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Inside The GSEs

December 9, 2016

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Mixed Bag in November Volume, GSE Market Share Down in 3Q16

Fannie Mae and Freddie Mac had markedly different experiences in November in terms of new single-family business activity. Issuance of Fannie mortgage-backed securities fell 25.9 percent from October to November, while Freddie production soared 13.6 percent higher, according to a new Inside The GSEs analysis and ranking. The most likely explanation for the divergence is that Freddie had more business days in which November MBS were issued. Both GSEs observed two legal holidays – Veterans Day and Thanksgiving – which knocked the number of business days down to 20 last month. But Fannie also took off the day after Thanksgiving in terms of new MBS issuance, while Freddie kept the machinery running. And although mortgage sellers set up new... Read More

Mnuchin GSE Privatization Comments Cause a Stir

Comments made by Treasury Secretary Designate Steven Mnuchin about privatizing Fannie Mae and Freddie Mac caused much speculation around Washington last week. But analysts predict that privatization in the near term is unlikely. Mnuchin criticized the fact that the GSEs have been in conservatorship this long. During a cable television interview he said, “We’ve got to get Fannie and Freddie out of government ownership,” adding that it often displaces private lending in the mortgage markets. “So let me just be clear. We’ll make sure that when they’re restructured they’ll be safer and they won’t get taken over again, but we’ve got to get them out of government control.” Read More

Freddie Now Using CSP After Release 1 Given the Go Ahead

Freddie Mac announced late this week that it is now using the common securitization platform after successfully implementing the first release on Nov. 21. As planned, the GSE will use the CSP for data acceptance, issuance support, and bond administration activities related to current single-class, fixed-rate, mortgage-backed securities. The first release was a test of sorts to make sure that the system, operations, and controls of the platform are functional. It also sets the stage for the second release when Fannie will begin using the CSP in 2018. Federal Housing Finance Agency Director Mel Watt said the successful implementation of the first release is a “significant milestone” toward the ultimate goal of a common securitization platform and a single security. Read More

The ‘Mnuchin Effect’: GSE Common Shares Spike, Then Retreat Slightly

Although the common stock of Fannie Mae and Freddie Mac has been deemed near worthless by stock analysts (and others), the share price of the two has been on a tear of late thanks to comments made two weeks ago by investment banker Steven Mnuchin, President-elect Donald Trump’s pick to head the Treasury Department. As Inside The GSEs went to press this week, Fannie common was trading at just $4.00 a share, Freddie at $3.90. And while that might not seem like much, it represents a stunning 166 percent gain since right before the November election. Mnuchin set the stocks in orbit when he said during a cable TV interview that resolving... Read More

Royce Introduces Bill to Increase CRT Activity with Private Sector

House Financial Services Committee members Rep Ed Royce, R-CA, and Rep. Gwen Moore, D-WI, introduced a bill this week to make it mandatory for the GSEs to increase credit risk transfers with the private sector. It includes provisions regarding deep coverage mortgage insurance. The Taxpayer Protections and Market Access for Mortgage Finance Act (H.R. 6487) is a way for Congress to encourage Fannie Mae and Freddie Mac to increase the amount and the types of credit risk transfer transactions to the maximum level that is economically and commercially viable, said Royce. Read More

Fair Housing Groups Accuse Fannie of Poor Foreclosure Maintenance

The National Fair Housing Alliance filed a housing discrimination lawsuit against Fannie Mae for allegedly not properly maintaining real estate-owned properties in 38 metropolitan areas with high proportions of African-Americans and Latinos.The lawsuit was filed this week in the federal district court in San Francisco. Fannie denies the allegations. According to the NFHA and 20 local fair housing groups across the country, Fannie purposely does not maintain its foreclosed properties in middle- and working-class minority neighborhoods to the same level of quality it does for foreclosures it owns in comparable white neighborhoods. Foreclosed properties in minority communities were littered with debris and trash, marked by graffiti... Read More

Fannie Headquarters Sold, New Buildings Making Progress

Fannie Mae closed on the sale of three of its buildings in Washington, DC, last week, including the iconic headquarters. The 1958 Williamsburg-style building sold for $89 million. Roadside Development, a private commercial real estate firm, along with the North American unit of Sekisui House, a large Japanese homebuilder, bought the 228,000-square-foot property situated on 10-acres of land. Roadside is known for its adaptive reuse of commercial properties. While speculation points to the possibility of the developer building condominiums and retail space on the site at 3900 Wisconsin Ave., said a spokeswoman for the developer. “Roadside Development plans to collaborate with the community on the parcel’s vision... Read More

Freddie Approves eMortgage Vendors, Encourages More Use

To streamline the mortgage process Freddie Mac recently approved a handful of mortgage vendors that sellers/servicers can use to have promissory note documents digitally signed. The mortgage industry has been behind when it comes to utilizing technology but Freddie is hoping to expedite the process by publishing a list of pre-approved eMortgage vendors. The list highlights vendors that have met its minimum functional, legal and security review requirements for creating, signing and storing electronic promissory notes. These eNotes detail the repayment obligation of the borrower to the lender. While sellers typically don’t need special approval to use electronic documents as long as their procedures meet the GSEs’ requirements, Samuel Oliver III, vice president of transformation management for the single-family business at... Read More

Freddie, Fannie Delist from European Union Exchanges

Fannie Mae and Freddie Mac recently requested to withdraw from the Ireland and Luxembourg markets, citing increased regulation that’s almost impossible for certain companies to comply with. Freddie asked that its debt and mortgage securities and Structured Agency Credit Risk debt notes be delisted from those two markets in the European Union on Nov. 30.  … Read More

FHFA Court Cases Involving Pre-Crisis MBS Winding Down

Two pending mortgage lawsuits involving the Federal Housing Finance Agency, spawned by the housing crisis, have been winding down in recent weeks. One includes a win for Bank of America and the other includes oral arguments in an appeal by Nomura Holdings and the Royal Bank of Scotland. The Department of Justice had until Nov. 21 to appeal an earlier ruling in which BofA, defending practices of Countrywide Financial, got out of having to pay more than $1 billion in penalties to the FHFA. Instead of appealing to the Supreme Court, the DOJ quietly let the deadline slip away. In 2014, a federal judge ordered the bank to pay $1.2 billion in civil penalties. Read More

GSE Roundup

DU Day 1 Certainty Begins. On Dec.10 components of Fannie Mae’s Day 1 Certainty initiative become effective. Day 1, announced in October, gives customers freedom from representation and warranties on key aspects of the mortgage origination process through Fannie’s Desktop Underwriter platform. Asset and employment validation as well as Collateral Underwriter freedom from reps and warrants for appraisals begins Dec. 10. Fannie Prices Latest CAS CRT Deal. Last week, Fannie Mae priced its latest credit risk sharing transaction under its Connecticut Avenue Securities program. CAS Series 2016-C07, a $701.7 million note offering, was scheduled to settle on Dec. 8, 2016. Read More

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