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Inside The GSEs

September 2, 2016

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Freddie Still Chipping Away at Legacy Buyback Issues

While Fannie Mae has mopped up virtually all of the buyback disputes on loans more than a few years old, Freddie Mac still has a stubborn supply of legacy repurchase demands on its hands. A new Inside The GSEs analysis of repurchase activity disclosures for the second quarter of 2016 reveals that 39.6 percent of Freddie’s pending and disputed buyback claims involved loans that were securitized prior to 2008. At Fannie, such loans accounted for just 0.7 percent of unresolved buyback demands as of the end of June. Freddie did make progress during the second quarter, however. In fact, 34.8 percent of the seller repurchases or indemnifications made during the... Read More

IDR Update Includes New Intermediary Dispute Process

The GSEs recently introduced a new loan dispute procedure that lenders should use prior to engaging a third-party arbitrator. Fannie Mae and Freddie Mac launched their independent dispute resolution process early in the year as the final piece to the representation-and-warranties framework to help prevent buybacks.This process uses a neutral third-party arbitrator to determine a final, binding decision about whether there was a loan violation.However, the new impasse and management escalation process, announced last week, is intended to serve as an intermediary between the normal loan dispute appeal process and the final IDR process for seller/servicers. Read More

New Streamlined Refi Program to Start in 2017, HARP Extended

Fannie Mae and Freddie Mac will implement a new high loan-to-value refinance option in October 2017 to replace the Home Affordable Refinance Program but lenders say it’s too early to know what to expect. While HARP was set to expire at the end of the year, the Federal Housing Finance Agency extended it to Sept. 30, 2017, so there is no gap in refinance offerings. The new high loan-to-value streamlined refinance option has not been named yet, but targets borrowers who are current on their mortgage loans, but have not been able to refinance through traditional programs because of high loan-to-value ratios. Read More

IU's Pagliara Loses Argument to Inspect Freddie Mac's Records

A high profile shareholder’s request to access Freddie Mac’s corporate records was shot down in a case dismissal last week as a federal court ruled that all shareholder rights were transferred to the Federal Housing Finance Agency during the conservatorship. In Timothy J. Pagliara v. Federal Home Loan Mortgage Corporation, plaintiff Tim Pagliara, chief executive of CapWealth Advisors and the executive director of Investors Unite, a GSE shareholders group, filed a lawsuit in court in March to gain access to Freddie’s records, as an individual stockholder. He owns approximately 346,000 shares of Freddie’s junior preferred stock, according to court documents. Read More

UI: GSE Risk-Sharing Should Expand, Consider Future Impact

The GSE credit risk-transfer program should expand and take into consideration what role it will play in the greater financial system, according to the authors of a new white paper published late last week by the Urban Institute. UI’s Laurie Goodman, Jim Parrott and Ellen Seidman, along with Moody’s Analytics Mark Zandi, said although the credit risk-transfer effort has come a long way in the three years since it was implemented, it still has a long way to go to reaching its full potential. The authors’ primary criticism is that the credit risk-transfer process is too limited. They said it focuses almost exclusively, on how various risk- sharing structures might effectively reduce the current risk to Fannie Mae and Freddie Mac. Read More

The Good and the Bad of the Redesigned URLA Form

Industry observers are weighing in on the redesigned Uniform Residential Loan Application, an industry standard that has largely remained the same for the past 20 years, until now. The GSEs published the new form last week to give lenders ample time to get familiar with it. The updated form won’t officially be in use until Jan. 1, 2018. The URLA is for single-family loans submitted to Fannie Mae and Freddie Mae, as well as mortgages insured by the FHA, VA or U.S. Department of Agriculture’s Rural Housing Services. The redesigned form falls under the larger Federal Housing Finance Agency and GSE initiative to standardize single-family mortgage data in the U.S. Read More

Former Freddie CFO Loses Appeal and Ex Fannie CEO Settles Case

One former GSE executive lost his severance package case and another settled in a long-standing civil fraud lawsuit. Both cases came to a conclusion last week. Anthony Piszel, former chief financial officer at Freddie Mac, appealed a judgment from the U.S. Court of Federal Claims dismissing his complaint that Freddie owed him payment for his “golden parachute” compensation after he was terminated without cause at the start of the conservatorship. The question came down to whether or not a government prohibition on making golden parachute payments to terminated Freddie employees was illegal or not. Piszel was terminated two weeks after... Read More

FHFA Loosens Regulations for New Business Activities by FHLBs

The Federal Housing Finance Agency issued a proposed rule last week that would reduce the amount of approval the Federal Home Loan Banks would need from the regulator before engaging in new business activities. This comes after the FHLBanks wrote the FHFA in 2013 following a request for public comment on existing regulations. The agency said this was done to help improve the banks’ effectiveness and reduce their burden. The agency announced the rule modifying part of its regulations regarding requirements for the FHLBanks’ new business activity in the Aug. 23, 2016, Federal Register. Read More

Experts Call GSE Servicing Fees Excessive, Behind the Times

Panelists, including former Federal Housing Finance Agency Director Ed DeMarco, said that mortgage servicing has evolved over the years but the costs are still decades behind the times. During a recent seminar on mortgage servicing hosted by CoreLogic and the Urban Institute, industry experts discussed rising costs and the frequency of servicing transfers.Panelists, including DeMarco, now a senior fellow at the Milken Institute, said that mortgage servicing compensation has not changed in decades as the servicing industry itself has undergone what he called “profound changes. The minimum servicing fee for Fannie Mae and Freddie Mac has been stuck at 25 basis points since the 1980s, he said. Read More

GSE Roundup

FHFA’s TCPA Exemption Request Denied. The Federal Communications Commission turned down the Federal Housing Finance Agency’s request to exempt GSE mortgage servicing calls from prohibitions against robocalls, or automated dialing and calling systems, to contact delinquent borrowers. It refused the request, citing the exemption for Fannie Mae and Freddie Mac loans “because little in the way of facts has been entered into the record.” According to the commission, the FHFA, in its request, cites two different exemption provisions. However, the FCC said the FHFA failed to provide the information necessary for determining whether the calls at issue would satisfy the threshold requirements for exemption. Under the rule, calls to cell phones are capped at no more than three attempts... Read More

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