Although only one of the 21 banks (BB&T) posted a net loss on mortgage banking during the second quarter, seven others reported lower profits than they had in the first quarter.
A new analysis shows that housing markets where FHA loan limits were reduced this year have seen a bigger drop in FHA business than elsewhere in the country.
The White House isn’t quite ready to pack it in on housing finance reform legislation this year, at least in the Senate, even as policymakers look ahead to take up the issue anew next year, say industry observers. The industry at large has all but written off the prospects of advancing a GSE reform bill in the 113th Congress following the bare minimum passage out of the Senate Banking, Housing and Urban Affairs Committee of S. 1217 by the committee’s chairman and ranking member Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID.
A Fannie Mae real estate-owned contractor engaged in a “clear pattern” of neglecting Fannie-owned vacant foreclosed homes in black and latino neighborhoods compared to white neighborhoods in four different cities, according to a discrimination complaint filed with the Department of Housing and Urban Development this week. The National Fair Housing Alliance and two partners allege that Brandon, FL-based Cyprexx Services violated the federal Fair Housing Act by neglecting minority-owned Fannie REOs.
The levels and types of guaranty fees that the Federal Housing Finance Agency directs the GSEs to charge “have a direct and significant impact on the affordability of mortgage credit,” according to a coalition of industry groups that urged the FHFA to abandon planned fee hikes. In a letter to FHFA Director Mel Watt this week, the 10 trade groups – including the Mortgage Bankers Association and the National Association of Realtors – said they are “strongly against further, arbitrary increases in g-fees or loan-level price adjustments.”
Reform legislation rolled out earlier this month by House Democrats that would phase Fannie Mae and Freddie Mac out of business while dramatically expanding Ginnie Mae’s role in the market has been positively received within the industry, but room for improvement remains. The Partnership to Strengthen Homeownership Act, H.R. 5055, sponsored by House Democrats John Delaney (MD), John Carney (DE) and Jim Himes (CT), has zero chance of gaining traction this year. However, the lawmakers said they are playing the long game with their bill, looking ahead to the GSE reform debate in the 114th Congress.
A federal judge last week granted limited discovery to a hedge fund representing a group of Fannie Mae and Freddie Mac shareholders as they challenge the government’s “net worth sweep” of their profits. However, the court will keep a tight lid on public access to the documents in a nod to the government’s claim that a leak could have dire economic consequences on the mortgage market. Fairholme Capital Management has been pushing hard for discovery and access to internal government documents since the shareholder filed suit last summer demanding that the Treasury Department void its August 2012 Third Amendment to its preferred stock purchase agreement with Fannie and Freddie.
Industry trade groups are lining up to express their dismay at a recent audit issued by the Inspector General of the Federal Housing Finance Agency, which said both good and bad things about the risk nonbanks and small lenders pose to Fannie Mae and Freddie Mac. The latest trade group missive was issued late this week by the Community Home Lenders Association: “By implication, the IG report seems to be pushing for more loans to be done at the big TBTF [too big to fail] banks by stating that small nonbank lenders are riskier for the enterprises and with little or no evidence to support the claim.”
Fannie Mae has priced its fourth and largest risk-sharing transaction to date, a more than $2 billion offering pegged to a pool of mortgages acquired last year, the GSE announced last week. The $2.05 billion note is the GSE’s third transaction under its Connecticut Avenue Securities series issued this year. Last year, the Federal Housing Finance Agency ordered both Fannie and Freddie Mac to shrink their role in the U.S. housing market. The latest offering – Series 2014-C03 – included reference loans with original loan-to-value ratios of up to 97 percent and “is consistent with prior transactions.”
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