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Inside The GSEs

March 1, 2013

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BPC Sparks GSE Reform Chatter, Not Results

This week’s effort by a quartet of former Washington heavyweights to “jump start” the debate over the future of Fannie Mae and Freddie Mac in the form of a new, but familiar, mortgage reform proposal put GSE overhaul back in the headlines. Industry observers say that’s a plus, but it remains to be seen whether it will ultimately affect policy change. The Bipartisan Policy Center, comprised of former Republican and Democrat lawmakers and cabinet officials, issued a plan calling for the phasing out of the GSEs in favor of a new federal entity that explicitly acts as a backstop of last resort after the private sector. Read More

Freddie’s Best 4Q Ends 2012 in the Black

Freddie Mac ended 2012 with its single best quarterly showing since the company was placed into government conservatorship by the Federal Housing Finance Agency at the height of mortgage market implosion 4½ years ago. The GSE late this week posted fourth quarter net income of $4.5 billion. Compared to the third quarter’s earnings of $2.9 billion, profits grew by 55 percent, the company noted in its Securities and Exchange Commission filing. Read More

Fannie’s First Nonperforming Mortgage Auction Coming Soon?

Over the next 10 months upwards of $15 billion in nonperforming residential loans could hit the auction market – and some of that product will come from Fannie Mae and Freddie Mac. Investment bankers and loan sale advisors familiar with the matter told Inside The GSEs that Fannie could come to market with a multi-million dollar package of residential NPLs before the end of March. One trader told IGSEs that Fannie’s announcement was imminent, but at press time no such proclamation had been made. Read More

‘Fee for Service’ Proposal Not Quite Dead

The Federal Housing Finance Agency hasn’t totally abandoned the idea of restructuring how mortgage servicers make a living and may take a second look at its “fee for service” proposal, according to industry executives close to the issue. A year ago, the FHFA shelved its fee for service (FFS) proposal, which would have replaced the current 25 basis point minimum fee with a flat payment of $10 per month for performing loans. This was just… Read More

CA Tops 2012 GSE Production, All States Increase

California continued to be the leading source of new single-family Fannie Mae and Freddie Mac mortgages during 2012, according to a new Inside The GSEs analysis. A total of $296.1 billion of home loans in the Golden State were securitized by the two GSEs during the 12 months ending on Dec. 31, 2012, accounting for 23.1 percent of their total business for the year. That was up 51.9 percent from total California Fannie/Freddie production back in 2011, while the overall GSE market rose 50.1 percent from a year ago. Although fixed-rate mortgages continued to dominate the GSE market throughout 2012, California produced $11.0 billion in adjustable-rate mortgages – 26.5 percent of the national total. ARMs accounted for just 3.2 percent of total GSE volume. Read More

FHLBank Advances Increased During 2012

The advance business for the 12 Federal Home Loan Banks increased by fits and starts throughout 2012 but ended the year ahead on both a quarterly and annual basis, according to preliminary figures released by the Federal Home Loan Bank Office of Finance. Advances increased 3.3 percent to $425.8 billion during the fourth quarter of 2012 while posting a smaller 1.8 percent increase from $418.2 billion a year earlier. “The demand for advances has shown some signs of regional stabilization and certain FHLBank members increased their use of advances,” said the OF. Read More

Fannie Continues Trimming Due Diligence Vendors

Although the GSEs ended 2012 with $20.11 billion of pending and disputed buybacks on their books, the halcyon days of loan repurchase disputes may be behind the two, causing both Fannie Mae and Freddie Mac to reconsider their employment of outside due diligence vendors. According to executives who work for these vendors and serve as consultants to the GSEs, over the past several months Fannie Mae has slashed contracts with at least two outside firms… Read More

Industry ‘Vigilant’ to Halt Congressional G-Fee Hikes

The mortgage industry remains on guard and is fully prepared to rebuff further attempts by lawmakers to squeeze Fannie Mae and Freddie Mac guaranty fee revenue to fund non-government-sponsored enterprise related pet projects, experts say. Congress’ passage in early 2012 of a payroll tax cut extension bill set a dangerous precedent and emboldened lawmakers to look to the GSEs as a piggy-bank by mandating an increase and using the funds to offset the costs of other programs, according to Robert Zimmer, head of external affairs at the Community Mortgage Lenders of America. “I’m shocked that I’m not hearing anything right now on diverting g-fees to other parts of the federal budget,” said Zimmer. “I think there has been some hardening in town that this is a bad idea but when [Congress is] desperate for money, anything can happen.” Read More

Higher GSE Net Worth Mininums a Matter of Time?

Many mortgage bankers are bracing for a slowdown in originations this year, but they have an even larger concern on their hands: whether Fannie Mae and Freddie Mac will hike their net worth minimum currently set at $2.5 million. The GSEs and their regulator have said little on the subject, but there is rampant speculation that it’s only a matter of time before higher net worth minimums are introduced – it’s just a matter of when,… Read More

Rep. Waters: Why Did FHFA Shutter Force-Placed Plan?

The top Democrat of the House Financial Services Committee has “concerns” and wants answers from Fannie Mae’s regulator as to why it pulled the plug on the GSE’s plans to lower the cost of force-placed insurance. Rep. Maxine Waters, D-CA, the committee’s ranking member, dispatched a letter this week to Federal Housing Finance Agency Acting Director Edward DeMarco seeking an explanation as to why the Finance Agency abruptly shut down a plan pushed by Fannie… Read More

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