Cart

Inside The GSEs

August 3, 2018

View Archived Issues

Fannie and Freddie Report $7.0 Billion in Combined Profits for 2Q

The GSEs posted a combined net profit of $6.96 billion for the second quarter, with Fannie accounting for the lion’s share having earned $4.46 billion. The combined number is down slightly from the $7.19 billion recorded for the first quarter. Fannie Mae’s chief financial officer, Dave Benson, attributed the 4.6 percent quarterly increase partly to higher credit-related income. [Includes one data chart.] Read More

With Reform a Priority, White House Takes a Keen Interest in FHFA Job

The White House, according to industry insiders, has formed a small search team to help pick a successor to Federal Housing Finance Agency Director Mel Watt, whose tenure at the agency is imperiled because of recent sexual harassment allegations levied against him by an employee.Watt’s five-year term is scheduled to end in early January 2019, but it’s possible he might be forced from the position much sooner or decide to step down on his own. The 72-year-old regulator – a former Democratic Congressman from North Carolina – has declined to discuss the matter, but issued a statement through the FHFA’s public relations department saying he’s “confident that the investigation currently in progress will ... Read More

Fannie CEO to Step Down by Yearend, Board Focuses on Replacement

Fannie Mae’s CEO Timothy Mayopoulos is leaving his post by the end of this year after being with the GSE since 2009. Fannie announced his departure last week along with a new leadership structure. Mayopoulos became CEO in 2012 after being promoted from chief administrative officer and general counsel. He will remain on board until the end of 2018 and work with the board of directors to make sure the transition is seamless. During his tenure, Fannie has been profitable each year. “For Fannie Mae, it has been a decade of reform and fundamental change. Read More

Fairholme Loves the GSEs, But No Help to Bottom Line, Not Yet

In a new semi-annual letter issued to shareholders this week, Fairholme Capital Management blamed the weak first-half performance of the Fairholme Fund on its investment in Fannie Mae and Freddie Mac preferred shares, while telling investors the GSEs’ businesses are “stronger than ever.”The Fairholme Fund decreased in value by 8.49 percent in the first half of 2018, while the S&P gained 2.65 percent, according to the shareholder letter. The investment in Fannie/Freddie accounts for 16.6 percent of the Fairholme Fund’s net assets. Headed by investment banking veteran Bruce Berkowitz, Fairholme is betting heavily on a recent promise made by the Trump administration to end the almost 10-year-old conservatorships with the hope the two will reemerge as shareholder-owned companies. Read More

Treasury Supports GSE Appraisal Waivers, Makes Recommendations

Fannie Mae and Freddie Mac have the Treasury Department’s support when it comes to appraisal waivers, according to a newly published report this week from the Treasury on nonbank financials, fintech and innovation. A portion of the report focused on updating activity-specific regulations under the realm of lending and servicing. Treasury explained that it supports the GSEs’ efforts to implement standardized appraisal reporting, their adoption of proprietary electronic portals to submit appraisal forms and the GSEs’ limited adoption of appraisal waivers. The report acknowledged concerns from the appraisal industry but touted the benefits of using the waivers. “While Treasury acknowledges that Read More

FHFA-OIG Examines Decision-Making Authority Changes

The Federal Housing Finance Agency Office of Inspector General said the GSE boards’ undelegated authority has changed significantly over the past five years. Some items like seller/servicer master agreements no longer need FHFA approval. In a white paper published last week, the IG examined the Federal Housing Finance Agency’s letters of instruction (LOI) to the boards of Fannie Mae and Freddie Mac. The letters were initiated at the start of the conservatorship in 2008, revised in 2012 and updated again in December 2017. They are sent to the GSE boards to define and... Read More

FHFA Halts Credit-Score Decision Analysis, Changes Focus

The Federal Housing Finance Agency decided to call off plans to announce a decision regarding alternative credit scores. Some credit-score providers are disappointed. The Fannie Mae and Freddie Mac regulator spent years discussing the topic and months reviewing comments on credit-scoring options after issuing a request for input last year. But it abruptly called off going any further and said it will now focus on implementing credit-score provisions in the recently enacted Dodd-Frank reform legislation. Under the Economic Growth, Regulatory Relief and Consumer Protection Act, which passed in May, the FHFA is required to issue new rules that set standards and approval criteria for how the GSEs validate their credit-score models. Read More

FHFA OIG Management Alert Explores Credit Score Conflict

A senior executive at Fannie Mae is involved in a conflict-of-interest administrative review pertaining to alternative credit scores, according to a Federal Housing Finance Agency Office of Inspector General management alert. The 15-page alert, published on July 26, is heavily redacted. It noted that an executive did not disclose “critical information” about potential conflicts of interest. The IG said the person failed to make a timely and complete disclosure about a potential conflict of interest and asked the FHFA to take appropriate disciplinary action. “FHFA’s decision whether to accept an alternative credit scoring model for the enterprises is a high-stakes decision, with long-term impact,” said the OIG. Read More

FHLBank Earnings Up 15 Percent, Advances Grow in Second Quarter

The Federal Home Loan Bank System saw a 13 percent yearly increase in earnings during the second quarter of 2018. The FHLBank’s Office of Finance reported that net income was $971 million for the quarter, up from $858 million in the first quarter. And for the entire first half of the year net income totaled $1.829 billion, an increase of 10 percent from a year earlier. The OF attributes the upswing to an increase in net interest income that was partially offset by lower non-interest income. [Includes one data chart.] Read More

Fannie Mae Launches SOFR as LIBOR Alternative

As the financial markets begin transitioning from the London Interbank Offered Rate, which is set to go away in 2021, Fannie Mae became a pioneer in a replacement index by issuing Secured Overnight Financing Rate (SOFR) securities. The government-sponsored enterprise announced that the three-tranche $6 billion SOFR debt transaction was created to accelerate the development of the SOFR market. And Fannie encourages other issuers in debt markets to follow. The inaugural transaction garnered strong investor demand for the floating rate notes from a diverse investor base, according to Fannie. Read More

GSE Footprint in Multifamily Mortgages Causes Concern

Multifamily purchase volume continued to surge for the GSEs in the second quarter. But as the mortgage giants maintain their large footprint in the multifamily market, some industry observers allege mission creep. During the second quarter, Fannie Mae provided $14.5 billion in multifamily financing, up from $11.3 billion in the first quarter of 2018. Freddie Mac also increased its volume in the second quarter and provided $15.8 billion in multifamily credit, up from $13.0 billion in the first quarter. Second-quarter numbers are a good indicator that even at the midway point in 2018, the GSEs are on track to meet or surpass last year’s financing volume. Read More

GSEs Update Mortgage Insurance Termination Policies

The GSEs have recently updated their policies as they look to simplify borrower-initiated requests to cancel private mortgage insurance coverage. Fannie is the latest to announce plans to update the various methods it uses for verifying current property values and said it will require servicers to implement the new policy by March 1, 2019. Borrower-initiated requests to terminate mortgage insurance based on the home’s original value no longer need to depend on servicers to warrant the property value, under Fannie’s new policy. The GSE said lenders can use the GSE’s Automated Property Service tool to verify the current... Read More

GSE Roundup

Capital Proposed Rule Comment Period Extended to November. The Federal Housing Finance Agency announced this week that it is extending the public comment period for the agency's proposed rule on Enterprise Capital Requirements by an additional 60 days. The previous deadline for comments was Sept. 17, 2018. The new deadline will be Nov. 16, 2018. FHFA extended the public comment period “due to the high level of interest in the proposed rule and requests from multiple stakeholders for more time to evaluate it.” GSE shareholders group Investors Unite, said, “However complex capital standards are, professionals who dwell in this policy area every day should be able to offer their views within a three-month window.” 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