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Inside The GSEs

December 4, 2015

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GSE Business Fell Sharply In 3Q15, Footprint Shrinking

Fannie Mae and Freddie Mac saw a huge drop in new single-family business in November, according to a new Inside The GSEs analysis of loan-level mortgage-backed securities data. The two companies produced just $50.94 billion of new single-family MBS last month, a 25.2 percent decline from October’s level. November 2015 was the slowest month in GSE MBS issuance since May 2014. MBS issuance was down 30.6 percent at Fannie and off 17.4 percent at Freddie. The sharp drop in monthly production had a distinctly seasonal tone. GSE securitization of purchase mortgages fell a whopping 33.2 percent from October to November, and purchase mortgages accounted for less than half of Fannie/Freddie business last month. Read More

Momentum Growing for More Up-Front Risk-Sharing, Use of MIs

         The Mortgage Bankers Association is urging the Federal Housing Finance Agency to incorporate more explicit up-front risk-sharing goals in the soon-to-be released 2016 Scorecard that dictates GSE activities for the year.          The MBA touts the advantages of using mortgage insurers, and said in a letter addressed to FHFA Director Mel Watt that the MI approach would be the most accessible for the vast majority of lenders. The trade group emphasized that… Read More

Judge Denies Motion to Quash Subpoena of Fannie Chair

In the ongoing Fairholme Funds v. The United States case, Judge Margaret Sweeney recently denied Fannie Mae’s motion to quash or invalidate a subpoena issued by the plaintiff’s counsel. As part of the discovery phase, Fairholme Funds asked that Egbert Perry, appointed chairman of the noard of Fannie in 2014 and board member since 2008, be called to testify in the case. In the motion, Fannie and Perry argued that based upon the discovery conducted so far, deposing Perry is “unnecessary and burdensome.” The court rejected that and other arguments made to relieve Perry of testifying. In the November order, Judge Sweeney said that the court permitted discovery in this case to ensure that plaintiffs would have every opportunity to... Read More

Groups Urge Congress to Dismiss 'Jumpstart Reform Act'

Instead of serving as a vehicle to help reform Fannie Mae and Freddie Mac, the “Jumpstart GSE Reform Act” would only hinder the mortgage giants, some groups say. A handful of fair housing advocates and civil rights groups joined forces to pen a letter urging House Speaker Paul Ryan, R-WI, along with Rep. Nancy Pelosi, D-CA, Sens. Mitch McConnell, R-KY and Harry Reid, D-NV, to reject the Jumpstart GSE Reform Act and any attempts to include it in the FY 2016 appropriations agreement. In September, a streamlined version of S. 2038, the Jumpstart Reform Act, sponsored by Sens. Bob Corker, R-TN, Mark Warner, D-VA, and Elizabeth Warren, D-MA, was reintroduced in Congress, then placed on hold and reintroduced again, and... Read More

Conforming Loan Limit Unchanged, California Realtor Group Not Happy

After the Federal Housing Finance Agency announced last week that the conforming loan limit for GSE mortgages will remain at $417,000 for 2016, and capped at $625,500 in high-cost areas, the California Association of Realtors said it was disappointed that the loan limits weren’t raised across the board, given that home prices in that region are on the upswing and among the highest in the country. The FHFA concluded that the average home value in the third quarter still has not reached the level it was in the third quarter of 2007. According to the expanded-data Home Price Index, national average home prices in the third quarter of 2015 remained... Read More

Salary Cap Now Official for Fannie and Freddie CEOs

It’s official. With no fanfare or big news headlines, President Obama signed the salary cap legislation limiting the salaries of Fannie Mae and Freddie Mac CEOs to $600,000 each, the day before Thanksgiving. There was strong opposition from many, including White House and Treasury officials, against the new multi-million dollar executive compensation packages proposed by the Federal Housing Finance Agency earlier this year. After a pay hike earlier in the year, salaries are now back at the $600,000 cap, previously set by former FHFA Director Ed DeMarco. The bill by Rep. Ed Royce’s, R-CA, to suspend the CEOs’ $4 million annual compensation packages passed out of the House by a 57-1 vote and was followed by a senate version from... Read More

HARP Refi Volume Down for Q3 As Program Enters Final Year

As the Federal Housing Finance Agency continues to ramp up efforts to get the word out about the Home Affordable Refinance Program, which is officially down to its last 12 months, the agency reported a sharp 18 percent quarterly decline in the number of takers in the third quarter of 2015. There were 25,824 HARP refinances in the third quarter, down from the 31,561 HARP refinances completed in the second quarter, according to new loan-count figures released by the FHFA. HARP activity accounted for about 5 percent of all refinances in the third quarter, mirroring that of the previous quarter. While both GSEs were down in HARP refi volume, Fannie Mae had more activity than Freddie... Read More

Fannie Mae Launches New Loan Delivery Application

After several months of being in the test phase, Fannie Mae officially released its new loan delivery application on Dec. 1. The new platform was designed to be easier to navigate with enhanced reporting capabilities, greater transparency and improved edit management capabilities. Customers have had a chance to get familiar with the program and take advantage of an online tutorial since September. For those ready to fully implement the application, it’s up and running on Fannie’s website as of this week, but there’s still time to ease into it. Both the old and new loan delivery applications will be available during the transition period. Lenders... Read More

Freddie's STACR and ACIS Reach Risk-Sharing Milestones

Marking several milestones, including the first time that Freddie Mac has issued both a Structured Agency Credit Risk offering and Agency Credit Insurance Structure in the same month, the GSE announced last week that it will sell more than $590 million in STACR 2015-HQA2. This is its last STACR offering for the year and it obtained its largest Agency Credit Insurance Structure so far, for a combined $702.4 million limit. The two are related. Through Freddie’s ACIS program, the GSE buys insurance policies that transfer a portion of the credit risk associated with its STACR debt note reference pools from insurance and reinsurance companies around the world. Read More

Fannie Analysis on Reaching Repeat Creditworthy Borrowers

Fannie Mae said that in the midst of trying to reach first-time homebuyers, a new trend has emerged with existing homeowners struggling to become repeat, move-up buyers.There was a 40 percent decrease in repeat buyers from 2002 to 2014, according to recent commentary from Jude Landis, vice president, single-family credit policy at Fannie. Credit did not appear to be holding them back either, because even among homeowners with mid-tier credit scores, between 680 and 740, the number of repeat home purchases dropped dramatically. “Owners of their first homes may have the credit eligibility to move up, but low housing equity appear to be holding them back,” she said. Read More

Senator Drills FHFA on Freddie's Low-Income Purchase Goal Miss

Although the Federal Housing Finance Agency said that Freddie Mac failed to meet all of its goals for low-income homebuyers in 2014, the GSE apparently has put the wheels in motion to meet its target for 2015. But Sen. Bob Menendez, D-NJ, ranking member of the Senate Subcommittee on Housing, Transportation and Community Development, wrote the FHFA asking why the goals fell by the wayside.Don Layton, Freddie’s CEO, told Inside The GSEs that the GSE has been working since early in the year to make sure those goals are met. Those preparations included the hiring of Danny Gardner in March, who leads a new unit specializing in affordable housing. Read More

GSE Roundup

  FHFA Debuts FHFA Insights Blog. This week the Federal Finance Housing Agency launched a new blog titled FHFA Insights. The blog, located on the agency’s website, is designed to serve as a resource for a wide range of stakeholders, including homeowners, renters, policy makers, media and the general public. The FHFA’s most recent blog entry this week focuses on the expansion of the Neighborhood Stabilization Initiative which went into effect Dec. 1. … Read More

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