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Inside The GSEs

November 23, 2011

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FHFA: OIG Growth At ‘Unprecedented Scale’

The Federal Housing Finance Agency’s Office of Inspector General is attempting to grow the Finance Agency and the OIG itself into a larger-than-necessary entity, and that is a questionable objective given Fannie Mae and Freddie Mac’s “uncertain long-term future,” the FHFA head told lawmakers last week.FHFA Acting Director Edward DeMarco, testifying before the Senate Banking, Housing and Urban Affairs Committee, noted the OIG’s “recurring conclusion” in its recent reports “that the FHFA is understaffed and that it should be more directly engaged day-to-day in the enterprises’ business activities.” That would include independently repeating and validating Fannie and Freddie’s business decisions and calculations. Read More

FHLB Community Support Revision Proposed

The Federal Housing Finance Agency earlier this month issued a proposed rule to require the Federal Home Loan Banks to “monitor and assess the eligibility” of each Bank member for access to long-term advances through compliance with the Community Reinvestment Act and the member’s first-time homebuyer standards.To maintain access to FHLBank long-term credit and community investment products, Bank members are required to submit a community support statement to the FHFA every two years to document their CRA performance and record of lending to first-time homebuyers. Read More

Moody’s: Reduced FHLBank Advances Would Hurt U.S. Banks

A reduction to the Federal Home Loan Bank system’s advance business and investment portfolio would diminish Bank profitability, resulting in a credit negative for U.S. commercial banks, according to a recent report by Moody’s Investors Service. “Limiting access to FHLBank funding would reduce alternative liquidity for U.S. banks,” noted the Moody’s report “A Diminished Federal Home Loan Bank System Would Weaken U.S. Banks.” Read More

FHFA, Executives Defend GSE Bonus Compensation

For an all too brief moment last week there was bipartisanship on Capitol Hill as exasperated Democrats and Republicans took turns questioning and berating the CEOs of Fannie Mae and Freddie Mac and their regulator surrounding the issue of executive compensation at the two GSEs.Federal Housing Finance Agency Acting Director Edward DeMarco was called before the Senate Banking, Housing and Urban Affairs Committee and the House Committee on Oversight and Government Reform to explain some $13 million in performance bonuses to Fannie CEO Michael Williams and Freddie CEO Charles Haldeman and eight other senior executives at the taxpayer-subsidized firms. Read More

HARP 2.0 Holds True to Modest Expectations

Details about the revised Home Affordable Refinance Program revealed few surprises in the seller-servicer bulletins issued by Fannie Mae and Freddie Mac last week with only a modest expansion in program activity expected.Among the noteworthy revisions under HARP 2.0, Fannie and Freddie have eliminated the existing cap on loan-to-value ratio, relaxed representation and warranty stipulations and reduced loan-level price adjustments for most HARP loans. Read More

Experts: Inaction by Congress Delaying GSE Endgame

Unless Congress tackles the future of Fannie Mae, Freddie Mac and the government’s role, if any, in housing finance, expect the Federal Housing Finance Agency to continue to resolutely employ an increasingly imperfect and outdated conservatorship model to the GSEs, say industry observers. Several times while appearing last week before the Senate Banking, Housing and Urban Affairs Committee and the House Committee on Oversight and Government Reform, FHFA Acting Director Edward DeMarco pointedly urged lawmakers… Read More

Congress Declines GSE Loan Limit Hike

Controversy regarding management bonuses at Fannie Mae and Freddie Mac was cited last week as a significant factor for lawmakers’ decision to reinstate temporary higher limits for mortgages insured by the FHA but not for loans backed by the GSEs.The “emergency” high-cost loan conforming loan limits enacted by Congress in 2008 for the GSEs and the FHA expired on Sept. 30, dropping the limit to $625,500 from $729,750. Read More

Freddie Mac Expands Winter Incentives to Move REO Inventory

Freddie Mac is unwrapping a new set of incentives for its HomeSteps properties to both homebuyers and real estate agents this winter in an effort to pick up the sales pace of the GSE’s real-estate owned inventory.Through January 31, 2012, Freddie is offering homebuyers up to 3 percent of the final sales price toward closing costs while selling agents representing the owner-occupant buyer would receive a $1,000 bonus under the incentive plan. Read More

Fannie, Freddie Market Share Rises in 3Q11

Both Fannie Mae and Freddie Mac retained their hefty shares of mortgage-backed securities with something of a bump during the third quarter of 2011, according to a new Inside The GSEs analysis.The GSEs issued a combined $174.8 billion in MBS in the third quarter, a 12.8 percent increase from the second quarter. Compared to the third quarter of 2010, Fannie and Freddie saw an 11.2 percent decrease in MBS issuance during the first nine months of the year. Read More

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