In response to a letter from Sen. Chuck Grassley, R-IA, that questioned some of the decisions surrounding the Preferred Stock Purchase Agreements, the Treasury fired back a response defending the PSPAs. The Treasury’s letter began by addressing “misconceptions” that Treasury and taxpayers have been repaid for the commitment of public funds to Fannie Mae and Freddie Mac. “Treasury did not make an ordinary loan to the enterprises; instead, it committed and continues to make available, hundreds of billions of dollars of capital, an amount that far exceeds the $187.5 billion in funding drawn by the enterprises to date,” the letter said.
The GSEs have provided multifamily financing for more than two decades, but their dwindling role has some worried that it has adverse effects on the underserved and low-income segment of the multifamily market. Although the Federal Housing Finance Agency said it is working to slow the decline, an April brief by the Urban Institute pointed out that with the increasing demand and costs of renting, the agency may need to do more in maintaining or increasing the GSE role in multifamily. In the past 25 years, the dollar volume of GSE multifamily financing has grown from $4.5 billion in 1990 to more than $57 billion at the end of 2014. But recent declines show that Fannie’s and Freddie’s
Treasury Counselor Michael Stegman said despite the inability to recapitalize, Fannie Mae and Freddie Mac, as well as the housing market in general, are better off under the current conservatorship plan. He pointed to lower bowering costs as one of the advantages. The Preferred Stock Purchase Agreement, in which the Treasury gets the bulk of the GSEs profits, has been a source of frustration for some. However, Stegman, speaking at a Financial Services Roundtable event in Washington last week, said he wanted to “correct the record.” “The dividends that Treasury receives are not a repayment for the capital support and backstop that Treasury has provided,” he said. “The fact is that the PSPAs provide tremendous value to the GSEs. Market participants continue to have confidence...
The House passed a bill last week that would allow privately-insured credit unions to apply for membership in the Federal Home Loan Bank System. H.R. 299, the Capital Access for Small Community Financial Institutions Act of 2015, was introduced by Reps. Joyce Beatty, D-OH, and Steve Stivers, R-OH, in January. Credit unions did not have federal insurance until 1970, and Stivers said that many small institutions decided to remain privately-insured and state regulated. While the number is small compared to the more than 6,000 credit unions in the country, the approximately 130 privately-insured credit unions spread out in nine states don’t meet the FHLB System guidelines. Stivers said that a “legislative oversight” has blocked FHLB membership for this small...
Freddie Mac Single-Family Update. On April 15, Freddie updated several servicing requirements, adding a new modification option in Workout Prospector for modifying Rural Housing Service mortgages. Also, in Bulletin 2015-5, Freddie announced a new credit-risk transfer initiative that involves the GSE purchasing mortgages from certain seller/servicers and transferring them to one or more senior subordinate trusts.Fannie Mae Closes First Multifamily Green Building Certification Price Break Loan. Fannie announced that the first loan to close with its Multifamily Green Building Certification Pricing Break is a 50-unit rental property in NJ. The April 21 announcement stated that the Station House was acquired by Prudential Real Estate Investors and has a U.S. Green Building Council LEED certification. As a result of the reduction in...
The Federal Housing Finance Agency late last week directed Fannie Mae and Freddie Mac to stop charging the 25 basis point “adverse market” fee assessed on all loans since the financial crises, but most lower-risk loans won’t get any reduction in loan-level pricing adjustments. As expected, the FHFA did not make any changes to the “base” guaranty fees charged by the two government-sponsored enterprises. Current fees, on average, are at an “appropriate” level. “We are going to monitor this on an ongoing or quarterly basis and we’ll adjust based on market conditions,” said Sandra Thompson, FHFA’s deputy director. The regulator instructed...
The Federal Housing Finance Agency late last week announced a few changes to new private mortgage insurer eligibility rules that were first proposed in July 2014, and the private MI industry appears mostly ready for them. “The new PMIERs are really designed to promote the counterparty strength of private mortgage insurers. We feel like this will strengthen the industry,” said Gina Haly, Freddie Mac’s vice president in the mortgage insurance and risk transfer counterparty credit division. During the financial crisis, some MIs couldn’t fully pay...
With private mortgage insurance eligibility requirements now a done deal, the MI industry may have a new headache on its hands: concerns from Fannie Mae and Freddie Mac – and their regulator – about the discounting of lender-paid MI policies. Industry officials familiar with the LPMI issue have been telling Inside Mortgage Finance for weeks that the government-sponsored enterprises are taking a close look at the product. Although the Federal Housing Finance Agency declined to discuss LPMI, a spokesman for Freddie Mac offered...
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