The Federal Housing Finance Authoritys’ “duty-to-serve” rule, mandated by the 2008 Housing and Economic Recovery Act, is getting a lot of attention lately from manufactured housing industry leaders who argue that the GSEs aren’t purchasing enough of their loans. “Duty-to-serve” was created to encourage Fannie Mae and Freddie Mac to support underserved markets, especially those that included manufactured housing, along with rural housing and affordable housing preservation. Although it was mandated years ago, a final rule has not been implemented and the FHFA plans to re-propose the rule later this year.MH accounted for just 0.2 percent of Fannie’s and Freddie’s total business this year with the GSEs securitizing $896 million of manufactured housing loans in the first half of 2015, according to data analyzed by Inside The GSEs.
Mortgage Bankers Association President David Stevens set off a firestorm of reactions after publishing a piece earlier this week regarding the MBA’s stance on GSE reform. Some in the industry accused Stevens of “flip flopping” when he said that he supports reforming Fannie Mae and Freddie Mac as opposed to eliminating them altogether. But Stevens was adamant in defense of the MBA’s position and took to Twitter stating, “It’s been our position for 2+ years.” Stevens noted in the article that conservatorship is not a long-term solution, and added that in the current state it may be the riskiest position of all. He said the GSEs don’t have the capital to withstand another housing downturn and taxpayers don’t want to be on the hook if the companies falter.
First-time homebuyers make up a significant part of the purchase-mortgage market, but Fannie Mae and Freddie Mac have a hard time competing with Ginnie Mae, according to a new Inside The GSEs analysis of loan-level data.The three agencies securitized $118.90 billion of first-time buyer mortgages during the first six months of 2015, but Ginnie accounted for over half (52.4 percent) of the business. Ginnie’s big advantage is that it gets all the FHA and VA loans, while the GSEs so far have not gotten much traction in their reduced-downpayment programs. First-time buyers typically have less savings for a downpayment and often have less-stellar credit profiles. In the first half of this year, the average loan-to-value ratio for...(charts)
The Federal Housing Finance Agency’s announcement last week that it will increase both the single-family low-income and multifamily low-income purchase goals was met with mixed reaction.In its final housing goals for Fannie Mae and Freddie Mac for 2015 through 2017, the single-family low-income goal was raised just one percentage point to 24 percent. But some housing industry groups weren’t necessarily happy with the single-family goal. “At 24 percent, the affordable housing goals fall short of what can and should be expected of Fannie Mae and Freddie Mac,” said Center for Responsible Lending President Mike Calhoun. “These companies have the capacity to reach a greater percentage of lower-wealth, creditworthy households, allowing borrowers to build wealth through homeownership.”
Fannie Mae said last week that Lone Star Funds’ LSF9 Mortgage Holdings was the sole winning bidder on its second sale of two pools of non-performing loans announced in July. The government-sponsored enterprise offered separate pools of approximately 3,900 loans, totaling $765 million in unpaid principal balance. The first pool included 831 loans with an aggregate UPB of $175.4 million and $211,179 average loan size. The second pool included 3,034 loans with an aggregate UPB of $589.4 million and average loan size of $194,298. On average, the loans in both pools have been delinquent for 37 months with an average BPO LTV of 76 percent. The transaction expects to settle Sept. 25.
The GSEs’ multifamily segment continues to witness growth amid the Federal Housing Finance Agency’s mandated caps. Freddie Mac’s comprehensive income from the multifamily business grew to $366 million for the second quarter. Freddie said the $102 million increase was primarily due to higher unrealized gains on available-for-sale securities. Also, new purchase volume remained strong at $13.1 billion, a $3.1 billion increase from the first quarter. In fact, Freddie’s multifamily business grew so much that some industry observers worry that the GSE could reach the $30 billion annual multifamily business cap set by the FHFA before the year ends. Approximately 70 percent of the $23.1 billion in new business activity in the first half counted toward the 2015 volume cap.
The Securities Industry and Financial Markets Association emphasized its concerns about the GSEs’ single security initiative in a letter sent last week to the Federal Housing Finance Agency. A large part of SIFMA’s letter focused on a lack of alignment between Fannie Mae and Freddie Mac. The trade group believes that the FHFA doesn’t have a strong enough role in maintaining the policy and practice alignment of the GSEs. “This causes significant concern about the potential outcome of the initiative,” the letter said, adding that the effective alignment of policies and practices, to achieve a continuing alignment to security performance, is the single most important factor in the success, or lack thereof, of the initiative.
Mortgage sellers doing business with Fannie Mae and Freddie Mac saw a sharp decline in repurchase activity in the second quarter of 2015 as the buyback focus continued to shift toward more recent production. The two government-sponsored enterprises reported a total of $436.3 million in mortgage repurchases during the second quarter, down 11.2 percent from the previous period. It was the lowest quarterly buyback number since ... [Includes two data charts]
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