Fannie Mae completed its second credit risk- sharing transaction with the reinsurance industry this week and last week Freddie Mac introduced two new Agency Credit Insurance Structure transactions that gives it coverage based on both first loss and actual losses realized in a reference pool of residential mortgages. Under the two ACIS transactions, Freddie took insurance policies that move most of the remaining credit risk associated with the two Structured Agency Credit Risk debt notes executed in early 2015 to insurers and reinsurers. The two policies cover up to a combined maximum of approximately $223 million of losses that Freddie incurs when homeowners default. This is the 9th ACIS transaction since 2013.

Fannie Mae and Freddie Mac will take part in more risk-sharing transactions in the coming months, especially upping their involvement in actual-loss deals as mortgage-backed securities investors appear to be willing to buy more risk, said Fitch Ratings in a report released this week highlighting GSE risk-sharing deals and trends. Freddie has had two risk-sharing deals this year where actual losses are passed on to investors based on actual recoveries at loan liquidation.Prior to those deals, risk-sharing transactions used pre-set loss severity schedules to determine investor loss exposure. Fannie said it plans to come to market with its first actual-loss deal as early as the fourth quarter of 2015.

Fannie Mae unveiled its second auction of nonperforming mortgages this week, $777 million of delinquent notes offered in two pools and a smaller $11 million pool that falls under its “Community Impact” program. The $11 million package includes just 75 loans. The collateral is located in Tampa, FL. The two larger pools include 3,900 mortgages. The GSE said it hopes to “inspire” nonprofits, small investors, minority- and women-owned businesses (MWOBs) and community groups to bid and then help borrowers avoid foreclosure. “We recently held a training forum to bring diverse stakeholders together to explore ways to participate in upcoming NPL sales,” said Joy Cianci, Fannie’s senior vice president for credit portfolio management.

With several cases underway involving Fannie Mae and Freddie Mac, Investors Unite hosted a status update teleconference in which one legal scholar referred to the Fairholmes case as an “open scandal” because of the government’s refusal to make the documents surrounding the case public.The three cases discussed included Fairholmes Fund v. The United States, Perry Capital Inc. v. Lew, and an individual shareholders suit in Iowa. Both RichardEpstein, NYU law professor and a senior lecturer at the University of Chicago, and Matthew McGill, partner with Gibson, Dunn and Crutcher, who is representing Perry Capital in its lawsuit and subsequent appeal, questioned the government’s secrecy in these cases. “The Obama administration has pledged to be the most open, and they have completely failed in this regard,” said Epstein.

First-time homebuyer mortgages acquired by the GSEs performed worse than repeat homebuyer mortgages, said the Federal Housing Finance Agency in a new working paper. But that doesn’t necessarily mean they are riskier. Although the study found first-time homebuyers likely to face more mortgage-related challenges, the FHFA said the difference is based on demographics. “They are younger, and have lower credit scores, lower home equity, and less income and therefore are less likely to withstand financial stress or take advantage of financial innovations available in the market than repeat homebuyers,” said Saty Patrabansh, senior economist and author of the white paper. However, once these differences are taken into account he said there appears to be no difference between first-timer and repeat homebuyers in their probability of default.

Freddie Mac, Fannie Mae and Common Securitization Solutions created an advisory group for the single security/common securitization platform and held its first meeting this week.No further information was available at press time about what happened at the meeting. A spokesperson for Fannie said additional information on the advisory group will be posted on its single security website in the next week or so. Although implementation may be years away, the group is charged with working together to help move the process forward by offering feedback and sharing information on the execution and building of the SS and CSP platform. “The group initially plans to meet every six months but additional meetings may be requested as...

Fannie Mae and Freddie Mac released a delivery timeline and said they will employ separate collection solutions lenders can use to start delivering the Uniform Closing Dataset, which supports the Consumer Financial Protection Bureau’s requirement to use the Closing Disclosure for most consumer mortgages.Lenders can begin delivering and testing the Uniform Closing Dataset in the fourth quarter of 2016. The GSEs expect the UCD will make it easier to electronically communicate information on the Truth in Lending Act and the Real Estate Settlement Procedures Act Integrated Disclosure form which will help keep lenders in compliance with the TRID three-day rule.The GSEs will make UCD usage mandatory by the fourth quarter of 2017 for all...

The insurance industry is reaping the benefit of the growing use of the Federal Home Loan Bank System as a funding source, according to a recent report from Moody’s Investors Service.Total membership in the FHLBs nearly doubled between 2005 and 2014 and advances rose around fivefold, said Moody’s. Growth will remain driven primarily by the life insurers. But with the FHLBs continuing to expand their lending to the sector, the ratings service said the underpenetrated property and casualty sector is likely to experience a large increase. Moody’s views insurers’ access to the Federal Home Loan Banks as a credit positive for insurers and said it provides an alternative source of funding for operational or liquidity emergencies.

Fannie Launches Mobile App. Fannie Mae launched a new educational tool this week called HOME by Fannie Mae. The GSE said the mobile app helps educate future homeowners about the steps and responsibilities of buying and owning a home. With the app, potential homebuyers can figure out what they can afford, understand their monthly mortgage payments, how to save for a downpayment, and learn how much they can save in interest by making extra mortgage…

Activity in the non-agency MBS market involving nonperforming loans and re-performing loans is expected to continue to flourish through at least the end of this year, according to industry analysts. Vintage mortgages in scratch-and-dent deals accounted for 42.0 percent of the non-agency MBS issued in the first half of 2015, according to the Inside Mortgage Finance MBS Database. The $15.60 billion in scratch-and-dent volume included a mix of nonperforming loans and re-performing loans. Issuance of non-agency MBS backed by NPLs and RPLs through two quarters this year equaled...