The Federal Housing Finance Agency is pushing back against the findings of its Inspector General that the agency rushed a mandated new representation and warranty framework “despite significant and unresolved operational risks” to Fannie Mae and Freddie Mac. Announced in September 2012 and implemented Jan. 1, 2013, the framework relieved sellers from certain reps and warrants, including those relating to credit underwriting and eligibility of the borrower and the property that were formerly effective for the life of the loan. It allowed for repurchase relief to seller/servicers if mortgages acquired by the government-sponsored enterprises after the effective date had acceptable payment history for 36 months. And the GSEs apparently weren’t...
Current and former commissioners of the FHA this week said the venerable program could carry out its mission more effectively if it was an independent, self-funded government enterprise. During this week’s Housing Summit hosted by the Bipartisan Policy Center, the five FHA commissioners – incumbent Carol Galante and alumni Brian Montgomery, Nicolas Retsinas, David Stevens and John Weicher – concurred that working with Congress, particularly on budget issues, has made it more difficult for the agency to operate safely and soundly. “We’re...
Time is not a friend to the housing finance system so long as Fannie Mae and Freddie Mac remain in government conservatorship with no endgame in sight, according to the former head of the Federal Housing Finance Agency. Former FHFA Acting Director Edward DeMarco, now a senior fellow in residence for the Milken Institute’s Center for Financial Markets, told attendees at this week’s Bipartisan Policy Council’s housing summit in Washington that the ongoing conservatorships of the two government-sponsored enterprises – now in the sixth year – will continue to distort the market and place taxpayers at risk. “The conservatorships are...
The Finance Agency filed suit against HSBC and 17 other firms in 2011. The two remaining defendants in the cases include Nomura Holdings and the Royal Bank of Scotland Group.
A number of firms that hold vintage non-agency mortgage-backed securities are using their clean-up call options as the outstanding balance in the MBS dwindles. Executing clean-up calls can be more profitable for certain firms than allowing securities to run-off. Chimera Investment is the latest firm to tout its clean-up call strategy. The real estate investment trust said it acquired the rights to $4.8 billion of seasoned subprime mortgages by purchasing subordinate tranches of non-agency MBS issued by Springleaf Finance between 2011 and 2013. The purchase price wasn’t disclosed.
MBS industry observers had hoped that federal banking regulators would clear up any confusion about the treatment of collateralized mortgage obligations and real estate mortgage investment conduits when they finalized new liquidity coverage ratio rules last week. The regulators gave some hints, but did not spell out a position. The rubber will meet the road when examiners start going over individual banks’ portfolios for compliance with the LCR rule, which requires banks to maintain sufficient quantities of highly liquid assets to meet their cash needs in a financial emergency. The final rule classifies...
The Federal Housing Finance Agency’s “single security” proposal for generic Fannie Mae and Freddie Mac MBS is “well-thought out” and “worthy of serious consideration,” but the agency should pick up the pace in its implementation to avoid making the solution part of the problem, according to a paper by the Urban Institute. Laurie Goodman, director of the UI’s Housing Policy Center, and Lewis Ranieri, chairman of Ranieri Partners, expressed concern that the FHFA “may be contemplating a slower pace in the project than it warrants.” The FHFA last month issued...
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