Fannie Mae and Freddie Mac released a new policy this week in hopes of providing clarity on correcting loan origination defects and solutions to the mortgage buybacks that have plagued lenders over the years. Based on input from lenders, the GSEs took the next step to lessen loan buyback risk and will now categorize defects in terms of “findings, price-adjusted loans, and significant defects.” Under the new “origination defects and remedies framework,” findings will not require a correction or a remedy from the seller as they are negligible defects that had no effect on whether the loan was acceptable to Fannie or Freddie. Those mortgages with one or more defects that are labeled price-adjusted loans would have been eligible for sale to the GSEs if...

After a long, steady decline in their combined market share, the top five sellers of home mortgages to Fannie Mae and Freddie Mac posted a modest increase during the third quarter of 2015. The top five sellers delivered $67.66 billion of loans to the two government-sponsored enterprises during the period for a 30.3 percent share of the market, according to a new Inside Mortgage Trends analysis. That was up from 29.8 percent in the second quarter and ... [Includes two data charts]

Sellers/servicers of Fannie Mae and Freddie Mac will get a reprieve from immediately meeting the technical requirements associated with the Truth in Lending Act Real Estate Settlement Procedures Act Integrated Mortgage Disclosure Rule that took effect Oct. 3. Just a few days after the rule went into effect both GSEs issued guidance intended to reach anyone concerned about quality- control reviews while lenders absorb TRID into their business routines, said Brad German, spokesman for Freddie. The letter noted that in recognition of some seller/ servicers continuing to work toward implementing technical requirements of the rule, the GSEs won’t conduct routine post-purchase loan file reviews for technical compliance. After a transitional period, however, they will consider whether to begin such reviews for technical compliance.

Rental demand coupled with favorable demographic trends in most major markets has Freddie Mac predicting that the multifamily market will remain strong, at least for several more years, according to an outlook report released this week. Despite a large amount of new multifamily units entering the market this year, and a rise in construction permits, Freddie said the sector remains robust. The supply of multifamily properties has reached the highest level of completions in 2015 since the 1980s. Freddie said that demand has kept pace with new supply, calming concerns that growth might start to decelerate. The sector is in its sixth consecutive year of robust growth. Steve Guggenmos, senior director of Freddie’s multifamily investments and research, said...

An independent dispute resolution program for resolving loan defects is currently in the works to determine if there was a violation in loan eligibility or not in loans sold to Fannie and Freddie. The Federal Housing Finance Agency said to expect further clarity on the IDR in fiscal year 2016. According to its annual performance plan release last week, Fannie Mae and Freddie Mac are expected to deliver a report on the results of the IDR pilots. The FHFA said that over the next 12 months, it will complete an evaluation of the pilots being tested for resolving disputes over alleged defects. It will also make a decision on whether or not to extend the pilot to additional...

The Federal Housing Finance Agency is tackling all things fraud related, from prevention to managing and detecting the various types of potential fraud, according to recently issued guidance to Fannie Mae and Freddie Mac. The FHFA warned that mortgage fraud may occur in loans purchased for the GSEs’ own portfolios or for securitization. Fraud can also be committed by a number of external and internal parties and can occur as part of the origination, underwriting, or closing process or in conjunction with the servicing of a loan on behalf of Fannie or Freddie.The GSEs’ boards of directors are responsible for making sure that the GSEs have appropriate policies in place for preventing and detecting fraud, according to the guidance.

As the Federal Housing Finance Agency continues to take issue with Property Assessed Clean Energy loans, the program is growing and rating service DBRS said many of FHFA’s concerns about risks can be addressed with proper program design. Earlier this year, FHFA Director Mel Watt said that although the agency is not opposed to energy retrofit programs, they must be structured to ensure protection of the core financing for the home. The issue at stake is that residential PACE assessments threaten to move existing Fannie Mae and Freddie Mac mortgages to a second -lien position, said the FHFA. In the event of a default, PACE assessments would be repaid before...

The Inspector General of the Federal Housing Finance Agency has accused the FHFA of being too lax when it comes to overseeing the budget of Fannie Mae and Freddie Mac and in many instances waiting until the start of the GSEs’ fiscal year to even approve the budget. Inundated with cursory-level analysis and inadequate resources, the IG noted that the FHFA’s budget review and approval process for Fannie and Freddie is seriously flawed. The recently released review was completed in June 2015 and the FHFA for the most part agreed with the IG report and revamped its budget-review process a month later in July 2015. The IG noted that the GSEs often submitted proposed annual operating budgets after...

As Fannie Mae and Freddie Mac continue to unload distressed home loans, Sen. Elizabeth Warren, D-MA, along with Rep. Michael Capuano, D-MA, led a protest last week urging the GSEs and the Department of Housing and Urban Development to not keep selling the loans primarily to private-equity firms and hedge funds. They want to level the playing field so that nonprofit groups have a chance at the loans. Inside Mortgage Finance reported in 2013 that its sources noted that some buyers are turning to the nonperforming loan market as a “back door” way to buy homes. Capuano cited a recent New York Times article about private-equity firms buying troubled home mortgages and said the piece “highlights the troubling approach being taken by...

Freddie Prices Two Multifamily MBS. This week Freddie Mac priced an offering of Structured Pass-Through Certificates backed exclusively by fixed-rate multifamily mortgages with seven- and 10-year terms on seniors housing properties. The company offered approximately $841 million in K Certificates. This is Freddie Mac's third K Certificate offering backed exclusively by seniors housing collateral. Also, this week Freddie announced the pricing of the SB4 offering, a multifamily mortgage-backed securitization backed by small-balance loans underwritten by the GSE and issued by a third-party trust. The company expects to guarantee more than $172 million in SB4 Certificates. Former Fannie Attorney Joins Law Firm. Christopher Bell, a real estate attorney whose experience includes more than...