The push for further de-risking Fannie Mae and Freddie Mac, especially by expanded up-front risk sharing by way of private mortgage insurers, is showing no signs of slowing down in 2016.The U.S. Mortgage Insurers said this week that, “The time is right to move forward to expand front-end risk sharing with MI, and USMI members are ready to do more.” The trade group explained that as policymakers are considering proposals to de-risk the GSEs, MIs are strong counterparties and the new capital standards that went into effect in 2015 further enhance reliability. “MI is a first layer of protection against mortgage credit losses and a time-tested method of...
Fannie Mae launched a new version of Fannie Mae Connect on Jan. 29 that includes five seller/servicer reports that were added to the system based on customer feedback. The Loan Delivery Edit Dashboard replaces the Data Quality Dashboard and provides insight into any possible issues at delivery with loan-level detail for fatal, warning and informational edits. About six months worth of data will be provided under this new report. This is the only new report that can be accessed by servicers as well as sellers. The Lender Dashboard gives monthly lender-specific data on things like delivery activity, loan performance and operational activities. It also includes a comparison of profile to peers and to expected loan performance value.
The Federal Housing Finance Agency released guidance in late January on how the Federal Home Loan Banks should classify investment securities. In doing so, it adopted the 2013 Uniform Agreement for FHLBank supervisory purposes. Where FHFA’s rule and guidance and the 2013 Uniform Agreement may conflict, the FHFA said its rules and guidance will apply. The directive states that FHLBanks should use “sound and conservative assumptions” as they pertain to upgrades and it provides classification approach examples and boundaries. For example, when a bank is considering whether to upgrade a classified security to “pass,” it should base its assessment on assumptions that minimize the likelihood that the FHLBank would need to classify the security again in the future.
The former CEO of Fannie Mae is not backing down in his defense that he did nothing wrong in a lawsuit stemming from the Securities and Exchange Commission accusing him of hiding faulty mortgages during the housing crisis. Daniel Mudd is one of three Fannie executives against whom the SEC brought civil fraud charges in 2011. The other two, Thomas Lund, former single family mortgages vice president, and Enrico Dallavechia, a risk officer, settled in September of last year. The court ordered Dallavechia to pay the Treasury $25,000, and Lund was ordered to pay $10,000.But Mudd maintains his innocence and refuses to settle. Last week his lawyer argued in court...
Freddie Default and Work Reporting Changes. Freddie Mac announced last week that servicers are not able to directly change the reporting of a third-party sale to an REO status without submitting a rollback request. Freddie said it also updated its foreclosure sale reporting error codes to more accurately reflect today’s housing market and align it with servicer’s needs. Fannie Ends 2015 with $42.3B in Multifamily Loans. Fannie Mae said that it provided $42.3 billion in financing to the multifamily market in 2015 to support 569,000 units of multifamily housing, of which more than 90 percent of the units financed support affordable or workforce housing. Approximately 99 percent of the multifamily loans Fannie financed last year were securitized...
Fannie Mae and Freddie Mac this week announced the final piece of a multiyear process to relieve seller anxiety about potential buybacks, an independent dispute-resolution process for the most difficult to resolve repurchase demands. As a last resort, the new IDR process may not see that much activity, especially since seller repurchases of government-sponsored enterprise mortgages have been declining sharply. For a buyback dispute to get to a final determination by a third-party arbitrator, it will have to go through three normal steps in the buyback process. The IDR process began...[Includes one data table]
But there is this caveat: the steady growth of the top 50 servicers is in bold contrast to the industry’s top tier. Wells Fargo, Chase and Bank of America all reported shrinkage in their servicing businesses in 2015.
If lenders used the seemingly sensible underwriting standards that were in place in 2001, some 1.2 million more mortgages would have been originated in 2014, according to estimates by the Urban Institute’s Housing Finance Policy Center. Laurie Goodman, director of the HFPC, said lenders have “plenty of room to safely ease credit.” An underwriting index from the HFPC suggests that originators are accepting little risk in terms of borrower or loan characteristics, hindering a recovery in the mortgage market and the broader economy. Lenders note...
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