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Inside The GSEs

September 13, 2013

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Senate Takes Initiative on GSE Reform

After a long period of inertia, Senate leadership from both sides of the aisle have seized the initiative in the effort to reform mortgage finance with the first of a series of hearings this week aimed at crafting a comprehensive, bipartisan bill by year’s end. Meanwhile, a largely partisan House Republican bill that would seal the fate of Fannie Mae and Freddie Mac has been shut out of the floor vote schedule this fall amid significant opposition from industry trade groups.Last month, at the direction of Senate Banking, Housing and Urban Affairs Committee Chairman Tim Johnson, D-SD, and Ranking Member Mike Crapo, R-ID, senior staffers met with various industry “stakeholders” to get field reform input in advance of the hearings. Read More

Court Upholds FHFA’s Challenge Over Vacant Property Ordinance

Vacant foreclosed properties with mortgages backed by Fannie Mae and Freddie Mac are not subject to the City of Chicago’s registration ordinance, according to a recent ruling from the U.S. District Court for the Northern District of Illinois. The ordinance, which took effect in November 2011, requires mortgage lenders to register vacant properties with the city and pay a $500 registration fee. The ordinance also directs lenders to secure and maintain vacant buildings in accordance with city requirements. Read More

Fannie Ready to Roll Out Risk-Sharing MBS

Fannie Mae is starting to market a risk-sharing mortgage-backed security that would require investors to bear some of the financial risk if mortgages default. The company, which is reportedly getting ready to launch a “road show” to debut its new risk-sharing mortgage bond within the next two weeks, is following up on Freddie Mac’s $500 million Structured Agency Credit Risk bond, which the GSE priced in July. The Federal Housing Finance Agency’s Strategic Plan calls for both Freddie and Fannie to establish loss-sharing arrangements, in which private investors bear some or all of the credit risk. Read More

Watt’s FHFA Confirmation Chances Dwindle

One week after Congress has taken up its fall agenda following a five-week summer recess, it remains to be seen when or even whether the Senate will call for a vote on President Obama’s nominee to head the Federal Housing Finance Agency. In July, Rep. Mel Watt’s nomination cleared the Senate Banking, Housing and Urban Affairs Committee along a straight party-line vote, with some key Republicans vowing to block the North Carolina Democrat’s confirmation. While Senate Majority Leader Harry Reid, D-NV, could have moved Watt’s nomination to the floor for a vote before members left for recess on Aug. 2, he did not. The passage of time and confluence of world events have made Watt’s already long odds for confirmation even less likely, according to Compass Point Research & Trading’s Isaac Boltansky. Read More

FHLB Chicago Issues New MPF Government Product

The Federal Home Loan Bank of Chicago will issue mortgage-backed securities guaranteed by Ginnie Mae and backed by mortgages originated by member financial institutions, the two entities announced jointly this week. The new conduit product, called the MPF Government MBS, is an offshoot of the Chicago Bank’s Mortgage Partnership Finance program. The new product is intended to provide smaller mortgage lenders that lack direct access to the secondary mortgage market another option for their home-buying customers. Lenders will be able to choose whether to retain or release servicing on the government loans they originate with a reliable channel for selling their loans, according to FHLBank of Chicago President Matt Feldman. Read More

OIG: GSEs Waiting Too Long to Write Off Loans

The official watchdog of Fannie Mae’s and Freddie Mac’s regulator wants to know what’s the holdup with the GSEs’ implementation of new accounting practices to write off overdue single-family residential mortgages. Last month, the Federal Housing Finance Agency’s Office of Inspector General dispatched a “management alert” to the FHFA seeking answers as to why an advisory bulletin directing the GSEs to classify any single-family residence loan delinquent for 180 days or more as a “loss” has yet to be implemented. OIG issued the bulletin in April 2012, but the FHFA has given Fannie and Freddie until Jan. 1, 2015, to fully implement it. Read More

Impact of GSE Lower Loan Limits Modest

A widely-expected reduction in conforming loan limits in 2014 by the Federal Housing Finance Agency will likely be confined to a handful of states, but that’s not stopping industry stakeholders and advocates from worrying about the implications of tighter credit for middle-income homebuyers in high-priced markets. Currently, Fannie Mae and Freddie Mac loans are capped at $625,500 in high-cost areas and it’s been stuck at $417,000 for everywhere since 2006. According to an analysis by Barclays Capital, the FHFA currently has the authority absent additional legislation to lower the base GSE conforming loan limit under the Housing and Economic Recovery Act of 2008. Lowering the conforming limit would in turn reduce the high-cost limit. Read More

Nonbanks Grab Sizeable Hold of GSE MBS Business

Fannie Mae and Freddie Mac saw their combined business in single-family mortgage-backed securities decline during the first six months of 2013 with nonbank lenders making up well over one-quarter of their business, according to an Inside The GSEs analysis. The two GSEs pumped out some $693.6 billion in new single-family MBS during the first and second quarters. With a 28.5 percent market share, nonbank sellers accounted for $197.4 billion of Fannie and Freddie loans sold during the January through June period.Nonbanks as a whole made the most of the retail channel (55.1 percent) during the six-month period, which was generally comparable to all GSE sellers (60.2 percent), while the gap widened in the correspondent channel between nonbanks (19.9 percent) and all GSE sellers (29.0 percent). Read More

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