The Federal Housing Finance Agency should expect some pushback on an unexpected and perhaps most controversial plan to shrink Fannie Mae’s and Freddie Mac’s multifamily finance operations, according to industry observers. As part of the Finance Agency’s 2013 Conservatorship Scorecard, FHFA Acting Director Edward DeMarco last week called for a 10 percent reduction target in business volume from 2012. This would be achieved through a combination of increased pricing, more limited product offerings and tighter…
Freddie Mac is still owed $1.2 billion from the bankrupt Lehman Brothers and likely will not be reimbursed anytime soon due to the fact that the GSE is an “unsecured” creditor, according to a new report by the Federal Housing Finance Agency’s Office of Inspector General. The report notes that the loan was made in August of 2008, not long before Lehman went bust and Freddie was placed into government conservatorship. The loan was described by Freddie officials as a “Fed Funds” transaction available to Lehman on an overnight basis. However, the limit on such transactions was $250 million, according to the OIG Report.
Freddie Mac’s real estate sales unit is looking to bring in more lending partners to widen the reach of its financing program implemented last year specifically to move the GSE’s real-estate owned properties. Since the company rolled out its Homesteps Financing program during the second half of 2012 in four select states, the new financing option for both owner-occupied and investor purchase of REO properties has yielded promising enough results to prompt expansion, says a Freddie…
Fannie Mae is having internal discussions regarding how it might change the way it holds mortgage seller/servicers responsible for losses when a deficiency is discovered on a delivered loan. A spokesman for Fannie told Inside The GSEs that under one scenario, a lender might take the “credit loss” on a mortgage with Fannie agreeing to keep the loan as opposed to forcing a buyback. A deficiency might include a mistake made during the underwriting process, such as borrower information being incorrectly punched into a computer. “If data were punched in wrong, there might be a pricing change,” said the spokesman.
Despite recent improvements in the 12 Federal Home Loan Banks’ ability to manage their interest rate risk, several of the FHLBanks continue to maintain large mortgage asset portfolios and that poses “ongoing challenges” due to their large portfolios, according to the Federal Housing Finance Agency’s official watch dog. A white paper issued this week by the FHFA’s Office of Inspector General found that seven of the FHLBanks’ mortgage portfolios are greater than 25 percent of their total assets. “FHFA has expressed concern over the fact that certain assets in these portfolios, such as [non-agency] MBS and [agency] MBS, which are classified as ‘non-core’ mission activities, do not materially contribute to the FHLBanks’ housing mission and, over the years, have increased risks within the FHLBank system,” said the OIG white paper.
The “near-term efforts” that the Federal Housing Finance Agency’s 2013 Conservatorship Scorecard take aim at include an update of mortgage insurance master policies and formulating eligibility standards, as well as developing a set of “aligned standards” for force-placed insurance, the FHFA announced last week. The announcement comes a month after the Finance Agency abruptly overruled a plan pushed by Fannie to buy force-placed insurance directly from a number of insurance companies at an estimated 30…
Fannie Mae announced it has replaced the company’s outgoing top finance executive from within. David Benson, 53, currently Fannie’s executive vice president of capital markets, securitization and corporate strategy, will be the GSE’s fourth chief financial officer since the company’s government takeover in September 2008. Benson replaces Susan McFarland, who joined the company as CFO in July 2011. She will step down as soon as Benson assumes the position and will remain employed by Fannie as a senior advisor for a transition period through June 30, 2013, according to a Securities and Exchange Commission filing.
The Treasury Department is on board with a risk-sharing mandate from the Federal Housing Finance Agency that sets a $30 billion goal this year for Fannie Mae and Freddie Mac. That’s the word from FHFA officials who discussed the matter with Inside The GSEs, but who did not want to be identified by name. “Treasury has taken a great interest in these things,” said one FHFA official. “They’re not ignoring what we’re doing.” The Treasury Department did not return telephone calls about the matter.
Outside vendors to Fannie Mae and Freddie Mac are enjoying the “salad” days of contracting – with promises of more work to come now that the GSEs are actively aiding in the creation of a separate but “outside” single platform to issue mortgage-backed securities. According to a recent Securities and Exchange Commission 10-K filing issued by Freddie Mac, the GSE spent $361 million on “professional services” last year, which is jargon for contract workers and outsourced…
House Republicans’ proposed budget for next year would see Fannie Mae and Freddie Mac wound down as part of an effort to “end corporate welfare” in the housing sector. The GOP’s 91-page “Path to Prosperity” proposal for Fiscal Year 2014 gives scant mention to the two GSEs – less than two full paragraphs. House Budget Committee Chairman Paul Ryan, R-WI, the proposal’s author, seeks to “drastically decrease” Fannie’s and Freddie’s market dominance by gradually ending their government guarantees and taxpayer subsidies.
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