Of course, there is a way to avoid the zero capital cushion dilemma. Congress can pass legislation to allow the GSEs to build capital or FHFA can act...
Meanwhile, refinance lending rose just 0.9 percent from the first to the second quarter, but still accounted for just over half of new originations during the period.
Ginnie’s big advantage is that it gets all the FHA and VA loans, while the GSEs so far have not gotten much traction in their reduced-downpayment programs.
Who cares about large hedging losses? Not the FHFA, which so far has shown no interest in increasing the allowable amount of capital the two can retain...
Fannie Mae and Freddie Mac reported big declines in mortgage repurchases and their inventories of unresolved buyback requests during the second quarter of 2015, according to a new Inside The GSEs analysis of disclosures filed with the Securities and Exchange Commission. Freddie reported a 19.1 percent drop in repurchases from the first to the second quarter of 2015, while Fannie’s decline was a more modest 3.9 percent. Together, the two GSEs reported $436.3 million in repurchased or indemnified loans during the second quarter, the lowest amount since Fannie, Freddie and other “securitizers” began reporting repurchase activity in early 2012. On a combined basis, Fannie and Freddie reported new lows in pending repurchases ($732.2 million) and disputed buyback requests...
Generally speaking, declining interest rates are welcomed by most mortgage market participants – unless the drop is both precipitous and unexpected, which is exactly what occurred over the past 10 days, thanks to the worldwide stock market carnage. As the weekend approached, the yield on the benchmark 10-year Treasury bond was at 2.17 percent, but earlier in the week – while stocks sold off – the yield fell to as low as 1.90 percent. Fannie Mae and Freddie Mac watchers are now wondering if given the steep (and unexpected) decline in rates, perhaps the two government-controlled mortgage giants will report large hedging losses for the third quarter.
Fannie Mae rolled out HomeReady this week, a revised affordable lending product to replace its MyCommunityMortgage program, which focuses on helping borrowers with low- and moderate-incomes obtain mortgage credit. With lender input, the GSE made a number of changes to make the product more efficient for both lenders and borrowers. Fannie will add it to Desktop Underwriter later this year. HomeReady expects to create business opportunities for lenders serving the changing demographics and the shift in borrower needs. “I think it will definitely give lenders some additional flexibility in being able to qualify moderate income and lower income borrowers that they don’t have today,” said Glen Corso, executive director of Community Mortgage Lenders of America.
The Federal Housing Finance Authoritys’ “duty-to-serve” rule, mandated by the 2008 Housing and Economic Recovery Act, is getting a lot of attention lately from manufactured housing industry leaders who argue that the GSEs aren’t purchasing enough of their loans. “Duty-to-serve” was created to encourage Fannie Mae and Freddie Mac to support underserved markets, especially those that included manufactured housing, along with rural housing and affordable housing preservation. Although it was mandated years ago, a final rule has not been implemented and the FHFA plans to re-propose the rule later this year.MH accounted for just 0.2 percent of Fannie’s and Freddie’s total business this year with the GSEs securitizing $896 million of manufactured housing loans in the first half of 2015, according to data analyzed by Inside The GSEs.
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