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Inside The GSEs

May 16, 2014

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Senate Committee Barely Votes Out GSE Reform Bill, Floor Vote Unlikely

An ambitious, bipartisan mortgage reform bill that would wind down Fannie Mae and Freddie Mac while repurposing the Federal Housing Finance Agency limped out of the Senate Banking, Housing and Urban Affairs Committee. The measure is expected to die waiting for a floor vote that will never occur. The committee voted 13 to 9 to report out a revised version of S. 1217, the Housing Finance Reform and Taxpayer Protection Act. Read More

FHFA Director Watt Overhauls GSE Policy in ‘the Present’

The new director of the Federal Housing Finance Agency wants to set a path for Fannie Mae and Freddie Mac with less emphasis on shrinking the two GSEs and a greater focus on “the present.” In his first major policy speech, FHFA Director Mel Watt told a packed room at the Brookings Institution how he seeks to “reformulate” the agency’s past conservatorship goals for the GSEs. “Our task is to continue to fulfill our statutory mandates, to execute our strategic plan and to manage the present status of Fannie Mae and Freddie Mac,” said Watt. Read More

Mass. AG Hints at Legal Action if FHFA Doesn’t Allow GSE Buybacks

Massachusetts Attorney General Martha Coakley, D, is calling on the Federal Housing Finance Agency to allow the GSEs to participate in a state-sponsored buyback initiative, as well as to allow principal reductions to keep Bay State residents in their homes “or face legal action.” In a letter dispatched this week to FHFA Director Mel Watt, Coakley said her office is reviewing “all legal options” regarding Fannie Mae’s and Freddie Mac’s refusal to comply with an August 2012 state law. Read More

GSE Rep & Warrant Revisions Offer Buyback Alternatives

Lenders selling loans to the GSEs will get buyback relief for mortgages that go through Fannie Mae’s and Freddie Mac’s quality-control review processes, according to a new policy the companies announced this week. The new policy, issued in conjunction with the unveiling of the Federal Housing Finance Agency’s updated strategic plan and conservatorship scorecard, tinkers at the edges of the buyback safe harbor for loans with acceptable payment history. Read More

FHFA Targets REOs with Detroit Neighborhood Stabilization Pilot

The Federal Housing Finance Agency will launch a pilot program in Detroit designed to improve servicing standards and foreclosure prevention options in neighborhoods hardest hit by the foreclosure crisis. FHFA Director Mel Watt, in a speech this week at the Brookings Institution, unveiled the agency’s new Neighborhood Stabilization Initiative, as part of the Finance Agency’s more muscular conservatorship strategic goal to maintain Fannie Mae and Freddie Mac. Read More

FHFA: Private MI Eligibility Standards a Work in Progress

Expect eligibility standards for mortgage insurance firms that rely on the GSEs later this year, according to MI executives’ reading of the long-awaited strategic plan released this week by the Federal Housing Finance Agency. Although the plan didn’t say much about MI eligibility, it does carry the veiled promise that pending standards, including risk-to-capital rules – are forthcoming. “FHFA hasn’t dropped the ball on the issue,” said one MI consultant who has met with the agency over the topic. “They now know that the [GSE reform bill] is dead and they want to make sure they get it right.” Read More

Watt Questions FHLB’s Captive Insurers, Affordable Housing

The Federal Housing Finance Agency, under recently installed Director Mel Watt, will continue to ensure that the 12 Federal Home Loan Banks play their “important role” in providing reliable funding and secondary mortgage market access to member institutions, as well as maintain the Banks’ statutory affordable housing requirements, so said the man himself. Last week, in his first public speech before a financial services group, Watt cautioned FHLBank directors to keep a close watch on captive insurers that are seeking membership in the FHLB system. Read More

Enterprise Endnotes

Fannie: Single Point of Contact Lessens Foreclosure Risks. Offering a single point of contact who is plugged into the case of a distressed borrower greatly lessens the chance of that mortgage reaching foreclosure, according to a new study from Fannie Mae. During a press call with reporters last week, Leslie Peeler of Fannie’s National Servicing Organization noted that the research conducted by the GSE involving five large – but unnamed – mortgage servicers using the SPOC model concluded that homeowners dealing with the same individual were twice as likely to receive and accept a modification. Read More

FHLBank Earnings Decline in First Quarter 2014

Combined net income for the 12 Federal Home Loan Banks fell 18.4 percent to $555 million in the first quarter of 2014, down from $680 million in the fourth quarter and a more modest 4.3 percent decrease compared to the same period last year, according to the Federal Home Loan Bank Office of Finance. The decrease resulted primarily from a decline in non-interest income and an increase in non-interest expense, partially offset by an increase in net interest income, explained the Office of Finance. Read More

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