Fannie Mae and Freddie Mac are poised to report robust earnings for the third quarter, likely blowing past results of the prior two periods, according to an analysis by Inside The GSEs. The only question now is this: Just how good will it be? “And most of that money will be swept into the Treasury,” noted Tim Rood, a former Fannie Mae executive who now heads The Collingwood Group. Not only did the GSEs benefit from a strong origination and MBS issuance market in 3Q17, but a previously announced legal settlement with Royal Bank of Scotland will finally hit the books.

Federal Housing Finance Agency Director Mel Watt said the likelihood of a draw from Treasury is growing fast in a reply letter to the 15 trade groups that wrote late last month advocating for legislation instead of recapitalization. Watt reiterated his position in the Oct. 12 letter and said while he appreciates their views, he has expressed “repeatedly and publicly” that the declining capital buffers leave Fannie Mae and Freddie Mac with no ability to absorb potential losses. “FHFA is concerned that in the absence of a sufficient buffer, normal operating losses, such as from interest rate volatility and the accounting treatment of...

The FHA could be in position to become a much bigger rival to Fannie Mae and Freddie Mac, according to one analyst, basing his observation on U.S. Department of Housing and Urban Development Secretary Ben Carson’s comments late last week. Jaret Seiberg, analyst with the Cowen Washington Research Group, said implications Carson made in regards to the False Claims Act and premium cuts led him to believe that the FHA may give the GSEs a run for their money competition wise. During his testimony before the House Financial Services Committee, Carson said that the Trump administration is working to change the False Claims Act policy...

The mortgage interest deduction, or MID, used to rank with apple pie and motherhood for real estate agents, mortgage lenders and homebuilders. But against the backdrop of an intense effort by Republicans to overhaul the tax code, some groups are showing more flexibility on the issue. Complicating matters is that neither the Trump administration nor key players on Capitol Hill have been explicit or consistent in what they want. The Mortgage Bankers Association wrote to the ...

The Trump administration has proposed to cancel $16 billion of the National Flood Insurance Program’s existing debt in addition to other legislative proposals to boost the program’s ability to meet its obligations while remaining viable as a major provider of flood insurance to mortgagors. A political fight could erupt over the proposals, observers say. In a letter to Vice President Michael Pence, Office of Management and Budget Director Mick Mulvaney sought legislative reforms that would place the ...

Did DoJ Opine on Ocwen v. CFPB? No One’s Talking. Earlier this year, Ocwen Financial asked Judge Kenneth Marra of the U.S. District Court for the Southern District of Florida, West Palm Beach Division, to invite the U.S. attorney general to appear and participate in the company’s challenge to the constitutionality of the CFPB.... Last Call for Public Comments on TRID ‘Black Hole’ Proposal. The industry has until 11:59 p.m. Oct. 10, 2017, to submit comments to the CFPB regarding its proposal to close the “black hole” associated with the bureau’s integrated disclosure rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act....

There was a sense of urgency in FHFA Director Mel Watt’s comments to Congress this week about reforming Fannie Mae and Freddie Mac. As the year winds down and the GSEs’ capital buffer becomes non-existent in January 2018, the FHFA head voiced his frustration about the lack of action from Congress on addressing the nine-year conservatorship. “These conservatorships have been unprecedented in scope, complexity and duration, especially when you consider that the enterprises support over $5 trillion in mortgage loan guarantees,” he said testifying before the House Financial Services Committee. House lawmakers fired off questions to Watt on everything from flood insurance to the qualified-mortgage rule and credit-risk transfers during this week’s hearing.

House lawmakers grilled Federal Housing Finance Agency Director Mel Watt on everything from flood insurance to the qualified-mortgage rule and credit-risk transfers during a hearing this week, but his comments regarding the evaporating capital buffers at Fannie Mae and Freddie Mac suggested that he’s fed up with the lack of action from Congress. Testifying before the House Financial Services Committee, Watt said it would be “especially irresponsible” for the two ...

The election of President Trump and Republican control of Congress initially prompted optimism among MBS and ABS issuers for significant easing of regulatory standards. But with comprehensive legislation from Congress looking unlikely, the focus has shifted to federal agencies, according to speakers at the recent ABS East conference sponsored by Information Management Network. “Expectations have had to be reset post-election,” said Ryan Schoen, a senior financial services analyst at Washington Analysis, a research firm. He said he doesn’t expect much regulatory reform from Capitol Hill. While the House passed H.R. 10, the Financial CHOICE Act, this year, the Senate is taking a more measured approach. “The Senate doesn’t seem...

A Ginnie Mae crackdown on abusive VA refinancing could be positive for housing finance reform, according to a Washington research organization. In a recent analysis, the Cowen Washington Research Group said Ginnie’s effort to rein in lenders that are engaging in churning might benefit those who are trying to revamp Fannie Mae and Freddie Mac. “We expect Ginnie Mae will succeed in curbing prepayment speed on VA mortgages,” wrote Jaret Seiberg, a financial services and housing policy analyst with the Cowen Group. “The crackdown is positive for government-sponsored enterprise reform as it should restore the spread between Ginnie and Fannie/Freddie MBS.” According to Seiberg, GSE reform advocates could potentially use the spread to pay for a housing finance bill that includes a government guarantee on the resulting MBS. Acting Ginnie Mae President Michael Bright has pledged to ...