Browse articles from all of our Newsletters related to FHFA.

February 16, 2018 - Inside The GSEs

GSE Roundup

At $600K a Year, Fannie Mae CEO Tim Mayopoulos is Underpaid. Although Fannie Mae reported pre-tax income of $18.4 billion in 2017, its CEO Timothy Mayopoulos took home, once again, a base salary of roughly $600,000, the limit for both GSE CEOs and a figure that seems exceedingly low when compared to financial services firms of similar size. A new 10-K filing from the company notes: “Our chief executive officer’s compensation in 2017 was more than 90 percent below the market median for comparable firms. Our inability to offer market-based compensation hinders our succession planning for our chief executive officer role, and potentially our ability to hire...

February 16, 2018 - Inside The GSEs

FHFA Challenges GSE Shareholder Suits Over Agency’s Structure

GSE shareholders seeking to challenge the Federal Housing Finance Agency based on its single-director structure may now face an added challenge. The Federal Housing Finance Agency has asked the courts to review the decision of the DC Circuit in PHH Corp. v. Consumer Financial Protection Bureau as it relates to similar complaints against the agency. When a 2016 ruling found that the similarly structured Consumer Financial Protection Bureau is not constitutional, Fannie Mae and Freddie Mac shareholders filed lawsuits asking the courts to vacate the Treasury sweep of GSE profits altogether.

February 16, 2018 - Inside The GSEs

OIG: FHFA Needs Better Oversight of Fannie’s Corporate Governance

The Federal Housing Finance Agency Office of Inspector General took issue with the way the FHFA oversees Fannie Mae’s corporate governance but said its review process for mortgage servicing rights transfers has greatly improved. The OIG released two audits recently. The first focused on the need for FHFA to pay closer attention to how Fannie handles conflicts with its senior executive officers. The OIG reviewed several Fannie policy documents, including those relating to governance, conflicts of interest and code of ethics procedures. It concluded that Fannie’s governance documents are “internally inconsistent” when it comes to resolving conflicts of interest involving senior executive officers (SEOs).

February 16, 2018 - Inside The GSEs

Corker Reform Draft Pulls from MBA , DeMarco/Bright Proposals

The draft of the housing-finance reform proposal from Sen. Bob Corker, R-TN, appears to have morphed out of both the Mortgage Bankers Association plan and a proposal put forth by Michael Bright and Ed DeMarco. A recent analysis by the Structured Finance Industry Group compared the Senate discussion draft with the other two proposals. SFIG noted that all three proposals advocate an explicit mortgage-backed securities guarantee, preserving the to-be-announced market and the 30-year fixed-rate mortgage. But when it comes to the cash window, the Senate draft deviates from the MBA and Bright/DeMarco plans, which suggested maintaining the cash window operations through the GSEs. Corker’s draft would maintain the cash window through the guarantors

February 16, 2018 - Inside The GSEs

GSEs Report $9B Earnings Loss Resulting from Tax Act

As predicted, per the Tax Cuts and Jobs Act, the GSEs’ fourth-quarter earnings took a big hit with Fannie Mae and Freddie Mac posting losses of $6.5 billion and $2.9 billion, respectively. This is a far cry from their combined net income of $7.7 billion in the third quarter. But this likely one-time event was prompted by the GSEs having to reduce the value of their deferred tax assets by $15.3 billion after the tax act became law in December 2017. As a result, Fannie will need a $3.7 billion draw from Treasury and Freddie will have to request a $312 million draw.

February 8, 2018 - Inside Mortgage Finance

OIG Says FHFA Needs Better Oversight Of Fannie’s Corporate Governance Policies

The Federal Housing Finance Agency Office of Inspector General took issue with the way Fannie Mae handles potential conflicts with its senior executive officers and wants the FHFA to pay closer attention to the problem.

February 2, 2018 - Inside The GSEs

Federal Housing Finance Agency Finalizes Goals for 2018-2022

The Federal Housing Finance Agency finalized its 2018-2022 strategic plan this week. A draft proposal of the plan was released back in October for public input. The long-range plan focuses on three strategic goals surrounding issues of safety and soundness of the GSEs; ensuring liquidity, stability and access in housing finance; and managing the conservatorship. When identifying risk in Fannie Mae and Freddie Mac, the FHFA said it plans to carefully document and communicate any adverse examination findings and conclusions to the GSEs.

February 2, 2018 - Inside The GSEs

IU Replies to Op/Ed Suggesting Trump on Verge of Crisis Repeat

GSE shareholders rights group Investors Unite took issue with a recent op/ed that suggested the Trump administration is preparing to return to the same housing-finance market that purportedly caused the financial crisis. In a piece penned for the Wall Street Journal, the American Enterprise Institute’s Peter Wallison warned that the Treasury Department is going down the wrong road on GSE reform. However, IU said Wallison's fears that the Federal Housing Finance Agency and Treasury are “marching back to the 1930’s” are unfounded. The group said in a blog posting that conservatives like Wallison will always claim that “statist prescriptions to economic questions are inevitably doomed to failure and almost always make matters worse.”

February 2, 2018 - Inside The GSEs

Trump Admin. Working on ‘Short List’ to Replace FHFA Director?

Although the term of GSE regulator Mel Watt doesn’t end until January of next year, the White House is reportedly already contemplating who will be the proper “conservative” choice to take over as regulator and conservator of Fannie Mae and Freddie Mac. According to industry stakeholders intimately involved in GSE issues, one candidate to be the next director of the Federal Housing Finance Agency is Mark Calabria, chief economist to Vice President Mike Pence. Calabria, a frequent GSE critic, is well-schooled on housing-finance issues – and the industry’s history. One observer said the choice would mirror the pick of conservative Mick Mulvaney to head the Consumer Financial Protection Bureau.

February 2, 2018 - Inside The GSEs

Mnuchin Talks GSE Reform, Wants Congress to Take the Lead

In the event that Congress can’t come to an agreement on fixing Fannie Mae and Freddie Mac, Treasury Secretary Steve Mnuchin said the department can take matters into its own hands. But he would rather leave it up to the lawmakers. “There are certain administrative options that we have,” he said, adding, “These entities are very complicated, and I would just say my strong preference would be to work with Congress on a bipartisan basis to reach a long-term solution.” Mnuchin reaffirmed his commitment to reforming the housing-finance system and support for the 30-year fixed-rate mortgage while testifying at a Committee on Banking, Housing, and Urban Affairs hearing Tuesday morning.

February 2, 2018 - Inside The GSEs

Corker’s GSE Reform Draft Includes Multiple Guarantors, Ginnie Wrap

Reforming the housing-finance system under the plan from Sen. Bob Corker, R-TN, includes having at least a handful of guarantors, winding down the GSEs and establishing a mortgage insurance fund with private capital, according to a leaked draft making the rounds this week. The 80-page document seeks to promote competition in the marketplace by having five or six guarantors of conventional mortgage-backed securities, with none of them getting more than 20 percent to 25 percent of the market. Those new guarantors would be expected to launch within two years. Section 809 of the legislation spells out that “as promptly as practicable” the FHFA can greenlight Fannie Mae and Freddie Mac to “sell or transfer” their assets.

February 2, 2018 - Inside MBS & ABS

Realtors Ask FHFA to Reduce Fannie/Freddie G-Fees and LLPAs, Citing the New Tax Law

The National Association of Realtors this week asked the regulator of Fannie Mae and Freddie Mac to lower the MBS guarantee fees charged by the two government-sponsored enterprises, citing lower corporate tax rates ushered in under the Tax Cuts and Jobs Act.

January 26, 2018 - Inside FHA/VA Lending

Congress Passes New Stop-Gap Funding Bill, Ends 3-Day Shutdown

President Trump this week signed a short-term spending bill that would keep the government operating until Feb. 8, 2018. The bill ended a three-day shutdown after the previous spending authority for most of the government expired at midnight on Jan. 19. However, the threat of another shutdown looms. FHA and Ginnie Mae both had contingency plans in place in case the short-lived shutdown dragged on, as it had in 2013. That event lasted for 16 days, at a loss of $1.6 billion a day to the federal government. Under FHA’s emergency plan, the agency would continue to endorse new single-family forward mortgages, but not Home Equity Conversion Mortgages and Title I loans. Ginnie would reduce staffing to essential personnel but continue its secondary market operations. It would continue to remit timely payment of principal and interest to investors, grant commitment authority and support issuance of ...

January 25, 2018 - Inside Mortgage Finance

Treasury Official Agrees with FHFA’s Objectives For Reforming the Housing-Finance System

The Treasury Department appears to be in agreement with the Federal Housing Finance Agency on objectives for a post-conservatorship housing-finance system, which includes preserving the 30-year fixed-rate mortgage and competition in the secondary market.

January 19, 2018 - Inside The GSEs

GSE Shareholders Continue Battle Against Government Agencies

In a joint brief filed this week, federal respondents took issue with arguments made by GSE shareholders in their fight against the net worth sweep and said a shareholder petition for a Supreme Court review of their case should not be granted. Shareholders in several cases filed three petitions for a writ of certiorari back in November. The plaintiffs asked the Supreme Court of the United States to intervene to “restore certainty and uniformity.” They claim that the Federal Housing Finance Agency acted unconstitutionally when it imposed the net worth sweep.

January 19, 2018 - Inside The GSEs

IG Says Fannie, Freddie ARMs Purchase Up Since 2016

The GSEs have been purchasing more adjustable-rate mortgages in the past year and the Federal Housing Finance Agency Office of Inspector General said that warrants monitoring. Since November 2016, the GSEs’ purchase of ARMs has grown. The numbers are far lower than the volume of ARMs purchased during the housing bubble in the early 2000’s, a new IG white paper noted. The ARM share of single-family mortgage purchases by the GSEs dropped from around 20 percent in 2006 to 12 percent in 2007. And by 2009, ARM purchases by Fannie and Freddie tumbled to just 2.3 percent of their single-family business. From 2007 to 2010, the GSEs tightened restrictions on their purchase of ARMs, including those with nontraditional features and layered risk.

January 19, 2018 - Inside The GSEs

Law Firm Forecasts GSE Reform to Happen Within First Half of Year

The stars are aligning for housing-finance reform, according to an analysis by K&L Gates. The law firm said it believes that reform may finally be addressed in the first half of this year. Sens. Bob Corker, R-TN, and Mark Warner, D-VA, have been circulating a draft proposal to other senators and the Trump administration. The firm noted that the Corker-Warner proposal contains features such as a federal government guarantee for mortgage-backed securities in the event of catastrophic losses, and it has the GSEs continuing to exist under government conservatorship until competitors enter into the securitization market for mortgage loans.

January 19, 2018 - Inside The GSEs

Treasury Advocates for Legislative Solution to GSE Reform

Craig Phillips, counselor to the secretary at the U.S. Department of Treasury, advocated for a legislative solution to the ongoing conservatorships of Fannie Mae and Freddie Mac. He said the decision to allow the GSEs to retain a small capital buffer was a litmus test on housing reform. Although he said Treasury didn’t feel that Fannie and Freddie have an immediate capital problem because they have lines of credit, Phillips said there was somewhat of an “optical issue,” which led to the Treasury’s decision to allow the GSEs to retain up to $3 billion in capital in December. Speaking at a Women in Housing and Finance public policy luncheon in Washington, he said, “We think that decreases tension over this point. There was...

January 19, 2018 - Inside The GSEs

FHFA Director Joins the GSE Reform Conversation, Seeks Explicit Guarantee

After years of being mum on what he thinks a reformed secondary mortgage market should look like, Federal Housing Finance Agency Director Mel Watt revealed FHFA’s goals for a post-conservatorship housing-finance system. Prompted by what Watt called “the growing perception that reform could be achievable this year,” he wrote to the Senate Committee on Banking, Housing and Urban Affairs on Jan. 16 outlining FHFA’s views on reform, which include an explicit government guarantee for mortgage-backed securities comprised of conventional home loans. According to the document, a copy of which was provided to Inside The GSEs, Watt and his staff reiterated that an ongoing conservatorship is not sustainable.

January 19, 2018 - Inside MBS & ABS

GSE Shareholders Continue to Appeal, Argue Their Case Against FHFA, Treasury in 2018

After their case against the Federal Housing Finance Agency was dismissed by the U.S. District Court for Delaware in November, government-sponsored enterprise shareholders David Jacobs and Gary Hindes recently filed an appeal.

January 19, 2018 - Inside MBS & ABS

Capitol Hill Hasn’t Shown Its Secondary-Market Reform Plans, FHFA Worries about Too Many Guarantors

Although the stars might be aligned for legislative reform of Fannie Mae and Freddie Mac this year, new developments late this week illuminate the difficulty of the task at hand.

January 18, 2018 - Inside Mortgage Finance

Credit Score War Brewing as FHFA, GSEs Explore Alternative Scoring Systems

Fannie Mae and Freddie Mac have been charged with exploring options to update their current FICO credit scoring model and make a decision this year as to whether to make the switch in 2019.

January 11, 2018 - Inside Mortgage Finance

FHFA OIG Says Uptick in Fannie Mae, Freddie Mac ARMs Purchase Warrants Monitoring

The Federal Housing Finance Agency Office of Inspector General said the recent uptick in the purchase of adjustable rate mortgages by Fannie Mae and Freddie Mac, especially since November 2016, bears watching as a potential emerging risk.


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