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Inside The GSEs

October 23, 2015

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Fannie Expands Access to Credit in 2016

Fannie Mae said that next year lenders would be able to verify a borrower’s income electronically and find ways to lend to customers with nontraditional credit histories. Fannie announced during the Mortgage Bankers Association convention this week changes to extend credit access to potential borrowers who typically have trouble finding a mortgage. Among those changes announced this week and set to take place in 2016, the GSE will require lenders to use trended credit data when underwriting single-family borrowers through its Desktop Underwriter program. The data, provided by Equifax and Transunion, will allow a more detailed analysis of the borrower’s credit history, according to Fannie. Currently, reports only indicate the outstanding balances and if a borrower has been... Read More

Nonbanks Still Building Share in GSE Market

Nonbank servicers accounted for a slightly larger share of the GSE servicing market at the end of the third quarter of 2015, despite the fact that one of the largest nonbanks was pulling back. Nonbanks serviced some $1.28 trillion of loans backing mortgage-backed securities issued by Fannie Mae and Freddie Mac at the end of September. That represented 28.7 percent of the “known” market, up from 28.5 percent at the end of the second quarter. Because of limitations in MBS pool-level disclosures, unknown servicers accounted for about 7.8 percent of the market as of September. The nonbank market share was up even though Ocwen Financial saw a 42.9 percent drop in its GSE servicing during the third quarter... Read More

FHLB Rule on Captive Membership Could Reach Compromise Soon

The Federal Housing Finance Agency is toying with the idea of “grandfathering” current captive insurance affiliates in the Federal Home Loan Bank system, while blocking out others, according to industry observers tracking the matter.If the FHFA does so, it would benefit mortgage-backed security investing real estate investment trusts that gained entry through a captive. A few years back, REITs found a loophole in the FHLB membership rules and exploited it before the FHFA put a moratorium on captives joining the system and requested industry comments on the captive angle and other membership rules. The moratorium expired in early 2015 and the 11 regional FHLBs once again began allowing REITs and others – via their captives – to join the system. Read More

Ending Conservatorship Not in the Cards Says Treasury, White House

As rumors ran rampant over the past few weeks about the White House possibly looking to end GSE conservatorship before a new administration takes reign, Treasury and White House officials said this week there are no plans in the works to recapitalize and release the GSEs. “None of us should be misled by the increasingly noisy chorus of the advocates of recap and release,” said Michael Stegman, the White House’s senior policy director for housing, speaking at this week’s annual Mortgage Bankers Association conference. He added that doing so would “turn back the clock on the run-up to the crisis,” which he said would be “bad judgment and poor stewardship of taxpayer’s interest.” Read More

FHFA Director Watt Asks for Patience in Launch of CSP, IDR

Mel Watt, director of the Federal Housing Finance Agency, dished on several GSE-related issues, including the common securitization platform and expanding access to credit, at the Mortgage Bankers Association conference in San Diego this week. After announcing last month that the CSP and single security will be launched in two stages, with no confirmation of an exact timeline yet, Watt said, “We realize that there is a degree of impatience and a desire to see all these efforts completed right away. While not in a position to give you specific dates right now, I can confirm that we plan to announce the Release 1 timeline in 2016.” He added that the FHFA also hopes to be able to announce the... Read More

Freddie Reveals New Initiatives And Partnerships at MBA Convention

It’s been an active week of GSE announcements with new initiatives, partnerships and increased competition between the duo. This appears to be an acknowledgment that GSE reform is not anywhere in the short-term plan and Freddie Mac, along with Fannie Mae, are taking matters into their own hands to help right the market. Freddie unveiled a partnership with Quicken Loans to modify some of the underwriting guidelines on its low-downpayment mortgage program, Home Possible. While not many details were available, Brad German, Freddie’s spokesman, said, “We're at the start of a work in progress to jointly develop products specifically aimed at the housing needs of millennials, first-time buyers, the middle class and other eligible borrowers.” Read More

Fannie Surpasses Multifamily Limit, FHFA Maintains $30B Cap

If the current pace of multifamily business continues, the GSEs will likely exceed their regulator-mandated cap on multifamily support in the aggregate, with Fannie Mae already topping its cap and Freddie Mac lagging a bit.Fannie already exceeded its scorecard cap for 2015, with three months of the year yet to go. For the first three months of 2015, Fannie issued $32.2 billion in multifamily mortgage-backed securities.In the third quarter, Fannie issued $7.3 billion of multifamily MBS backed by new acquisitions, mostly through its Delegated Underwriting and Servicing program. The GSE also resecuritized $1.9 billion of DUS MBS through its Guaranteed Multifamily Structures program during the period ending Sept. 30, 2015. This issuance volume included two Fannie... Read More

FHFA Finalizes Tying GSE Conforming Loan Limits to HPI

As anticipated, the Federal Housing Finance Agency announced that it decided to finalize plans to use its existing “expanded data” House Price Index for tracking home prices for setting Fannie Mae’s and Freddie Mac’s maximum conforming loan limits. During the comment period, industry participants largely supported the plan but questioned the extent to which conforming loan limits should be adjusted. The FHFA said it will release the maximum conforming loan limits for 2016 using the expanded-data HPI at the end of November. The most recent FHFA House Price Index was released late this week and reported a 0.3 percent increase in U.S. house prices in August from July. Year-over-year, house prices were up 5.5 percent. Read More

Mario Ugoletti, FHFA Advisor and PSPA Co-Creator, Retires

Mario Ugoletti, economist and senior advisor at the Federal Housing Finance Agency, and the subject of the ongoing Fairholme Funds v. The United States case, retired from the agency effective Sept. 30.Ugoletti was a senior official with the Department of Treasury during the government bailout of the GSEs and was special advisor to FHFA Director Mel Watt. Among other things, he helped draft the now-controversial “Senior Preferred Stock Purchase Agreement” whereby Treasury is allowed to “sweep” almost all of the quarterly profits of Fannie Mae and Freddie Mac. The PSPA has been challenged in court by investors that are speculating in the common and preferred stock of the two GSEs. In a sworn statement filed in DC federal court last Read More

MIs Tout Front-End Risk-Sharing Benefits, Analysts Cite Concerns

 With front-end risk-sharing by the GSEs being a hot topic as of late, this week the U.S. Mortgage Insurers released an analysis touting the benefits of risk sharing with mortgage insurers and said it may even help lower guaranty fees. The group proposes MI coverage as deep as 50 percent of the home’s value. … Read More

GSE Roundup

New Actual-Loss Risk Transfers for Fannie, Freddie. This week, Fannie Mae announced that it priced its latest credit risk-sharing transaction under its Connecticut Avenue Securities series. While this is Fannie’s 9th CAS deal, this is its first CAS transaction structured using an actual-loss framework, which will be the standard for the CAS program going forward. The $1.45 billion note offering is scheduled to settle on Oct. 27. Meanwhile, Freddie Mac also announced its intention to sell its seventh Structured Agency Credit Risk debt notes offering this year for more than $1 billion. This STACR Series 2015-DNA3 offering is the company’s fourth transaction where losses will be allocated based on the actual losses. FHFA, GSE Departures. The most recent Fannie Mae executive... Read More

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