The Federal Housing Finance Agency this week announced 2014 conforming loan limits for Fannie Mae and Freddie Mac that are unchanged from those currently in place, but it’s unclear whether the agency still intends to direct the government-sponsored enterprises to set lower limits. The agency cited statutory requirements of the Housing and Economic Recovery Act of 2008 that require changes in the baseline loan limit, $417,000, based on the movement of house prices. Al-though house prices have risen over the past year, the FHFA said, they still haven’t made up all the decline since the housing market tanked in 2007. In the third quarter of 2013, the FHFA house price index was...
The Federal Housing Finance Agency needs to be more hands-on and engaged with additional resources to best oversee Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks, according to the agency’s inspector general. In its semi-annual report to Congress, the FHFA IG noted “recurring oversight issues that policymakers may want to consider as part of reforming the secondary mortgage market.” “The recent housing crisis has shown...
The annual loan limit announcement from the Federal Housing Finance Agency included mixed news for the non-agency market. The FHFA said both the conforming and high-cost loan limits for the government-sponsored enterprises will be unchanged for 2014. However, a reduction to the maximum loan sizes Fannie Mae and Freddie Mac can purchase is still under consideration. “Further information on potential future changes in the maximum size of loans that Fannie Mae and Freddie Mac guarantee will be ...
The five-year transition toward a non-agency market contemplated in government-sponsored enterprise reform legislation in the Senate is far from guaranteed, according to industry participants. A number of questions have been raised about the timing and the ability of private players to replace the GSEs. “The idea that ‘if you build it, they will come,’ may work in the movies, but you are playing with the nation’s housing-finance system,” James Millstein, chairman and CEO of Millstein & Co., an advisory group ...
Fannie Mae and Freddie Mac are designing a securitization framework that will work for today’s fully-guaranteed residential MBS as well as securities with a partial government guaranty or none at all, according to an update released this week by the Federal Housing Finance Agency. Among the initiatives set for the government-sponsored enterprises by the FHFA is the development of a contractual and disclosure framework (CDF) designed to give MBS investors more clarity and confidence about what they’re buying. Along with the common securitization platform, the CDF project is a major component of the MBS architecture of the future that the GSEs are building. A lot of the CDF work involves...
The fallout from last week’s trigger of the “nuclear option” by Senate Democrats, which is expected to lead to the confirmation of President Obama’s choice to be the new director of the Federal Housing Finance Agency, has analysts worried about the possibility of expanded Home Affordable Refinance Program eligibility. The Senate voted to confirm most executive and judicial nominees by a simple majority vote, and it dramatically improves the prospects of Rep. Mel Watt, D-NC, to replace FHFA Acting Director Edward DeMarco. A career civil servant who has been the chief regulator of the government-sponsored enterprises for the past four years, DeMarco has resisted proposals to expand HARP and broaden the GSE loan-modification options to include principal write-downs. Expanding HARP has been...[Includes one data chart]
Mortgages originated by brokers and correspondents, once a concern for MBS investors, have actually performed better in recent years than retail-originated loans, according to Moody’s Investors Service. The rating service said risks from third-party originations will remain low if lenders continue to put an emphasis on retail-originated mortgages. Default rates on securitized mortgages have decreased significantly in recent years regardless of origination channel. However, Moody’s noted that beginning in 2010, production from third-party originators started performing better than retail mortgages. From 2003 through 2009, third-party originations defaulted...
Although the Federal Housing Finance Agency has said it wants more “parity” in the MBS guaranty fees paid by large and small lenders, observers say the playing field remains uneven. One trade group official, who spoke on the condition his name not be used, said as far as he can see there are still “meaningful differences” in what smaller lenders pay in g-fees compared to their larger competitors. He added...
A rough measure of production profitability, the ratio of production income to origination volume, fell from 179 basis points in the second quarter to just 84 bps in the third. Back in the Wonderland of early 2012, this ratio was 203 bps.
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