A proposed bipartisan House bill that would dissolve Fannie Mae and Freddie Mac but retain an explicit government guarantee for certain mortgage-backed securities appears poised to go nowhere fast, despite vocal trade group support. Earlier this month, H.R. 1859, the Housing Finance Reform Act of 2011, was filed amid a splash of headlines by Rep. John Campbell, R-CA, and co-sponsor Rep. Gary Peters, D-MI. The bill would empower the Federal Housing Finance Agency to issue charters establishing privately held and funded housing finance guarantee associations. The associations would be empowered to deal in conventional mortgages only for the purpose of...

Testifying before the House Financial Services Subcommittee on Capital Markets and GSEs this week, the head of the Federal Housing Finance Agency took issue with some of the proposed bills in the legislative package intended to wind down Fannie Mae and Freddie Mac. “I appreciate the effort in these and other bills to begin moving towards a final resolution of the enterprises in conservatorship, but I also recognize the critical and contemporaneous need to provide market participants with greater clarity and assurance about the ultimate role of the government in housing finance beyond the issues surrounding the enterprises,” said...

Recruitment and retention of executives and staff at Fannie Mae and Freddie Mac remain a “principal risk management challenge” to the two GSEs, a problem that is likely only to worsen with time, according to Fannie and Freddie’s regulator. During a speech last week, Federal Housing Finance Agency Acting Director Edward DeMarco cited several recent key executive departures from both GSEs as a concern for both companies. “How does one preserve and conserve the value of a company’s human capital in the face of an uncertain future?” asked DeMarco. “For the duration of the conservatorships, I believe the best way to protect taxpayer interests in...

The Federal Housing Finance Agency has gone to court in order to deal itself into a wrongful termination suit filed last year by a former Fannie Mae executive against the GSE. According to papers filed in the U.S. District Court for the District of Columbia, the FHFA sought a temporary stay of the lawsuit, citing its authority as Fannie’s conservator under the Housing and Economic Recovery Act of 2008. “The conservator’s participation will aid the parties and the court in resolving the issues presented in this action, including the issue of Fannie Mae’s status vis-à-vis the federal government as it relates to the plaintiff’s claims,” said the Finance Agency in...

While federal agencies gather comments on a proposed rule to establish margin and capital requirements for various swap entities, experts say it’s not altogether clear how the proposed rule would apply to the GSEs. Final comments are due June 24 on a rule proposed by five federal agencies that would require swap entities regulated by the agencies to collect minimum amounts of initial margin and variation margin from counterparties to non-cleared swaps and non-cleared security-based swaps. The five agencies that issued the proposed rule last month are the Federal Reserve, the Farm Credit Administration, the Federal Deposit Insurance Corp...

During testimony this week before the Senate Banking, Housing and Urban Affairs Committee, housing trade association representatives warned lawmakers that the current efforts to wind down Fannie Mae and Freddie Mac must not disrupt the already fragile housing and secondary mortgage markets. National Association of Home Builders First Vice Chairman Barry Rutenberg told Senators that Fannie and Freddie should neither be converted to government agencies nor should their functions be completely turned over to the private market. Instead. NAHB supports making major changes in the structure and operations of the secondary mortgage market not unlike...

The head of the Federal Housing Finance Agency urged House Republican sponsors of various bills aimed at reforming Fannie Mae and Freddie Mac to include the government-sponsored enterprises’ regulator as part of the solution to avoid the problem of the two sides working at cross purposes. “FHFA and the enterprises are facing challenging times as Congress considers legislation to restrict, transform and wind down the enterprises,” said Edward DeMarco, acting director of the FHFA, during a hearing in the House Financial Services Subcommittee on Capital Markets, Insurance and GSEs this week. “During this period, I respectfully ask that...

FHA loans in Pennsylvania, New Jersey and Delaware performed better in 2008 and in 2009 than in 2006 and 2007 as credit quality became stronger, according to a new study by the Federal Reserve Bank of Philadelphia. The findings should allay concerns of policymakers in Washington, DC, that FHA defaults have risen during the housing crisis and may put the federal mortgage insurance fund in peril, the study said. Home Mortgage Disclosure Act data, one of the data sources used by Fed analysts, indicate that overall lending patterns in the Third District states have ...

Republican members of the House Financial Services Committee are warming up another set of bills designed to "tie the hands" of Fannie Mae and Freddie Mac. Unveiled last week, the seven bills affecting the operations of the government-sponsored enterprises while they remain in conservatorship will be discussed during a hearing next week in the House Financial Services Subcommittee on Capital Markets and GSEs. "These seven bills were carefully designed to tie the hands of Fannie and Freddie so that they are no longer a drag on American taxpayers, a threat to our economic security and an impediment to private market growth and...