Fannie Mae and Freddie Mac cannot remain safely in conservatorship indefinitely, and they cannot get out from under Uncle Sam’s protection without “cataclysmic” consequences to the government-sponsored enterprises, MBS investors and the market, according to a new Urban Institute study. While the Federal Housing Finance Agency and the White House can make minor changes administratively, the UI paper notes it would take an act of Congress to authorize substantial revisions to the GSEs’ bailout agreement. “They can take...

Issuance of agency MBS has dropped off in the past year due to a decline in the supply of refinances. However, industry analysts expect that Fannie Mae and Freddie Mac will boost the supply of agency MBS with issuance backed by modified mortgages and re-performing loans. Fannie and Freddie could have $250 billion in modified mortgages on their balance sheets, according to estimates by Deutsche Bank Securities. The two government-sponsored enterprises will likely unload the holdings via securitization, prompted by portfolio reduction goals established by the Federal Housing Finance Agency. Freddie has been...

Mortgage servicing rights will never trade as freely as mortgage-backed securities, but agency officials say they are considering ways to facilitate the increasingly active MSR market. “The market is undergoing tremendous changes with great opportunities in mortgage servicing,” said Bob Ryan, a special advisor at the Federal Housing Finance Agency, during last week’s Secondary Market Conference sponsored by the Mortgage Bankers Association. “It has attracted ...

With housing finance reform legislation effectively stalled just short of a Senate floor vote, the industry is beginning to shift its expectant gaze to the Federal Housing Finance Agency to take the initiative as the debate moves toward GSE preservation. Although the reform bill, S. 1217, by Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID, cleared the Senate Banking, Housing and Urban Affairs Committee earlier this month, its less than impressive 13-9 vote margin all but ensures that Senate leadership will ignore the measure’s bid for a floor vote through the remainder of the 113th Congress.

Expect it to take years for the courts to resolve lawsuits filed by private investors in Fannie Mae and Freddie Mac stock, with the odds heavily stacked in the government’s favor, note industry observers. Speaking during a recent Bloomberg Industries webinar on Fannie Mae and Freddie Mac litigation, Brooklyn Law School Professor David Reiss noted it could take the courts up to a year simply to resolve the introductory motions.

Fannie Mae and Freddie Mac are moving forward slowly on the common securitization platform even after the Federal Housing Finance Agency recently narrowed the project, according to an agency official. Bob Ryan, a special advisor to the FHFA, told attendees at last week’s Mortgage Bankers Association Secondary Market Conference that the development of a common GSE securitization platform would take several years. The Finance Agency’s 2014 strategic plan for the GSEs includes clarifying the scope of the CSP project, which has been in the works for over a year.

Over roughly two years, Fannie Mae and Freddie Mac have spent about $65 million on the common securitization platform project, but without employing a timeline on the massive undertaking or a total cost estimate, according to a new report from the Inspector General of the Federal Housing Finance Agency. In its report, released last week, the IG notes that the regulator/conservator of the GSEs has yet to fully employ these “two basic project management tools,” which it deems critical to the project’s success.Although some progress has been made in developing the CSP, the project faces “considerable challenges that could undermine the project.”

Mortgage lenders will benefit from a reduced risk of loan repurchase owing to the easing of borrower performance standards mandated earlier this month by the Federal Housing Finance Agency, according to a report from Fitch Ratings. Fannie Mae and Freddie Mac, at the direction of their conservator, announced a narrow adjustment in how loans with minor payment problems can still qualify for buyback relief if they are current 36 months after origination. The new framework also provides buyback protection for mortgages that come clean in the GSEs’ quality control checks and an alternative to automatic repurchase of loans when private mortgage insurance is canceled.

Fannie Mae last week priced its second credit risk-sharing deal of 2014, the first to be backed by higher loan-to-value mortgages. The $1.6 billion note is the GSE’s third and largest transaction under its Connecticut Avenue Securities series since the Federal Housing Finance Agency ordered both Fannie and Freddie Mac to shrink the GSEs’ role in the U.S. housing market last year. In its latest offering – Series 2014-C02 – Fannie included reference loans with original LTV ratios of up to 97 percent. Previous C-deal offerings included reference loans with up to 80 percent original LTV ratios.

Industry trade groups are calling on the Federal Housing Finance Agency and the Consumer Financial Protection Bureau to be more transparent about how they plan to use the information the agencies want to collect to build the National Mortgage Database. Earlier this year, the FHFA announced it will begin to collect additional, more specific and personal information on borrowers and loans as part of the National Mortgage Database project the agency launched with the CFPB in 2012. An FHFA announcement in the Federal Register noted that under a “revised system of records,” the database will begin collecting demographic and personal contact info for borrowers and their households, as well as loan-level data on mortgage performance.