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Inside The GSEs

March 9, 2012

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Freddie Nets Income, Fannie Loses in 4Q

The two sibling GSEs experienced a divergent earnings period during the fourth quarter of 2011, as Freddie Mac posted a quarterly gain, on paper anyway, while Fannie Mae announced losses, albeit at a slower pace, in a year that drove both companies even deeper into the red.Freddie posted net income of $619 million during the three month period ending Dec. 31, 2011, compared to a net loss of $4.4 billion during the third quarter. For the full year, the company reported a net loss of $5.3 billion, compared to a net loss of $14.0 billion for the full-year 2010. Read More

Industry Deflects New Congress G-Fee Hike

A legislative effort to extend Fannie Mae and Freddie Mac’s guarantee fee hike beyond 2021 to pay for the Gulf Coast cleanup was averted this week following some behind-the-scenes lobbying, but industry insiders remain wary of future attempts by lawmakers to milk the GSEs for cash. An amendment to the Restore the Gulf Coast Act of 2011 would have used revenue generated from GSE g-fees to help pay for the continued clean up from the BP Gulf Coast oil spill. Sponsored by Sens. Mary Landrieu, D-LA, and Richard Shelby, R-AL, the bill would establish a trust fund paid for partly by fines levied against the oil company. Read More

FHLBank Advances Continued to Decline in 2011

The advance business for the 12 Federal Home Loan Banks continued to shrink again in 2011, dropping 12.6 percent from the previous year to $418.2 billion, according to preliminary figures released by the FHLBank Office of Finance. However, advances did increase slightly from the third to the fourth quarter. The overall 2011 decline came through “continued low demand by member institutions resulting from high levels of liquidity in the market, as well as high levels of deposits and low loan demand experienced at member institutions,” the OF explained. Read More

FHFA Announces Available REO Properties For Sale

The Federal Housing Finance Agency is proceeding with its initiative to dispose of GSE and government-held real estate-owned properties even as some within the industry question whether such a wide-spread REO program is necessary. Last week, the FHFA announced the first pilot transaction under its REO initiative, which is targeted to the country’s “hardest-hit” metropolitan areas, including Atlanta, Chicago, Las Vegas, Phoenix and parts of Florida. Read More

Fannie Now to Oversee ‘Forced-Placed’ Insurance

Fannie Mae announced this week it will soon implement changes to its Lender-Placed Insurance requirements by overseeing the “forced-placed” policies itself instead of allowing banks and other financial institutions to do so. In a departure from current practices, Fannie said it would solicit proposals from insurance companies for its LPI business in an effort to “significantly reduce costs” to homeowners, taxpayers and to the GSE itself. Read More

Fannie Says It Cut Off BofA Over Buyback Dispute

Fannie Mae said last week that it acted first to end its existing mortgage loan delivery contract with Bank of America because of delays in resolving repurchase issues. The GSE’s account in its quarterly filing with the Securities and Exchange Commission is at odds with BofA’s announcement two weeks ago where the bank announced in its own SEC filing that it has stopped selling to Fannie due to “increasingly inconsistent” repurchase requests by the enterprise compared to past practice. Read More

Official: FHFA Remains Committed To Servicer Pay Rule Changes

A Federal Housing Finance Agency official said this week that the FHFA’s proposed overhaul of servicer compensation is an “integral part” of the agency’s plan for a post-GSE mortgage market. FHFA Special Advisor Mario Ugoletti told Inside The GSEs this week that the Finance Agency’s servicing compensation reform is “not dead or on the back burner” but the timing of the initiative's roll out remains “uncertain.” … Read More

GSE Bonus-Killing STOCK Act in Legislative Limbo

A month after Congress voted to curtail bonus payments conferred to Fannie Mae and Freddie Mac executives, lawmakers have yet to close the deal and send a final bill to the president’s desk for signature. In early February, both the House and Senate overwhelmingly approved the Stop Trading on Congressional Knowledge Act of 2012, which would bar members of Congress and congressional staff from using non-public, inside information for private gain. While the House version of the STOCK Act is weaker than the Senate’s, both versions retained an amendment sponsored by Sens. John McCain, R-AZ and Jay Rockefeller, D-WV, to prohibit Fannie and Freddie executives from receiving multi-million dollar bonuses while the GSEs remain in federal conservatorship. Read More

NAHB Proposes Expanded Role for FHLBanks

The 12 Federal Home Loan Banks would see an expanded and enhanced role in a post-Fannie/Freddie mortgage market as envisioned by the National Association of Home Builders. The NAHB last week issued its blueprint for housing finance reform that would transition Fannie Mae and Freddie Mac to a new mortgage securitization system for single-family and multifamily conventional mortgages. Read More

FHFA Unveils New Plan to Reduce Fannie, Freddie Executive Pay

Compensation for top executives at both Fannie Mae and Freddie Mac will be cut by nearly three-fourths with no bonuses paid out in 2012 under a new plan rolled out by the Federal Housing Finance Agency late this week. The FHFA’s 2012 Executive Compensation Program reduces top executive pay by nearly 75 percent since conservatorship, eliminates bonuses and sets a target for new CEO pay at $500,000. … Read More

OIG Rips FHFA for Lax Freddie Servicer Oversight

The Federal Housing Finance Agency Office of Inspector General took the FHFA to task this week for what the OIG considers the agency’s lax supervision of Freddie Mac’s relationship with its servicers. Specifically, the FHFA has not clearly defined its role regarding servicers, sufficiently coordinated with other federal banking agencies about risks and supervisory concerns with individual servicers, or timely addressed emerging risks presented by mortgage servicing contractors. Read More

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