Cart

Inside The GSEs

March 4, 2016

View Archived Issues

Fannie, Freddie Business Tumbled in February

Fannie Mae and Freddie Mac single-family business slowed in February as the purchase-mortgage sector faltered, and trends suggest the GSEs are losing share in their core market. The two enterprises issued $50.05 billion of single-family mortgage-backed securities last month, according to a new ranking and analysis by Inside The GSEs. That was down 11.5 percent from January and left Fannie and Freddie production for the first two months of 2015 12.2 percent behind the pace set last year. February’s new issuance was also the lowest monthly total for the GSEs since May 2014, when they produced $44.80 billion of single-family MBS. Purchase-mortgage volume followed seasonal patterns and sank 18.5 percent from... Read More

Ninth Circuit Court Rules GSEs Are Private Companies

Fannie Mae and Freddie Mac are private companies, according to a recent Ninth Circuit Court of Appeals case that dismissed an argument stating that the mortgage giants are federal instrumentalities as it relates to them being liable under the False Claims Act. Now some say this ruling may influence and stir up reaction about a case in Delaware involving GSE shareholders who argue that the Treasury sweep of the GSEs’ profits was illegal. In the United States ex rel. Adams v. Aurora Loan Services, Inc., et al., a whistleblower case, James Adams, on behalf of the government, named 16 banks, lenders and servicers as defendants in a FCA breach of representations-and-warranties lawsuit. It was alleged... Read More

Scorecard: Expect NPL Sales Data, Credit Scoring Assessment in 2016

The Federal Housing Finance Agency released the 2015 Scorecard progress report for Fannie Mae and Freddie Mac on March 3. The agency detailed goals the GSEs met in 2015 and mentioned several initiatives for this year including the first public release of non-performing loan sales data in 2016. Because of the amount of time needed to transfer sold loans to a new servicer, evaluate borrowers for foreclosure prevention action and complete loan modification trial periods, the FHFA said it takes six to 12 months after the datew of an NPL sale to get any meaningful data. Once it has that data, it will begin to assess borrower outcomes of NPL sales going forward. Read More

Congressmen Want Reform For Non-Performing Loans

Forty-five congressmen signed a letter addressed to the head of the Federal Housing Finance Agency on March 1 citing the need to reform the way nonperforming loan sales are conducted and singled out Lone Star Funds as a “bad actor” in the transactions. The letter, addressed to FHFA Director Mel Watt as well as Secretary Julian Castro of the U.S. Department of Housing and Urban Development, noted that there are improvements both agencies should take to better align the programs with the goals of stabilizing neighborhoods, alleviating the affordable housing crisis and working with organizations that have a track record of homeownership preservation. Read More

Conversations on GSE Reform and Recapitalization Intensify

As talks of GSE reform intensify with FHFA Director Mel Watt’s speech last month citing concerns about dwindling capital levels, the Mortgage Bankers Association held a briefing this week on Capitol Hill focusing on the urgent need for reform, but stopped short at agreeing with calls to recapitalize the mortgage giants. Reasons to reform Fannie Mae and Freddie Mac appear to be growing like a never-ending laundry list with increased risk to taxpayers at the very top. The MBA said its core concern is that one of the GSEs will have to take a draw from the U.S. Treasury because earnings capacity is much less than it has been over the past few years and is only expected to decline. Read More

Fannie, Freddie Provide More Details on Credit Risk Transfers

Freddie Mac and Fannie Mae recently enhanced the disclosures for their single-family credit risk transfers to give potential investors more information on the deals. Investors and lawmakers have been calling for more transparency since the GSEs began transferring credit risk several years ago.Freddie’s disclosures for all single-family credit risk transfer initiatives will now include quarterly updates on credit scores for outstanding loans in all transactions as well as quarterly updated mark-to-market loan-to-value ratios. Freddie said this leverages the estimated property value from its Home Value Explorer Automated Valuation Model tool. Investors can analyze loan-level mortgage insurance details and identify whether or not the lender or the borrower paid the mortgage insurance on the loan. Read More

Fixer-Upper Homes in Old Fannie Pool Sale Problematic, says NYT

One of the companies that purchased a large number of distressed homes from Fannie Mae following the housing crisis was the focus of a recent New York Times piece highlighting the problems brought on by investor-purchased homes that still linger today. Harbour Portfolio Advisors of Dallas is an investment firm that purchased thousands of single-family homes from Fannie in states like Florida, Georgia, Illinois, Michigan and Ohio, by way of a pool sales program that existed from 2010 to 2014. The article accused the firm of targeting and taking advantage of low-income buyers who don’t know what they’re getting themselves into once agreeing to buy a fixer-upper home from Harbour. The investment firm bought... Read More

Bank of America Offers 3 Percent Down Loans WIth Freddie and Self-Help Fund

Bank of America introduced a new affordable lending program last week that allows 3 percent downpayments and no required reserve funds in most instances. The bank partnered with Freddie Mac and Self-Help Ventures Fund, a Durham, NC-based nonprofit, to offer conforming loans to borrowers whose income doesn’t exceed 100 percent of the area median income. There’s also no private mortgage insurance on the loans as “Self-Help Ventures Fund is taking the first loss position in the event of a loan default through a recourse agreement,” said a Freddie spokesman. The Affordable Loan Solution mortgage was designed to let creditworthy homebuyers who meet specific income limits and other requirements to become homeowners at an affordable entry point, said... Read More

FHLBank Income Up in 2015, Advances Reach New Record

The 11 surviving Federal Home Loan Banks posted a significant increase in net income during the fourth quarter of 2015, along with a surprising jump in advances. The Office of Finance reported that the FHLBanks generated $673 million in net income during the fourth quarter, a 39.0 percent increase from the prior period. That brought year-to-date income to $2.850 billion, a 26.6 percent gain from 2014. Non-interest income was up sharply last year in large part because of settlements related to FHLBank investments in soured non-agency mortgage-backed securities, which brought in $688 million in 2015, mostly in the first half of the year. Legal settlements accounted for... Read More

Freddie Mac to Fine-Tune MBS Master Trust Accounting

Freddie Mac has launched a project to correct some “operational deficiencies” in how it transfers money in and out of mortgage-backed securities trusts. The GSE said in its 2015 10-K filing that the issue has not had a material impact on its earnings or on investors in its MBS. Freddie explained that seller/servicers deposit various funds – such as mortgage principal and interest payments owed to MBS investors and guarantee fees due to the GSE – into custodial accounts for securitization trusts. The funds owed to the company are classified as restricted until they are transferred to an operating cash account. Management, however, determined that Freddie has not maintained detailed pool-by-pool records of funds in the custodial account... Read More

FHFA Increases Maximum Civil Penalty Amounts

The Federal Housing Finance Agency issued a final rule last week in which it adjusted the maximum civil money penalties it can impose on a regulated entity or any entity-affiliated party. The last time the maximum CMP amounts were set was in 2008. The FHFA noted that the increases in maximum penalty amounts contained in this final rule might not necessarily affect the amount of any CMP the FHFA may seek for a violation. “FHFA would calculate each CMP on a case-by-case basis in light of a variety of factors,” the final ruling stated. The FHFA’s Rules of Practice and Procedures allow the agency to govern cease-and-desist proceedings, civil money penalty assessment proceedings, and other administrative adjudications. Read More

GSE Roundup

FHFA Ramps Up HARP Social Media Efforts. The Federal Housing Finance Agency kicked off a new social media campaign in late February, #HARPNow, to let more than 367,600 homeowners across the country know about the Home Affordable Refinance Program before it expires on Dec. 31, 2016. FHFA will use Twitter, LinkedIn and YouTube to reach homeowners in the 10 states with the greatest concentration of HARP-eligible borrowers. Fannie Names Winner of Second NPL Community Impact Pool. Fannie Mae announced that New Jersey Community Capital is the winning bidder of the company’s second Community Impact Pool of non-performing loans. This pool of loans was structured to attract diverse participation from non-profits, smaller investors and minority- and women-owned businesses. The transaction... Read More

Latest Imf News

More Imf News

Featured Data

More Featured Data

Featured Reports

More Latest Reports

Featured Poll

As homeowner equity continues to build, more and more lenders are launching home equity lending products. Are you thinking of joining this market?

View Results