The Congressional Budget Office in December opened a new approach to GSE reform that could become a middle ground between GOP hardliners who want to entomb Fannie Mae and Freddie Mac and lawmakers who want to keep some form of the current system. One way to reduce the GSEs’ footprint in the mortgage market would be to auction a limited supply of Fannie and Freddie mortgage-backed securities guarantees to the highest bidders, the CBO suggested ...

The head of the House Financial Services GSE Subcommittee called on the Federal Housing Finance Agency to look into whether Fannie Mae and Freddie Mac have resumed lobbying and other political activities, which were barred when the GSEs were put in conservatorship in 2008. Political activity by Fannie and Freddie has long been a bone of contention for many GOP members of Congress, who believe that lobbying, campaign contributions and advertising ...

Conversations with Capitol Hill insiders, industry lobbyists and trade group representatives suggest the CFPB is going to face a double-barreled threat from a Republican-controlled U.S. Senate and House of Representatives in the 114th Congress that convenes in January. On the one hand, the GOP is expected to be aggressive in holding numerous oversight hearings on a number of issues having to do with the CFPB. On the other hand, Republicans also are likely to push multiple pieces of legislation relating to the bureau and its rulemaking. A number of tweaks, revisions and technical corrections to the Dodd-Frank Wall Street Reform and Consumer Protection Act are expected as well. Elaborating on the legislative front, Joe Pigg, vice president and senior counsel ...

The Department of Veterans Affairs announced new, lower loan limits for 2015 after Congress decided not to extend the agency’s current maximum lending limits beyond 2014. The current limits will expire on Dec. 31. Under new guidelines, the maximum guaranty amounts for VA loan limits in 2015 will match the lower conforming loan limits established by the Federal Housing Finance Agency for the government-sponsored enterprises next year. These limits range from $417,000 to $625,500, depending on where the borrower is located. VA’s loan limits are tied to the county-based limits established for conforming loans backed by Freddie Mac. Freddie’s loan limits are calculated based on median house prices in counties across the nation. In recent years, VA’s high-cost loan limits have exceeded Freddie’s due to statutory authority granted under the Housing and Economic Recovery Act of 2008. The VA authority was ...

The Inspector General of the Department of Housing and Urban Development has announced a $300 million recovery from an earlier settlement between SunTrust Mortgage and the Department of Justice, Consumer Financial Protection Bureau, the HUD Office of the Inspector General, and 50 state attorneys general. The settlement resolved allegations of violations of FHA requirements in a joint complaint filed on June 14, 2014, by federal and state enforcement agencies. The suit against SunTrust alleged misconduct related to the origination and servicing of single-family residential mortgages. The problem loans were uncovered during a routine OIG review of targeted FHA-insured loans. According to the suit, as an FHA direct endorsement lender, SunTrust certified poorly underwritten loans for FHA insurance from January 2006 through March 2012, despite its knowledge of ...

Lenders are likely to shift some of their business away from the government-sponsored enterprises and into the non-agency market in the coming years, regardless of GSE reform efforts, according to a report released this week by the Congressional Budget Office. “With house prices expected to trend upward, the balance sheets of lenders and investors should improve, as should borrowers’ financial positions,” the nonpartisan provider of analysis for Congress said. “Consequently, CBO projects that private companies will become more willing to make new loans and demand lower fees to compensate for the credit risks they take, which will reduce Fannie Mae and Freddie Mac’s pricing advantage over their private competitors.” If the private sector bears more mortgage credit risk, the CBO said...

Mortgage industry participants generally think GSE reform is necessary but they don’t support a complete wind-down of Fannie Mae and Freddie Mac, according to a new survey conducted by the Collingwood Group. Some 64.5 percent of 97 respondents said GSE reform is necessary. “Those who want reform say that the GSEs need not serve as a backup guarantor of home mortgages and believe that the government shouldn’t be guaranteeing more than 90 percent of the market,” Collingwood said. “The majority of respondents felt strongly that Fannie Mae and Freddie Mac’s current state is untenable,” Collingwood said. “Interestingly, none of the survey respondents called for a wind-down or elimination of the GSEs.”Those who said GSE reform is not necessary cited ...

Democrats in Congress and consumer advocates remain concerned about tight underwriting standards for mortgages, particularly due to overlays established by lenders. However, at a hearing this week by a subcommittee of the Senate Committee on Banking, Housing and Urban Affairs, there was a lack of consensus on what causes underwriting overlays. “Instead of matching the creditworthy borrower at the lower end of the distribution with affordable loans, these borrowers are being cut out of the market entirely,” said Sen. Robert Menendez, D-NJ, chairman of the Banking Subcommittee on Housing, Transportation and Community Development. Sen. Elizabeth Warren, D-MA, suggested...

The Federal Housing Finance Agency should not wait for Congressional reform and should instead move at a deliberate pace to implement a single government-sponsored enterprise MBS, according to the Structured Finance Industry Group. SFIG staff and several members met with FHFA officials this week to discuss the potential transition to a single, common security between Fannie Mae and Freddie Mac. In August, the FHFA proposed...

Reports that the Senate Appropriations Committee might include a proposed FHA administrative fee in the Senate’s spending bill for financial and housing agencies is causing a furor within the mortgage financing industry. Industry groups have come out in force, urging the leaders of the Senate committee to remove the provision from a continuing resolution to fund the government beyond Dec. 11. There is speculation that the House might go along with the fee. The provision, expected to raise $30 million for FHA quality assurance efforts, would allow the Department of Housing and Urban Development to charge a fee of no more than 4 basis points of the original principal balance of all FHA-insured mortgages a lender made in the previous fiscal year. HUD originally made the request in President Obama’s proposed FY 2015 budget. Over industry objections, the Senate later incorporated the ...