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Inside The GSEs

March 27, 2015

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GSE Buyback Activity Focused On Newer, Performing Loans

Fannie Mae and Freddie Mac continue to turn their focus in loan-quality reviews to more freshly originated mortgages, the vast majority of which are current. A new Inside The GSEs analysis of disclosures made by the GSEs to the Securities and Exchange Commission shows that most of the lender repurchases made in 2014 continued to be associated with older, pre-crisis loans. But the biggest volume of pending and unresolved buyback demands were tied to loans securitized in 2013 and 2014. Sellers repurchased or provided indemnification on some $4.046 billion of mortgages during 2014, the disclosures reveal. They were split roughly evenly between Freddie ($2.031 billion) and Fannie ($2.014 billion)...[includes exclusive chart] Read More

House Democrats Reintroduce Mortgage Finance Reform Bill

A bill to replace the Federal Housing Finance Agency with a beefed up Ginnie Mae and set Fannie Mae and Freddie Mac on a path to liquidation has been reintroduced in the House. The Partnership to Strengthen Homeownership Act was first introduced in July 2014 to wind down Fannie and Freddie over a five-year timeframe. Reps. John Delaney, D-MD, John Carney, D-DE, and Jim Himes, D-CT, are the lead sponsors of the measure. They said the bill takes the best ideas from both parties to create a housing finance system that combines the strengths of the private and public sectors.The congressmen agreed that things need to be done differently. Read More

FHFA Remains Quiet on When it Will Approve Ocwen’s Sale of GSE MSR

Over the past month, Ocwen Financial has unveiled agreements to sell roughly $89.4 billion of Fannie Mae and Freddie Mac servicing rights – transactions that require approval from not only the GSEs, but their regulator/conservator, the Federal Housing Finance Agency.To date, the FHFA has made no public statements regarding Ocwen’s sales and isn’t likely to until it actually makes an approval or denial.Based on the transactions that have been announced since Feb. 23, there is little to indicate that the deals won’t pass regulatory muster. The receivables being off-loaded by the troubled servicer are considered to be pristine in nature and with little in the way of delinquencies. Read More

Senators Tell FHFA CSP Needs Fine Tuning, Involvement of Non-GSEs

Members of the Senate Committee on Banking, Housing and Urban Development cited a lack of flexibility to accommodate multiple types of users, a biased board of directors, and an unacceptable timeframe as their primary concerns about the common securitization platform. The bipartisan group of eight senators, led by Republican Chairman Bob Corker (TN), articulated their concerns surrounding the development and usage of the planned CSP in a letter addressed to Federal Housing Finance Agency Director Mel Watt. Primarily, they want to ensure that the CSP is designed to be just as usable and beneficial to the private sector as it is for Fannie Mae and Freddie Mac in order to avoid “the duopolistic tendencies of the past.” Read More

FHFA Weighing HARP Extension, Won’t Rule Out Program Changes

It’s still unclear whether the Home Affordable Refinance Program, set to expire in December, will be extended and if eligibility requirements will be altered. During remarks at a JPMorgan conference in March, Bob Ryan, special advisor to Mel Watt, Federal Housing Finance Agency director, said that a decision needs to be made in the coming months. HARP, introduced in 2009 as a way for borrowers with little or no home equity to refinance mortgages into affordable payments, was originally set to expire at the end of 2013 but was extended through this year. Close to 3.3 million loans were refinanced through HARP since it began in 2009, and as of September 2014 there were... Read More

Bank, Thrift FHLBank Advances Up In Fourth Quarter 2014

Bank and thrift members had drawn a combined $437.7 million in Federal Home Loan Bank advances at the end of the fourth quarter of 2014, according to the Inside Mortgage Finance Bank Mortgage Database. That number represents an 11.6 percent increase from the previous quarter and an 18.8 percent increase from the same period a year earlier. Top-ranked JPMorgan Chase’s use of advances rose 8.3 percent and reflected its largest amount of advances used sequentially during 2014. The bank had drawn $60.0 million in the third quarter. Its advances were up 5.0 percent on a year-over-year basis. Second-ranked Wells Fargo remained steady with no quarterly percentage change of its $34.1 million in advances used. [exclusive data chart included] Read More

Bill Introduced to Stop Congress From Raiding Fannie and Freddie

Industry groups have rallied around a bill introduced to stop what a bipartisan group of senators call a “back door tax,” by raising guaranty fees. Sens. Mike Crapo, R-ID, and Mark Warner, D-VA, introduced the bill in Congress last week. The bill, S. 752, stipulates that a congressionally mandated increase of guarantey fees imposed on Fannie Mae and Freddie Mac business can only be used for deficit reduction. The goal is to prevent Congress from using Fannie and Freddie to fund unrelated spending. They also want to establish a scorekeeping rule to ensure that any increases in guaranty fees of the GSEs won’t be used to... Read More

Study Says Current Credit Model Excludes Potential Homebuyers

Creditworthy buyers are being constrained by dated scoring systems, according to a study released this week by VantageScore Solutions, which says there are benefits to Fannie Mae and Freddie Mac, as well as consumers, if a new model is adopted. The enterprises could increase their revenue while expanding access to mortgages to a more diverse group of consumers. The credit reporting company has been working to get Fannie and Freddie to embrace a new credit reporting system for years now. Its new report comes on the heels of the Federal Housing Finance Agency comments in its 2015 scorecard directing the GSEs to look into potential alternative forms of credit scoring. Read More

FHFA-IG White Paper Questions Fannie, Freddie Profits

A recent white paper by the Federal Housing Finance Agency Office of the Inspector General highlights the precariousness of GSE profitability. The IG questions whether Fannie Mae and Freddie Mac has the muscle to withstand adverse market conditions or other changes and uncertainties that could lead to additional losses.“The enterprises’ conditions have stabilized and market conditions have improved since 2008. They returned to profitability in 2012; however, the level of earnings they experienced in 2013 and 2014 is not sustainable over the long term,” the paper said. Record-breaking profits of a combined $132.6 billion were reported in 2013 for Fannie Mae and Freddie Mac. That number dropped significantly the following year to $21.9 billion. Read More

IG Report Reviews FHFA’s Management of Fannie, Freddie

The Federal Finance Housing Agency needs to be vigilant in its continued oversight in its management of Fannie Mae and Freddie Mac, according a report from the Office of the Inspector General. Because the FHFA’s actions aren’t subject to judicial review, the OIG said its oversight of the FHFA conservatorship actions and processes “is critical to safeguard taxpayer dollars and ensure that the FHFA is fulfilling its statutory duties.” In the new white paper, the OIG said Congress vested the FHFA with “sweeping powers” as conservator to potentially control every decision the enterprises make.In 2014 alone, the FHFA flexed its muscle to take more than 750 conservatorship “actions” against Fannie and Freddie. Read More

More NPL Sales for Freddie Mac

Freddie Mac is offering another bulk sale of delinquent loans but is not releasing the details just yet. Thomas Fitzgerald, company spokesman, confirmed on Monday that there are nonperforming loans for sale, making this Freddie’s second offering this year so far. “We are sharing details about the sale solely with prospective bidders,” he said, adding that Freddie anticipates on providing more specifics on the results after the auction. Fitzgerald did confirm that the loans in the transaction are “deeply delinquent,” at least two years old, and said “the sales process is a round-one competitive auction.” Bloomberg reported that the three pools amount to $1 billion in nonperforming loans... Read More

GSE Roundup

New GSE Reserve Fund Bill. Rep. Marsha Blackburn, R-TN, introduced legislation on March 26 requiring the GSEs to send future profits to a newly established reserve fund administered by the FHFA. The bill is titled ''Enterprise Secondary Reserve Taxpayer Protection and Government Accountability Act of 2015'' and it would “establish a secondary reserve fund for a housing enterprise under conservatorship to protect taxpayers against loss in the event of a housing downturn, and for other purposes." Jumpstart GSE Reform Amendment. On March 25, Sens. Bob Corker, D-TN, and Mark Warner, D-VA, offered an amendment to the Jumpstart GSE Reform Act that would prohibit... Read More

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