal Housing Finance Agency’s proposed capital rule for Fannie Mae and Freddie Mac does not close until next month and so far, there have been about 25 official written comments registered and various opinions floated around Washington. Michael Stegman, senior fellow at the Milken Institute, said he was encouraged by FHFA’s proposed capital rule for the GSEs and Ed DeMarco, president of the Financial Services Roundtable Housing Policy Center, said the proposal should compel everyone to think about the implications. “This rule is much too important and far too complex to be digested and commented on in 60-days,” he said. “A critical question in evaluating this...

Mnuchin Wants GSE Reform in Next Congress. Treasury Secretary Steven Mnuchin is worried about Fannie Mae and Freddie Mac expanding their already large role in the mortgage market and said he’s not against taking administrative action absent a legislative solution for reforming the mortgage giants.During the secretary’s annual testimony to the House Financial Services Committee late last week, Mnuchin reiterated his position in wanting lawmakers to reform the GSEs and said he expects that to happen in the next Congress. “This is something that I am determined, in the next Congress, should be a major focus of ours, hopefully on...

Twenty-two trade associations strongly urged House and Senate leadership to extend the National Flood Insurance Program before it expires at the end of the month, warning what inaction might do to home sales.

The mortgage industry this week continued to look for a fix to the VA Interest Rate Reduction Refinance Loan mess, which has imperiled roughly $500 million worth of government product that is now ineligible for Ginnie Mae securitization.

Industry experts continue to weigh in on the White House’s proposal to privatize the GSEs and introduce multiple guarantors, but don’t anticipate action anytime soon. Analysts with Keefe, Bruyette and Woods said the proposed changes are similar to the Corker-Warner and Johnson-Crapo reform bills previously introduced in the Senate.

Routine financial transactions involving mortgages could face extreme headwinds under a new consumer data privacy bill passed last week in California. So much so that it prompted the Federal Housing Finance Agency to urge state lawmakers to consider the implications of the legislation to the mortgage market. The controversial consumer data privacy bill passed on June 28. It would allow consumers to opt-out of any type of data collection and give consumers the right to have any personal information deleted.

Department of Housing and Urban Development Secretary Ben Carson reiterated concerns raised previously by his deputies regarding certain lending trends that could potentially endanger FHA’s financial health. Testifying during a HUD oversight hearing in the House Financial Services Committee this week, Carson said the department is scrutinizing certain policies that may be causing or contributing to the growth of cash-out transactions, unusually high debt-to-income ratios, serious loan delinquencies and early payment defaults. Carson said maintaining the health of the FHA mortgage insurance fund is critical in maintaining the agency as a source of credit for first time, low- and moderate-income, and minority homebuyers. The share of cash-out among all of FHA’s refinance transactions has increased to 60 percent as of April 2018 from 45 percent a year ago, he said. Also during that ...

The mortgage banking industry is backing a legislative proposal that would limit the government’s use of the False Claims Act to pursue hefty damages against FHA lenders. In a recent letter to the bill’s co-sponsors, the Mortgage Bankers Association expressed its strong support for H.R. 5993, the Fixing Housing Access Act of 2018. The MBA noted that originating FHA-insured loans has become very risky in recent years largely due to the civil actions brought by the Department of Justice under the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. Fifty-four FCA and FIRREA cases against financial institutions have settled for billions of dollars between July 2011 and January 2018, according to data compiled by the Buckley Sandler law firm. Four cases are pending and one civil penalty award was reversed on appeal. Those lenders who were on the ...

The White House’s broadly phrased proposal to make Fannie Mae and Freddie Mac private corporations again and make explicit the government’s guarantee of their mortgage-backed securities caught industry observers by surprise.