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Inside Mortgage Finance

March 15, 2012

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Non-Agency Lending Gains Ground In Expanding Jumbo Market of 2011

Mortgage lenders appeared to have no problem taking up the slack after Fannie Mae and Freddie Mac high-cost loan limits were lowered in the fourth quarter of 2011. Fannie Mae, Freddie Mac and Ginnie Mae financed 36.6 percent of the loans exceeding $417,000 that were originated in the fourth quarter of last year, according to a new Inside Mortgage Finance analysis. That was down from a 42.7 percent agency share of the jumbo market in the previous quarter. The key factor was the reduction in the top Fannie/Freddie loan limit from $729,750 to $625,500, which (Includes two data charts)... Read More

New FHFA Compensation Program Would Kill Fannie, Freddie Executive Bonuses, Cut CEO Pay to $500,000

Fannie Mae and Freddie Mac executives will take home significantly less compensation during 2012, even as staffers at the taxpayer-subsidized companies will be monetarily rewarded for hitting performance goals – though they won’t be called bonuses – under a new plan unveiled late last week by the Federal Housing Finance Agency. The FHFA’s 2012 executive compensation program reduces top executive pay at the government-sponsored enterprises by nearly 75 percent from pre-conservatorship levels, while it totally eliminates bonuses and establishes a “six-figure” pay target for the executive positions... Read More

HUD Tries to Rev Up FHA Refi Program For Underwater Conventional Borrowers

Two White House administrations and Congress have separately tried to launch three FHA programs designed to help various constituencies of distressed homeowners since the housing market began to crash in 2007, and none of them have accomplished much. Still, policymakers keep trying. The Obama administration this week announced a handful of changes to the FHA Short Refinance program in hopes of increasing volume. The program, aimed at borrowers who are current on underwater conventional loans, is also being extended through December 2014. According to the most recent FHA data available, only 2,163... Read More

Details of AG Servicing Settlement Reveal No Big Surprises; Banks Expected to Move Quickly

Industry experts digging through thousands of pages of legal documents associated with the $25 billion foreclosure settlement agreed to by five major servicers mostly found what they expected: a complex package of mixed forms of borrower support that the banks are expected to implement sooner rather than later. The settlements involving Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial and 49 state attorneys general will have to be approved by the U.S. District Court in Washington, DC. Although critics found grounds for complaint about the varying incentives for loan modification and... Read More

Government Dividend Payments Weigh Down GSEs As Freddie Nets Income, Fannie Posts Smaller Losses in 4Q

Dividend payments paid by Fannie Mae and Freddie Mac to the U.S. Treasury for its continued financial support held down the two government-sponsored enterprises during the fourth quarter as Freddie would have otherwise posted a profit, while Fannie narrowed its losses during the final three months of 2011. Freddie actually reported $619 million in net income during the fourth quarter of 2011, compared to the third quarter’s net loss of $4.4 billion, before having to repay $1.7 billion in preferred stock dividends to the government. Under the terms of the GSEs’ purchase agreement, the Treasury is entitled... Read More

CFPB Intensifies Coordination with State AGs; Focus On Servicing, Forced-Place Insurance, Hybrid ARMs

The director of the Consumer Financial Protection Bureau – himself a former state attorney general – is looking to work more closely with state officials. “Quite bluntly, we need your experience, your perspectives and your coordination in a strategic effort to root out fraud and unfairness in the financial marketplace,” said CFPB Director Richard Cordray in a speech to a convention of state AGs. The CFPB is already involved in several working groups that are actively cooperating with state AGs and their staff, one of which has to do with foreclosure scams and another on debt collection. “These... Read More

Fannie Mae’s Cost-Cutting Proposal Puts Major Underwriters of Lender-Placed Insurance at Risk

A Fannie Mae proposal to reduce the cost of lender-placed homeowner insurance might be great news for borrowers but not for insurance companies that underwrite the product, warned Moody’s Investors Service. While Fannie has not disclosed the full details of its cost-reduction proposal, the government-sponsored enterprise plans to place policies directly with insurance companies, rather than accept policies put in place by the mortgage lender. Last week, the GSE issued a “request for proposals” inviting insurance companies to compete for the GSE’s lender-placed business. The request is... Read More

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