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Inside The GSEs

June 24, 2011

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OIG Slams FHFA’s Complaint Reporting

The Federal Housing Finance Agency is working on the double to come up with written policies and procedures for its consumer complaints process, as well as a thorough assessment of the staff and resources needed to implement the new functions by the end of the year following a very public rebuke by the Finance Agency’s watchdog.In a report released this week, the Office of the Inspector General of the FHFA said its audit of Freddie Mac and Fannie Mae’s regulator found the Finance Agency’s oversight of the receipt, processing and disposition of consumer complaints to be a “significant deficiency” in its internal controls. Read More

FHFA Cites FHLB Governance ‘Shortcomings’

While overall governance of the 12 Federal Home Loan Banks passed muster in 2010, the Federal Housing Finance Agency’s annual examination identified a number of “shortcomings” that should be addressed during the coming year.“In 2010, FHFA has a concern about the level of experience and expertise of certain executives and executive turnover at some FHLBanks,” said the FHFA’s annual report to Congress. “While board and management oversight generally improved during 2010 at most FHLBanks, there remains room for improvement at some FHLBanks.” Read More

FHFA: Non-Agency MBS Still A Challenge for FHLBanks

Non-agency mortgage-backed securities continue to affect the financial performance of several Federal Home Loan Banks, according to the Federal Housing Finance Agency’s annual report to Congress.In aggregate, the FHLBanks hold 1,622 non-agency MBS with a par value of $46.9 billion. Although all of the non-agency MBS had triple-A ratings when purchased, the portfolios are generally of poor quality credit, said the FHFA. Read More

Fannie Names New Outside CFO

Fannie Mae made a splash this week with the announcement that it has recruited a Capital One executive to be the company’s new chief financial officer — the GSE’s third CFO since its government takeover in September 2008.Fannie named Susan McFarland executive vice president and CFO to replace David Johnson, who resigned at the end of last year. Read More

FHFA Rule: GSE Shareholders ‘Lowest Priority’

Fannie Mae and Freddie Mac shareholders would fall to the very back of the line of creditors under the terms of a new rule submitted to the Federal Register by the Federal Housing Finance Agency.The FHFA’s final rule follows up on its proposed rule released last year to codify the Finance Agency’s terms of conservatorship and receivership operations for Fannie, Freddie and the Federal Home Loan Banks. Read More

House Dem Files Bill to Investigate GSEs

Fannie Mae and Freddie Mac’s management and decision making authority, both present and past, would be subject to special Congressional scrutiny under a bill filed by Rep. Marcy Kaptur, D-OH, earlier this month.The bill, H.R. 2093, would establish the Fannie Mae and Freddie Mac Investigative Commission, composed of eight congressional lawmakers, to examine the practice, decisions and policies of the two GSEs that affect the financial stability of the mortgage firms. Read More

Covered Bond Bill Moves To House Floor

A bill that would create a legislative framework for a covered bond market in the U.S., as well as a potential competitor for the Federal Home Loan Bank system, cleared committee this week following some fine-tuning by its sponsors and is headed to the full House for consideration.The House Financial Services Committee voted 44-7 in favor of H.R. 940, the U.S. Covered Bond Act of 2011. Read More

GSE Debt Issuance Drops Overall in 1Q11

Debt issuance for Fannie Mae, Freddie Mac and the Federal Home Loan Banks declined during the first three months of 2011, while Freddie recorded an increase in new debt in the first quarter.The GSEs collectively issued $707.6 billion in new debt during the first quarter, a 9.9 percent decline from the previous quarter, while total GSE debt outstanding at $2.222 trillion declined 1.8 percent from the previous quarter. Read More

Fannie Expands Incentives to Move REOs

Fannie Mae is sweetening the incentives for its HomePath properties to both homebuyers and real estate agents in an effort to hasten the sales pace of the GSE’s real-estate owned inventory.Through Oct. 31, Fannie is offering homebuyers up to 3.5 percent of the final sales price to put toward closing costs while selling agents representing the owner-occupant buyer would receive a $1,200 bonus under the incentive plan. Read More

ASF Calls for ‘Equal Terms’ With GSEs on QRM

The “very conservative terms” of the “qualified residential mortgage” definition proposed by federal regulators, taken together with the risk-retention requirements, the premium capture rule and other provisions, will provide a “significant and undue competitive advantage” to the GSEs over private-market mortgage-backed securities participants, according to the American Securitization Forum.In comments submitted to regulators on the proposed rule earlier this month, the ASF said that securities guaranteed by the GSEs will be able to be securitized free from the risk-retention requirements. This would result in the non-QRM loans that back such securities having lower costs to borrowers and more attractive terms than similar loans offered by private-market participants. Read More

Fannie Issues New ‘Imminent Default’ Rule

Fannie Mae is loosening its loan modification requirements regarding “imminent default” by changing its requirements for evaluating a borrower’s financial condition for consideration of a loan modification.According to Announcement SVC-2011-06, the GSE’s revised policy would make the Home Affordable Modification Program less stringent by including non-HAMP modification evaluations for borrowers who are either current or in default but less than 60 days delinquent. Read More

Frustrated HAMP Homeowners Lawsuit Dismissed

A federal judge in Washington dismissed a class action lawsuit over the Home Affordable Modification Program this week, ruling that a group of New York homeowners lacked the standing to sue their mortgage servicer, as well as Fannie Mae and the Treasury Department. Read More

Former TBW, Colonial Executives Get Jail For Defrauding Freddie

Four more executives have been handed down jail terms for their role in a $2.9 billion fraud scheme that defrauded Freddie Mac, among others, and contributed to the failures of Colonial Bank and Taylor, Bean & Whitaker. Read More

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