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Inside The GSEs

September 11, 2015

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GSE MBS Business Tapered Off in Aug., Smaller Footprint

Fannie Mae and Freddie Mac last month saw sharp percent declines in new issuance of single-family mortgage-backed securities, and they are capturing less of the conventional-conforming market.The two GSEs generated $65.94 billion in single-family MBS in August, down 20.8 percent from July, according to a new Inside The GSEs analysis. Monthly volume has seesawed through most of 2015, driven in part by how much seasoned-loan business they get. Most of the August decline in new issuance stemmed from a sharp drop in Freddie’s vintage-loan activity. After securitizing $8.00 billion of loans aged more than three months in July – most of them delivered by Bank of America – Freddie securitized just $99.6 million of such loans in August. Read More

Fannie Mae Launches New Index Based on Consumer Sentiment

Fannie Mae launched the Home Purchase Sentiment Index this week to give monthly updates on the direction of the housing market from a consumers point of view. Results showed that attitudes toward the current home-selling climate have dipped back to their April 2015 level thanks to recent rising mortgage rates and economic concerns, according to Doug Duncan, Fannie’s chief economist.The index will be released on or around the seventh day of each month. The HPSI takes results from Fannie’s consumer-focused National Housing Survey to measure current attitudes toward the housing market. This index is different from other consumer economic sentiment indices because it’s devoted exclusively to housing. Fannie said it will help industry players make better informed business decisions. The GSE constructed... Read More

GSE Recap Talks Re-Emerge, Possible New House Legislation

As they approach their eighth year in conservatorship, Fannie Mae and Freddie Mac generate a lot of revenue for the government and dominate the conventional-conforming mortgage market. But both GSEs are forced to hold less and less capital, and a bad quarter or two could force another round of bailouts. Aside from lawsuits by disgruntled GSE shareholders, pressure appears to be growing for a new approach that would allow the two to rebuild their capital. According to reports, Rep. Mick Mulvaney, R-SC, may introduce such a bill in one of the least hospitable places it could land, the House Financial Services Committee. Read More

Freddie's New Modification Rule to Increase Number of Borrowers

 Freddie Mac announced changes to its mortgage modifications on Sept. 9 in hopes of allowing more borrowers to qualify for modification and lower payments. Although the changes won’t be mandated until March 1, 2016, Freddie is encouraging its servicers to implement them as early as possible.          The GSE is revising the mark-to-market loan-to-value-ratio calculation for both Freddie standard and streamlined modifications, according to a letter sent to its servicers this week. The MTMLTV is used for… Read More

FHFA and CFPB Make Small Changes to NMDB Project

The Federal Housing Finance Agency and the Consumer Financial Protection Bureau recently teamed up to release a joint technical report detailing the progress made so far in creating a National Mortgage Database. They also made a few changes including updating the sample design and merging with other data sources for more detailed information. The database has been in the works for 2.5 years but completion of the joint venture may still be a ways away. The NMDB will be a resource for research and analysis of the U.S. residential mortgage market. The database, the first mortgage data repository of its kind, according to the two agencies, includes information about the mortgage market based on a 5 percent sample of residential mortgages. Read More

Documents Remain Protected in Fairholme Funds, FHFA Suit

In the Fairholme Funds v. The United States case, Judge Margaret Sweeney ruled in favor of the Federal Housing Finance Agency to keep documents in the case sealed under “protected information,” according to an order filed on Sept. 4. The court denied the motion by the plaintiffs and said it was too early to consider unsealing the documents since the case is still in the discovery phase. “Because this case is in the jurisdictional discovery phase, the court finds that it is premature to grant at this juncture plaintiffs’ various motions to remove the ‘protected information’ designation from certain deposition transcripts and documents produced during jurisdictional discovery,” said the order. Read More

Moody's Upgrades Fannie and Freddie Risk-Sharing Deals

Moody’s Investors Service recently upgraded three early GSE risk-sharing transactions from 2013 and 2014 that performed better than the rating service initially expected. Freddie Mac’s STACR 2013-DN2 and STACR 2014-DN1 along with Fannie Mae’s CAS 2014-C01, each designed to provide credit protection against the performance of reference pools of prime first-lien conforming mortgages, were upgraded. These are different from a typical residential mortgage backed security transaction in that note holders aren’t entitled to receive cash from the mortgage loans in the reference pools. Instead, Moody’s said the timing and amount of principal and interest that Freddie or Fannie are obligated to pay on the notes are linked specifically to the performance of the mortgage loans in the reference pool. Read More

Non-Profit Group Wins Fannie's First Small NPL Pool

Fannie Mae revealed last week that New Jersey Capital, a non-profit organization, was the winner of the GSE’s first small non-performing loan pool geared toward non-profits and minority- and -women-owned businesses. The “community impact pool” auction was for $10 million of nonperforming loans. The pool, first marketed back in July, was designed to include geographically focused, high-occupancy collateral where bidders have a longer than usual time to participate in hopes of attracting diverse participation. The average loan size was $143,572 and the mortgages were delinquent for three years on average. The transaction is expected to close Oct. 26. The non-profit organization’s president, Wayne Meyer, said the pool will help the organization expand NJCC’s innovative foreclosure mitigation and prevention programs in Florida... Read More

Fannie Revises Self-Employment Income Verification Guidelines

Fannie Mae recently changed the way self-employment income is verified when the borrower doesn’t have a history of business income distributions. The set of changes was updated in the GSE’s selling guide and shows a new way that income from self-employment can be both calculated and documented. As an alternative to the previous verification method of a documented distribution history, the lender now just needs to confirm that the borrower has access to the business income and that there is adequate liquidity in the business to support withdrawal of earnings. Additionally, only the most recent year of individual and business income federal tax returns will be required for certain Desktop Underwriter case... Read More

HARP Refi Volume Flat for Q2, Extra Focus on HARP-Rich States

Activity in the Home Affordable Refinance Program in the second quarter of 2015 was down 0.3 percent from the first three months of the year, according to new loan-count figures released by the Federal Housing Finance Agency. Fannie Mae had a slight increase in HARP activity and accounted for 59.3 percent of the total for the two government-sponsored enterprises. … Read More

GSE Roundup

No More Adverse Market Charge. Fannie Mae and Freddie Mac retired their “adverse market delivery charge” on Sept. 1. The loan-level price adjustments are removed from their loan matrixes. Former Freddie SVP Joins Collingwood. Paul Mullings, former Freddie Mac vice president of single-family business, joined The Collingwood Group as managing director, the group announced this week. FHLB NY Denied Lawsuit Trim. This week a bankruptcy judge denied the Federal Home Loan Bank of New York's bid to trim a lawsuit, according to Law 360. The suit alleges that the FHLB NY cheated Lehman Brothers Holdings Inc. out of more than $150 million by undervaluing interest rate swaps. GSEs Update State Foreclosure... Read More

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