Fannie Mae and Freddie Mac produced a total of $77.42 billion of new single-family mortgage-backed securities in August, their fourth consecutive monthly gain. August single-family MBS issuance was up 8.8 percent from the previous month at Fannie, and up 6.1 percent at Freddie. Their combined production represented a 7.8 percent increase from July. Although the two GSEs have seen steady growth in MBS issuance in recent months, production through the first eight months of 2017 was down 1.6 percent from a year ago. And other than January and February, every month in 2017 has yielded less new business than it did last year.
The U.S. Attorney for the District of Texas indicted the former CEO of the Federal Home Loan Bank of Dallas, along with two other former bank employees, for fraud. They were accused of creating fake travel reimbursement requests for lavish trips and embezzlement schemes that began back in 2008. Terrence Smith, at the helm of the bank from 2000 to 2013, and Nancy Parker, chief information officer around the same time, were charged with six counts of making false statements, according to the Department of Justice. And Michael Sims, chief financial officer from 2005 to 2014, was charged with three counts of making false statements.
Some three dozen appraisal trade groups are fighting to keep Fannie Mae and Freddie Mac from issuing waivers that eliminate the need for traditional home valuations. Earlier this year, the GSEs announced they would offer appraisal waivers on some refinance loans to borrowers who have at least 20 percent equity in their homes. And more recently Fannie and Freddie said that they will extend the waiver to include certain purchase loans as well. But the groups said first purchase transactions carry higher risk from a property information standpoint and, to make matters worse, the change comes at a time when markets are at all-time highs and risk mitigation should be tantamount.
On the heels of making concessions for Houston area homeowners with property damaged by Hurricane Harvey, another storm threatens the housing industry this weekend. As Inside The GSEs went to press, Hurricane Irma was approaching the U.S., potentially hitting Florida and several southern states and prompting the GSEs to remind lenders and homeowners about their disaster-relief options for affected areas. Freddie Mac said it is monitoring the approach of Irma. “We stand ready to work with the nation’s servicers to ensure that mortgage relief is made available to homeowners who may be affected,” said Yvette Gilmore, Freddie’s vice president of single-family servicer performance management.
The Independent Community Bankers of America issued a statement midweek questioning – nine years after the fact – the federal takeover of Fannie Mae and Freddie Mac, saying it was the government’s way of putting the two mortgage giants in a “time out.” ICBA said the move by the Bush administration on Sept. 6, 2008, was made to “help calm the fears of global investors of GSE mortgage-backed securities.” MBS issued by Fannie and Freddie have an “implicit” government guarantee, not an explicit one. However, before and since the takeover, the GSEs have never missed a bond payment to MBS investors. ICBA said, “After being put into conservatorship – an action that has since been proven to be...
The International Monetary Fund proposed that Fannie Mae and Freddie Mac merge into a single enterprise. The IMF discussed ideas that it said could help stabilize the mortgage finance system in a working paper published late last month. The global Washington, DC-based organization said the GSEs should combine forces “as quickly as possible.” And, “Until this happens they should be forbidden to compete for business on the basis of price.” “The GSE regulator should be tasked with monitoring the enterprises to ensure consistency on this basis,” said the author of the paper, Richard Koss. He believes that the housing finance system is unnecessarily complicated, with Fannie and Freddie having selling guides of 1,408 and 2,303 pages, respectively.
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