Cart

Inside The GSEs

September 14, 2018

View Archived Issues

Purchase-Mortgage Business Up Again, Plus Unlikely Refi Jump

Single-family mortgage business at Fannie Mae and Freddie Mac grew substantially from July to August, according to an Inside The GSEs analysis of mortgage-backed securities data. The two firms issued $79.34 billion of single-family MBS last month, a 20.5 percent increase from July’s volume. That brought year-to-date volume to $523.40 billion, down 6.1 percent from the first eight months of 2017. [Includes two data charts.] Read More

Hensarling’s Bipartisan Bill Takes Another Stab at GSE Reform

Rep. Jeb Hensarling, R-TX, released his much-anticipated proposal, the Bipartisan Housing Finance Reform Act of 2018, for housing-finance reform last week but industry observers say it has little or no chance of making any headway. In fact, Hensarling said if reform stalls in this Congress or the next, he would advocate for the administration to tackle reform when a new Federal Housing Finance Agency director is named in January. He released the “discussion draft” the day of a House Financial Services Committee hearing on Sept. 6, the 10-year anniversary of the conservatorship. The bill would transition to a system where qualified mortgages backed by government-approved guarantors with regulated capital can access the... Read More

Under the Hensarling Bill, the GSE AU Systems Would be Transferred

If the Bipartisan Housing Finance Reform Act of 2018 becomes law, the common securitization platform of Fannie Mae and Freddie Mac would be transferred to a nonprofit “exchange” along with their automated underwriting systems, Desktop Underwriter and Loan Prospector, respectively. Among other things, the bill – introduced by Rep. Jeb Hensarling, -TX, chairman of the House Financial Services Committee, would require that the AU systems “be made available for public use.”... Read More

FHFA Issues Proposed Rule on UMBS Focusing on Alignment

Fannie Mae and Freddie Mac should standardize their programs and policies that impact cash flows in preparation for the new Uniform Mortgage Backed Security, according to a proposed rule issued by the Federal Housing Finance Agency this week. The proposed rule incorporates recent input from the Securities Industry and Financial Markets Association. The regulator noted that standardizing policies that affect cash flows to investors in to-be-announced MBS will benefit market participants and homeowners. “By instituting regulations that further standardize those products, the proposed rule and the UMBS would reduce complexity and the cost of analytics set to be introduced in the second quarter of 2019,” said the FHFA, adding that it will also help encourage a broader investor base. Read More

Leadership Structure Changes for Both GSEs As CEOs Plan Departure

Freddie Mac CEO Donald Layton will retire in the second half of next year, the GSE announced last week. This comes six weeks after Fannie CEO Timothy Mayopoulos announced his departure from the GSE. While Layton plans to be around through midyear 2019, Mayopoulos plans to leave his post before 2018 ends. This leaves both GSEs looking for replacements. Freddie’s board has started its succession plan to consider internal and external candidates. The GSE named David Brickman, executive vice president and head of Freddie’s multifamily business as a possibility. Read More

Fannie’s Northern VA Consolidation Unnecessary, Says OIG

The Federal Housing Finance Agency should not have approved Fannie Mae’s July request to sell its three buildings in Northern Virginia and consolidate to newly constructed office space, according to a new management alert from the FHFA Office of Inspector General.The report, published late last week, questioned the decision to allow Fannie to consolidate and relocate to newly leased space, built out to specifications. The IG noted that Fannie failed to demonstrate that the move would be in the best interest of taxpayers. In fact, the report said four officials in the FHFA’s Division of Conservatorship told the IG that Fannie faced no “action forcing” event that required it... Read More

Former FHFA Director Stunned at Length of Conservatorships

James Lockhart, the Federal Housing Finance Agency director who headed the regulator when the government takeover of Fannie Mae and Freddie Mac occurred in September 2008, told Inside The GSEs he never dreamed the conservatorships would last a decade. “We thought it might go a couple of years and Congress would act,” he said. Lockhart added philosophically: “Perhaps, the conservatorships worked too well.” Lockhart, who eventually became a vice chairman of WL Ross & Co., and played a key role in that firm’s mortgage-related investments, said he’s happy that the two are now steadily profitable. But he... Read More

Somber House Hearing on 10th Anniversary of Conservatorship

The bulk of the House Financial Services Committee hearing last week focused on the lack of reform and how the GSEs’ growing role in the housing market makes them more of a liability to taxpayers today than they were before the housing crisis. The hearing was held on September 6, the 10-year anniversary of the conservatorship that has lasted longer than anyone expected. Retiring chairman of the committee Rep. Jeb Hensarling, R-TX, called the date the “not so happy anniversary” and said while reform is critical, it’s proven illusive.Hensarling introduced a bipartisan bill during the hearing, the Bipartisan Housing Finance Reform Act of 2018, but implied it likely won’t go anywhere in this Congress. Read More

Freddie Helps Expedite Transition to One Market with Exchange Path

Freddie Mac is developing an exchange path in preparation for the single security initiative that will combine the Freddie and Fannie Mae markets into one Uniform Mortgage-Backed Security. To make that transition easier for the June 2019 single security launch, Freddie teamed up with Tradeweb to create a simple, standardized transaction entry point to submit valid legacy MBS for exchange. The platform will also accept float compensation and choose a settlement date. Investors will be able to request exchanges through their order management systems integration with Tradeweb or enter them directly into Tradeweb. The platform will provide a direct-to-Freddie path for... Read More

Trade Groups Pen Letter to Congress, Admin. Urging Reform

More than two dozen trade groups signed an open letter to the administration and Congress urging them to preserve what works in the current housing-finance system and get more private capital back into the market. “There is a pressing need to ensure that the existing progress is cemented rather than cast aside,” said the groups, which include the Mortgage Bankers Association, the Community Home Lenders Association, the Community Mortgage Lenders of America, Independent Bankers of America and the Credit Union National Association. The groups want to make sure that any effort to change the role the GSEs play doesn’t result in market disruptions that reduce access to credit in the single-family and multifamily space. Read More

Alternatives Explored for Expiring GSE Patch in Qualified Mortgages

Dropping the debt-to-income cap for qualified mortgages is one way to level the playing field between the GSEs and the private market, according to the Urban Institute. With the somewhat controversial GSE patch in qualified mortgages expiring in January 2021, talk has turned to coming up with alternatives for retaining or replacing this special treatment given to Fannie Mae and Freddie Mac loans. The GSE patch allows Fannie and Freddie to purchase loans with debt-to-income ratios exceeding 43 percent as long as they meet other QM rule requirements set forth by the Consumer Financial Protection Bureau. Read More

GSE Briefs

Fannie’s Latest NPL Sale. Fannie Mae announced its latest sale of non-performing loans this week, including the company’s 14th Community Impact Pool. The five larger pools include approximately 10,700 loans totaling $1.95 billion in unpaid principal balance. The Community Impact Pool contains approximately 80 loans totaling $28.7 million in UPB. The Community Impact Pool consists of loans geographically located in New York City. Bids are due on the five larger pools on October 4 and on the Community Impact Pool on October 23. Investors Unite on 10-Year Conservatorship Anniversary. The GSE shareholders group said 10 years later, the GSEs remain wards of the state. “After... Read More

Latest Imf News

More Imf News

Featured Data

More Featured Data

Featured Reports

More Latest Reports

Featured Poll

As homeowner equity continues to build, more and more lenders are launching home equity lending products. Are you thinking of joining this market?

View Results