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Inside The GSEs

August 17, 2018

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Purchase-Mortgage Boost Can’t Offset Falling Refi in July MBS

Fannie Mae and Freddie Mac issued a combined $65.85 billion of single-family mortgage-backed securities last month, a 1.0 percent decline from their June total, according to an Inside The GSEs analysis of MBS data. Compared to the first seven months of 2017, the GSE single-family business was down 7.4 percent as of the end of July. Most of the month-to-month slump was at Freddie, where MBS production fell 8.9 percent from June. Fannie managed a 5.0 percent increase in July. Both GSEs are off about the same on a year-to-date basis. [Includes two data charts.] Read More

Mayopoulos at Center of Recent IG Management Alert

A heavily redacted Federal Housing Finance Agency Inspector General management alert about credit scores, published in late July, involved Fannie Mae CEO Timothy Mayopoulos, sources confirm.The 15-page report only mentioned that a “senior executive” was involved in a conflict-of-interest administrative review pertaining to alternative credit scores. It said that the executive did not disclose “critical information” about potential conflicts of interest arising from a personal relationship. Based on the IG report, it seems that Mayopoulos did disclose and recuse himself from business decisions related to alternative credit scores. But the IG report appears to take issue with the fact that he did not “fully disclose” the information. Read More

Watt Faces Controversy in Final Months as FHFA Director

Federal Housing Finance Agency Director Mel Watt has been under a lot of scrutiny as his tenure winds down by yearend. Some observers claim the FHFA is allowing the GSEs to introduce pilot programs that conflict with the primary market. There is a sexual harassment allegation against Watt. And he is reportedly being investigated for intimidating the agency’s inspector general.... Read More

Freddie Launches Mezzanine Loan Pilot to Help Workforce Housing

Freddie Mac launched a new pilot program geared toward keeping rents affordable for low-income and working families.The Mezzanine Loan program is different from other affordable housing efforts because it’s strictly voluntary and will offer lower cost financing to multifamily borrowers who agree to cap their rent increases for the life of the loan.... Read More

List of Clarifications Needed Prior To Single Security Launch

With the launch of the single security less than a year away, there are some uncertainties that Fannie Mae, Freddie Mac and the industry expect to have cleared up before making the switch next June. They range from ensuring fungibility between Fannie and Freddie securities, to creating more regulatory clarity, preparing third parties and determining how the Securities Industry and Financial Markets Association will consider the new security in the to-be-announced market.... Read More

Fannie, Freddie Could Need $77.6B Bailout in Extreme Economic Crisis

The Federal Housing Finance Agency’s recent stress test results show that the GSEs could need up to $77.6 billion in a severe economic crisis. But quarterly earnings continue to show a profitability that cancels out the need for a bailout. Required annually by the Dodd-Frank Act, the test of severely adverse scenario is based on Fannie Mae and Freddie Mac portfolios as of Dec. 31, 2017.... Read More

More Oversight of GSE Multifamily Seller/Servicer Relationships

As the GSEs’ share of the multifamily market continues to grow, the Federal Housing Finance Agency wants them to take more precautions when selecting and monitoring their multifamily seller/servicers. The regulator issued an advisory bulletin this week outlining expectations for Fannie Mae and Freddie Mac to institute proper controls and perform monitoring to identify and manage risks associated with .... Read More

FHFA Issues Guidance on Federal Home Loan Bank Advance Pricing

New guidance issued to the Federal Home Loan Banks focuses on making sure the banks are properly pricing the funding they offer. The Federal Housing Finance Agency said the banks have introduced a diverse array of advance products to meet the changing needs of their members over the years. In a recent advisory bulletin, the regulator directs the banks to be certain that the cost to issue debt, plus administrative and operating costs, does not surpass the minimum ... Read More

Fannie Warns of Expanding List of Fake California Companies

Fannie Mae issued its second fraud alert of the summer, warning lenders about borrowers using fake companies as their employers on loan applications. This time the fake companies seemed to have expanded their reach from southern California to Northern California.Ten more possibly fictitious companies have been found to be included on mortgage documents. The original alert included .... Read More

Shareholders Tweak Cases to Include Ruling on FHFA’s Structure

GSE shareholders have introduced a new theory to help strengthen their cases after being forced to back down from their illegal takings claim arguing that the Treasury sweep was illegal. They now look to modify their complaint to focus on a ruling in another case that deemed the Federal Housing Finance Agency structure unconstitutional.... Read More

GSE Roundup

Fannie’s Eighth RPL Sale. Fannie Mae began marketing its eighth sale of reperforming loans this week. It consists of approximately 18,400 loans, having an unpaid principal balance of $3.59 billion, and is available for purchase by qualified bidders. Reperforming loans are mortgages that were previously delinquent, but are performing again because payments .... Read More

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