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Inside The GSEs

January 8, 2016

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Nonbanks Continue Building Share in Softening GSE MBS Market

Nonbank lenders accounted for nearly half (48.7 percent) of the single-family mortgages securitized by Fannie Mae and Freddie Mac during the fourth quarter of 2015, according to a new Inside The GSEs analysis of mortgage-backed securities disclosures. The nonbank share of new GSE business has been on a steady march higher over the past few years as the top tier of depository institutions has repositioned their mortgage strategies and more lenders have participated directly in the securitization process. Back in 2013, nonbanks accounted for just 31.0 percent of new Fannie/Freddie business. The momentum did slow somewhat in 2015, however. After boosting their aggregate share by 12.9 percentage points to 43.9 percent in 2014, the nonbank... Read More

OIG: FHFA Did Not Comply WIth Underwriting Review

The Federal Housing Finance Agency’s Office of the Inspector General determined that the agency failed to properly oversee the GSEs’ single-family mortgage underwriting standards and variances. As a result, the OIG has reopened its recommendation from a previous audit report until the FHFA proves it has fully implemented the proper oversight. … Read More

Risk Fee or No Fee: Fannie's and Freddie's Approach to Defects

While Fannie Mae recently said it would announce details this year about its plan to let lenders pay a risk fee as an alternative to repurchase for some defective loans, Freddie Mac said it’s “business as usual” and the GSE doesn’t plan to make lenders pay a fee for retaining some loans with defects. “We did look at charging a fee, but we believe we have an alternative of recourses, which means the lenders are not paying any fee up front, and if the loan performs there is no repurchase,” Christopher Mock, Freddie’s vice president of quality control, told Inside The GSEs. He said this allows the lender and the GSE to walk together down the performance trail of the loan. Read More

Manufactured Housing Continues Push for Chattel Loans

Since issuing a proposed rule on duty-to-serve and opening it up to comments several weeks ago, the Federal Housing Finance Agency has received a handful of comments so far, including one from the Wisconsin Housing Alliance stating that the FHFA has “shirked their duties” by ignoring the needs of manufactured housing residents. The trade group, representing factory-built housing interests, noted that there is a gap in access to credit for buyers of used manufactured homes and added that local and national lenders have exited the market in droves thanks to increased regulation. The FHFA tackled duty-to-serve rulemaking in December, several years after being mandated by the Housing and... Read More

Fannie Moving and Consolidating Its Dallas Headquarters

Fannie Mae plans to move its Dallas headquarters to nearby Plano, TX, and consolidate three area offices into one new location by sometime in 2018, thanks to an improvement in loan quality resulting in the need for less staff. The Dallas-based offices are focused on mortgage servicing, working with borrowers if they’re behind on their mortgages and managing foreclosed properties. But with foreclosures lessening, plans include downsizing office space from about 450,000 square feet to an approximately 300,000-square-foot office. “It’s important to have our teams in one place to do that work together,” said a GSE spokesman who confirmed the move. Read More

FHFA Issues Rule on Business with Fraudelent Mortgage Lenders

The Federal Housing Finance Agency issued a final rule last week to make the process a bit clearer when it comes to ending relationships with fraudulent businesses and individuals. The Suspended Counterparty Program final rule has been in the making for a few years and parts of the interim rule, published in October 2013, have been revised. The final rule, which goes into effect Jan. 22, addresses comments made by Fannie Mae and 11 Federal Home Loan Banks. The program was put in place to help mitigate risk to Fannie, Freddie Mac and the FHLBs. One of the changes made in the final rule is that it allows more time for Fannie and Freddie to... Read More

Advisory Group Mulls Changes, Provides More Timeline Clarity

Members of the single-security and common securitization platform industry advisory group met last month for the second time and are considering more frequent meetings and subcommittees. The group also confirmed that the implementation date of the single security won’t occur at the beginning or end of a quarter and said the industry will have a 12- to 15-month advance notice prior to implementation. The group, created in preparation for the launch of the common securitization platform and single security, met at Fannie Mae’s headquarters to discuss a wide range of concerns raised by members and industry stakeholders, according to notes summarizing the meeting. Read More

Fannie Changes Age-Based Resale Restrictions on Loans

Fannie Mae has changed the guidelines for loans with age-related resale restrictions in response to lenders’ requests about second homes and investment properties in these communities. Currently, Fannie limits occupancy on a loan with resale restrictions to a borrower’s one- and two-unit principal residence, but it has now expanded the eligibility to permit all occupancy types. The GSE said this will allow borrowers to purchase a property for the benefit of older family members or for future use. It said the criteria of the deed restriction must continue to be met and those requirements typically apply to the unit occupant and often requires just one resident to be 55 or older. Read More

News Media Giants Rip Into Faniie Mae and Freddie Mac

In late December, The Washington Post and Wall Street Journal took aim at the GSEs in their editorial sections, just 10 days apart. The Post’s editorial board noted that mixing politics and money makes for “unholy alliances,” referred to a push by both Wall Street hedge funds and low-income housing advocates to recapitalize and release Fannie Mae and Freddie Mac from conservatorship. “These unlikely allies want to end government control of the two entities and put shareholders back in charge, as if their collapse and federal bailout in 2008 never happened,” stated the editorial. Investors Unite, a shareholders trade group, put out statements this week saying that both editorials were riddled with flawed facts and assumptions. “It was obvious... Read More

GSE Roundup

Freddie Announces New Alliance with Lenders One. Freddie Mac has teamed up with Lenders One Mortgage Cooperative, based in St. Louis, to give Lenders One members who are Freddie seller/servicers pricing and execution benefits, enhanced access to mortgage products, and professional training and development opportunities. Freddie did not provide additional details on specific pricing benefits .Chris Boyle, senior vice president of single-family sales and relationship management at Freddie, said Freddie Mac is pleased to “help its members reach more eligible borrowers, achieve new efficiencies in the origination process and build strong, competitive businesses.” In related news, Lenders One is still... Read More

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