In its much anticipated duty-to-serve final rule issued last week, the Federal Housing Finance Agency gave the green light for Fannie Mae and Freddie Mac to begin pilot programs for manufactured housing “chattel loans.” Although duty-to-serve was mandated eight years ago to make sure the GSEs support three underserved markets, (such as manufactured housing,) it was never implemented. The other markets are affordable housing preservation and rural housing. A proposed rule was issued in December 2015 and it’s taken a year to issue the final rule. The FHFA sifted through hundreds of comments on the proposed rule earlier this year, most focusing on the need for greater GSE support when it comes to manufactured housing lending.

The Federal Housing Finance Agency came up short when it comes to supervising the GSEs to ensure a “safe and sound operation,” according to a Federal Housing Finance Agency Office of Inspector General report released late last week. The IG also suggested that the FHFA follow the lead of other federal financial regulators with stronger supervisory standards including the Federal Reserve System and the Office of the Comptroller of the Currency. “Among our findings was that FHFA had difficulty completing its planned targeted examinations over four supervisory cycles from 2012 through 2015 and that the number of targeted examinations planned and completed during each supervisory cycle has fallen since 2012 for Freddie Mac and has diminished significantly for Fannie Mae,” said the IG.

With the Home Affordable Modification Program expiring in about a week, Fannie Mae and Freddie Mac recently introduced the Flex Modification foreclosure prevention program to take its place in helping delinquent borrowers get back on their feet. The Federal Housing Finance Agency said that the new program is based on lessons learned from loan modification programs created during the housing crisis. The Flex Modification is a hybrid of three different types of programs, including HAMP. “The Flex Modification program also reflects input received over the course of extensive engagement with lenders, mortgage insurers, consumer advocates, and other stakeholders,” said FHFA Deputy Director Sandra Thompson, adding that by avoiding...

Member institutions of the Federal Home Loans Bank system had outstanding advances of $541.8 billion at Sept. 30, a slight sequential decline, but a 19.0 percent improvement from the same period a year ago, according to analysis by Inside The GSEs. The FHLBs said the growth in advances was primarily driven by higher demand from larger members. The megabanks, not surprisingly, continued to be the biggest clients of the system with JPMorgan Chase leading the pack at $79.5 billion worth of advances, followed by Wells Fargo ($68.7 billion), Citibank ($31.5 billion), PNC Bank ($17.1 billion) and Capital One ($16.3 billion).

Freddie Mac this week issued a new risk-sharing transaction backed by seasoned mortgages. The Seasoned Credit Risk Trust 2016-001 is comprised of all modified, seasoned reperforming first-lien residential mortgages funded by the issuance of asset-backed certificates totaling $934 million.The SCRT securitization program is a key part of Freddie’s efforts to reduce less liquid assets in its mortgage-related investments portfolio and shed credit and market risk. The GSE announced in July that it would be expanding its reperforming loan program by introducing the seasoned loans. This includes option adjustable-rate mortgages as well as loans that were originally option ARMs but have been modified through a Home Affordable Refinance Program or other modification.

The Federal Housing Finance Agency agreed to disclose the total cost of the common securitization platform after a Dec. 15 audit by the FHFA Office of Inspector General revealed issues in transparency.The auditors said that while the FHFA committed to be transparent in its development of the multiyear project in 2014, the FHFA has not disclosed detailed costs or associated risks in its public reports. Instead, it only discloses the costs incurred though mid-2015. FHFA only disclosed specific CSP cost data once in a September 2015 status report, in which it announced that, from 2012 through mid-2015, the GSEs spent $146 million to develop the actual CSP platform. Then, their 2015 10-Ks revealed the amount increased to $218 million by year-end 2015.

Whether to privatize Fannie Mae and Freddie Mac continues to be a topic up for debate ever since Steven Mnuchin, president-elect Donald Trump’s pick for Treasury secretary, said getting the GSEs out of conservatorship is a priority. This week the Community Home Lenders of America applauded Mnuchin’s recent comments about promptly returning Fannie and Freddie to the private sector. The group told President-elect Trump that he should permit the GSEs to retain a capital buffer and submit a recapitalization plan to end their conservatorship and re-privatize them. In the letter, which included other recommendations of what should be done in Trump’s first 30 days, the CHLA noted that because...

Two House bills introduced last week focus on making sure Fannie Mae and Freddie Mac broaden their scope of credit risk-sharing transactions through pilot programs and the use of deeper mortgage insurance coverage. The “Taxpayer Protections and Market Access for Mortgage Finance Act of 2016” would require the Federal Housing Finance Agency to push the GSEs to transfer at least 400 basis points of their total risk. Meanwhile, the “Moving Housing Forward Act” would set up a system for Fannie and Freddie to sell off some of the “catastrophic” risk retained by the GSEs on mortgage-backed securities issued in the to-be-announced market.

The Federal Housing Finance Agency published a final rule this week allowing the Federal Home Loan Banks to transfer mortgage servicing rights on Acquired Member Assets to any institution, including a nonmember and nonbank. The Dec. 19 final rule reorganizes much of the current regulation governing the FHLBanks’ AMA programs and makes it easier for the banks to take on new business activities. The change was made, in part to recognize the evolving market landscape where a good amount of servicing is being done by nonbanks. The provision noted that any such transfer cannot result in the AMA loan failing to meet any other AMA requirement, including the credit enhancement.

Fannie Mae’s Desktop Underwriter has been updated this month to include an employment and asset verification service under its Day 1 Certainty initiative announced in October. Day 1 was created to alleviate buyback fears on some loan components for lenders using its underwriting and appraisal tools. The GSE said that lenders would be relieved from most representations-and-warranty risk when it comes to verifying a borrower’s income, assets and employment. When a lender opts in to use the DU validation service, Fannie said that DU will use third-party vendor data to perform calculations and validate information entered by the lender.