Nine senators said they would work to invalidate any new rules issued by the CFPB if Leandra English prevails in her attempts to unseat and replace the bureau’s acting director, Mick Mulvaney...
Fannie Mae and Freddie Mac say they have made significant strides over the past year to address obstacles to the transition to a fully digital mortgage process that have been identified by mortgage lenders and other industry participants.
A tiny portion of loans sold into Fannie Mae and Freddie Mac mortgage-backed securities trigger a buyback demand from either of the GSEs, and in most cases lenders are able to avoid an actual repurchase or indemnification. Lenders repurchased or provided other indemnification for $260.12 million of home loans during the third quarter of 2017, a 6.4 percent increase from the prior period, according to an Inside The GSEs analysis of quarterly disclosures made to the Securities and Exchange Commission. During the same period, Fannie and Freddie issued $223.6 billion of new single-family MBS. The third-quarter spike in buyback activity came all on the Freddie side of the market.
In roughly 30 days, Fannie Mae and Freddie Mac will see their capital buffers fall to zero, an event that has GOP legislators working feverishly over the past several weeks to come up with housing-finance reform legislation. In short, Republicans fear that in the event of a quarterly loss by one or both GSEs next year, these massive mortgage giants might need to tap a line of credit they have with the U.S. Treasury, which would result in another “taxpayer bailout” of the two. And since Republicans are in charge of both chambers of Congress, as well as the White House, they would get blamed. At least that’s how the situation was explained to Inside The GSEs.
As the end of the year nears, there’s been talk this week about negotiations underway between the Federal Housing Finance Agency and the Trump administration to address the capital situation at Fannie Mae and Freddie Mac. Although no one is confirming the discussion, a Bloomberg report quoted an anonymous source as saying that FHFA officials want Fannie and Freddie each to keep a capital buffer of $2 billion to $3 billion on their books. In return, the report said, the administration wants to limit the GSEs’ activity in the market by tightening restrictions on the type of loans they buy. In late 2013, former FHFA Acting Director Ed DeMarco proposed implementing a loan size limit on...
The Federal Housing Finance Agency raised the baseline conforming loan limit for GSE mortgages by $29,000 for next year. The new loan limit, announced Nov. 28, is $453,100, and represents just the second time since the 2007 housing downturn that the conforming loan limit has been raised. For 2017, it was increased by $7,100, to $424,100. The baseline loan limit was established by the Housing and Economic Recovery Act of 2008 and is closely reviewed each year to reflect any changes in the national home price index. In determining maximum loan amount under the terms of HERA, FHFA uses the expanded-data home price index. The expanded-data HPI increased 6.8 percent between the third quarters of 2016 and 2017.
In anticipation of a slight decline in multifamily mortgage originations, the Federal Housing Finance Agency last week lowered the multifamily lending caps for Fannie Mae and Freddie Mac in 2018. GSE multifamily business will be capped at $35.0 billion, down from the $36.5 billion level it’s been the past two years. FHFA analyzes the multifamily loan origination market size each quarter to decide if it will adjust the GSEs’ purchase limits. In the event the market picks up in 2018, the agency could raise the cap. And if the market slows even more than expected, it could lower the caps further.
If Congress succeeds in cutting the corporate tax rate next year, the GSEs would have to write down their deferred tax assets by somewhere between $13 and $19 billion or face having to take a draw from the Treasury, according to estimates from Keefe, Bruyette & Woods. The House Republican tax reform plan proposes to lower the corporate tax rate from 35 percent to 20 percent. It would be the largest reduction in the corporate rate in the nation’s history. But KBW also said having to take a draw because of the DTA write-down may not be that big of a deal.
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