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Inside The GSEs

March 21, 2014

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Johnson, Crapo Issue Draft Senate GSE Reform Legislation

Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID, finally delivered this week their long-awaited mortgage reform bill that provides for a wind down of Fannie Mae and Freddie Mac and create in their place a new mortgage insurance entity to act as a new federal backstop. The 442-page draft by the Chairman and Ranking Member of the Senate Banking, Housing and Urban Affairs Committee sets a five-year timeline to shut down the two GSEs, while creating the Federal Mortgage Insurance Corp., a utility that securitizes and guarantees mortgages. Read More

Experts: Johnson-Crapo Bill Prospects Mixed in Election Year

Most industry observers expect it will be too tall of an order for Congress to finish the difficult task of enacting GSE reform in 2014 amid the high-stakes mid-term elections and with political control of the Senate up for grabs. However, some experts note that lawmakers, both Democrat and Republican, may become more open to compromise and horse trading closer to the end of the year if it means getting legislation to the President’s desk rather than risk starting over next year with a potentially GOP-controlled 114th Congress. Read More

FHFA Mum on New Scorecard, GSEs Get High Marks for 2013 Goals

With the first quarter of the year nearly over, the Federal Housing Finance Agency has yet to indicate when, or even whether, it will issue its 2014 Conservatorship Scorecard. The agency debuted its scorecard in early March 2012 under then FHFA Acting Director Edward DeMarco as a means to implement in fuller detail the Finance Agency’s “strategic plan” for a post-Fannie Mae and Freddie Mac secondary market. Read More

Report: Fannie, Freddie Liquidation Value Worth Some $200 Million

Fannie Mae and Freddie Mac have a liquidation value – excluding what they’ve already paid to the federal government – potentially well north of $200 billion, according to an independent evaluation conducted on the two GSEs.The report, conducted by Alvarez & Marsal, concluded that if the two GSEs are eventually liquidated, the federal government could reap $170 billion to $234 billion in net proceeds. Fannie Mae and Freddie Mac have a liquidation value – excluding what they’ve already paid to the federal government – potentially well north of $200 billion, according to an independent evaluation conducted on the two GSEs. The report, conducted by Alvarez & Marsal, concluded that if the two GSEs are eventually liquidated, the federal government could reap $170 billion to $234 billion in net proceeds. Read More

Bill to Open FHLBs to Privately Insured CUs Clears Committee

Legislation that would allow privately insured credit unions access to the Federal Home Loan Bank system cleared committee last week and is headed to the House floor for a vote. Introduced in December by Rep. Steve Stivers, R-OH, and Joyce Beatty, D-OH, H.R. 3584, the Capital Access for Small Community Financial Institutions Act of 2013, would amend the Federal Home Loan Bank Act to allow privately insured credit unions to be eligible for FHLBank membership. H.R. 3584 was voted out of the House Financial Services Committee by a vote of 55-0. Read More

Lawmakers, Trade Groups Oppose FHFA Loan Purchase Limits

Lawmakers and industry groups are strongly suggesting that the Federal Housing Finance Agency think twice then forget about its proposal to set GSE conforming purchase limits. The conforming loan limit is currently $417,000 and the high-cost conforming loan limit is $625,500. Last December, the FHFA proposed to establish “loan purchase” limits for Fannie Mae and Freddie Mac which wouldn’t occur until October at the earliest. Read More

Forecast: GSE Dividends a $179 Billion Cash Cow for Treasury

GSE profits are poised to remain the multi-billion dollar gift that keeps on giving to Uncle Sam over the next decade, according to a White House analysis. The analysis, which is part of the Obama administration’s 2015 budget, assumes Fannie Mae and Freddie Mac remain in operation and continue to pay dividends to the government under the current “net worth sweep” arrangement promulgated by the Treasury Department in the summer of 2012. As part of the President’s Fiscal Year 2015 budget request, the White House Office of Management and Budget released projections that the GSEs could return an additional $179.2 billion to the Treasury through 2024. Read More

Enterprise Endnotes

Fannie, Freddie Helped by Special Servicers. While nonbank servicers are under scrutiny from a number of different parties, Fannie Mae and Freddie Mac said special servicers reduce credit losses compared with traditional bank servicers. In its latest earnings report, Freddie said it facilitated the transfer of servicing for $55.6 billion in unpaid principal balance to special servicers in 2013. “Some of these specialty servicers have grown rapidly in the last two years and now service a large share of our loans,” the GSE said. Read More

Fannie, Freddie Refi Deliveries Continue to Decline in February

A continued decline in GSE refinances, in concert with faltering purchase activity midway through the first quarter, helped contribute to an overall drop in the volume of single-family mortgages securitized by Fannie Mae and Freddie Mac in February. Fannie and Freddie issued $44.6 billion in single-family mortgage-backed securities in February, a 5.1 percent decline from January and a steeper 62.0 percent drop for the first two months of 2014 compared to the same period in the previous year. Read More

GSEs Report Dramatic Increase in Total 2013 Buyback Settlements

Fannie Mae and Freddie Mac in 2013 wrapped up most of the massive amount of repurchase demands they made on legacy loans originated before 2008, but the GSEs are looking more closely at new production and, increasingly, servicer performance. Together, Fannie and Freddie reported a total of $37.87 billion in mortgage repurchases and other settlements of buyback claims, which typically means the lender indemnified the GSE for its losses. Read More

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