Browse articles from all of our Newsletters related to GSEs.

August 18, 2017 - Inside FHA/VA Lending

Industry Experts Favor Unified GSE, FHA/VA Servicing Policies

Simplifying and aligning the default servicing policies of the conventional conforming and the government-backed mortgage markets would better serve the mortgage industry and homeowners, according to industry experts. In a recent discussion on how regulatory burden and high servicing costs might impede lending, members of the Mortgage Servicing Collaborative agreed on the need for streamlined and harmonized federal, state and agency policies and rules on servicing. Increased regulatory requirements have caused mortgage-servicing costs to skyrocket in recent years, experts said. Even though the quality of servicing has improved, the new regulations are complex and costly, they noted. Multiple pressures placed upon servicers have suppressed mortgage lending, making it harder for borrowers with tainted credit to obtain a mortgage, according to the ...

August 18, 2017 - IMFnews

What We’re Hearing: The Nation’s Volume Leader in the ‘New’ Nonconforming Is… / Sales Executive Departs / Don’t Stop Believin’ (in Fannie and Freddie)? / ‘Contract Law’ and GSE Common Shares / A Legislative Snafu Called Donald Trump?

According to our calculation, Fannie common now trades at $2.80, a 20.17 percent improvement since the close of 2Q17, while Freddie’s value rose 21.08 percent to $2.70.

August 18, 2017 - Inside MBS & ABS

GSE Shareholders Grow Weary of Drawn Out Discovery Process in Fairholme Case

Attorneys for Fairholme Funds filed another motion this week requesting to view about 1,500 government documents in a lawsuit challenging the government’s net-worth sweep of profits at Fannie Mae and Freddie Mac. And late last week, the government produced three more documents that were originally classified as “privileged.” In the new motion, the Fairholme attorneys asked the Federal Claims Court to use the “quick peek” procedure for more than 1,000 documents dating back to May 2012. These are among the many documents the plaintiffs say the government is still withholding under the deliberative process and bank examination privileges. It’s...

August 18, 2017 - Inside MBS & ABS

Merger of SFR Operators Invitation Homes and Starwood Could Spell More Opportunities for Fannie and Freddie

The proposed $4.3 billion merger of single-family rental operators Invitation Homes and Starwood Waypoint Homes will create a corporate landlord with 82,000 homes – and a behemoth of a potential client for Fannie Mae and possibly Freddie Mac. Earlier this year, Fannie agreed to provide Invitation Homes with $1 billion in financing. The deal broke new ground for the government-sponsored enterprise, but it also raised questions about whether a government-owned entity that received billions in taxpayer assistance should be lending money to a company (Invitation Homes) grubstaked by Wall Street. Since the Invitation-Fannie arrangement was unveiled, no other significant SFR financing vehicles involving a GSE has...

August 18, 2017 - Inside MBS & ABS

Banks Add to Residential MBS Holdings During Second Quarter, More Interest in GSE Securities

Commercial banks and savings institutions continued to stockpile agency MBS during the second quarter of 2017 with a strong appetite for Fannie Mae and Freddie Mac pass-through securities. Total bank investment in residential MBS rose by $36.28 billion during the second quarter, lifting the industry’s aggregate portfolio to a record $1.799 trillion. Bank MBS holdings have risen steadily since the third quarter of 2014, growing by $264.07 billion over that period. In addition to those held-to-maturity and available-for-sale accounts, about a dozen banks held $16.34 billion of residential MBS in trading accounts. All of the growth has been...[Includes two data tables]

August 18, 2017 - IMFnews

Those Incredibly Shrinking GSE MBS Portfolios – a 5.3 Percent Decline in 2Q17

Today, Fannie and Freddie hold $13.50 billion of subprime and Alt A MBS. At the end of 2005, they had a staggering $258.67 billion in such assets.

August 17, 2017 - Inside Mortgage Finance

MBA Says Ending the Fannie, Freddie Duopoly Beneficial For All, Including Small Lenders

Mortgage industry groups cannot seem to agree on whether there should be more than two guarantors of conventional mortgage-backed securities once Congress and the White House figure out what to do with Fannie Mae and Freddie Mac. The Mortgage Bankers Association firmly supports multiple guarantors, arguing that more competition is better. But groups representing smaller lenders worry about the burden of maintaining relationships with many secondary-market outlets and the potential for an uneven playing field. David Stevens, president and CEO of the MBA, said...

August 17, 2017 - IMFnews

Short Takes: Changes for the HARP Program / Still Eligible: 143,000 / But Shrinking / Citadel Servicing Crosses $1B Mark / A New CIO for Freddie Mac

The FHFA estimates that roughly 143,000 GSE borrowers are still eligible to use the HARP program.

August 16, 2017 - IMFnews

Alternative Credit Scores for GSE Loans will Have to Wait for the Single-Security Project

Mel Watt called the credit score explorations one of the “most difficult” evaluations he’s taken on as FHFA director.

August 16, 2017 - IMFnews

Fannie, Freddie Earnings Could Hit $10 Billion in 3Q17 Thanks to RBS Settlement

If the $10.4 billion figure proves accurate it will result in another hefty dividend payment by Fannie and Freddie to the holder of its senior preferred stock: the U.S. Treasury.

August 15, 2017 - IMFnews

LIBOR is Being Phased Out. A Big Deal or Ho-Hum?

Fannie Mae and Freddie Mac are well aware of the issue and have leeway to replace LIBOR with another benchmark when the time comes, industry officials said.

August 14, 2017 - IMFnews

Freddie Mac Picks up the Pace in CRTs During 2Q17

Freddie Mac issued $2.11 billion of new Structured Agency Credit Risk notes, an impressive increase of 35.6 percent…

August 14, 2017 - IMFnews

KBW Weighs in on GSE Earnings, PSPA Lawsuits, Says Stocks are Worth $1 Each

Although Fannie and Freddie continue to earn money hand over fist, their common shares are probably worth just $1 a piece, according to a new research report…

August 14, 2017 - IMFnews

GSE Lenders Reach for Refi Business in 2Q17 by Loosening the Credit Box

The pronounced shift from refinance to purchase lending made for major changes in overall risk distribution during the second quarter.

August 11, 2017 - Inside The GSEs

GSE Roundup

Fannie’s Fourth Sale of Reperforming Loans: Fannie Mae began marketing its fourth sale of reperforming loans on Aug. 9 as part of the GSE’s ongoing effort to reduce the size of its retained mortgage portfolio. The pool of approximately 11,000 loans, approximately $2.5 billion in unpaid principal balance, is available for purchase by qualified bidders. This sale is being marketed in collaboration with Citigroup Global Markets, Inc. Bids are due on Sept. 6, 2017. Former Fannie Exec Leaves for Flagstar. Flagstar Bank has hired Kristy Fercho, previously senior vice president and customer delivery executive for Fannie Mae, to lead Flagstar's mortgage business. Since 2007, she has served in ...

August 11, 2017 - Inside The GSEs

FHFA OIG: Counterparty Risk Program Needs More Supervision

The Federal Housing Finance Agency Office of Inspector General said the FHFA’s suspended counterparty program needs better oversight. In a recent audit of counterparty risk, the IG found deficiencies in the FHFA’s Office of General Counsel review of suspended counterparties. Suspended counterparties are businesses that have engaged in misconduct. The suspended counterparty risk management programs were designed to manage counterparty risk through various means that include maintaining eligibility standards, evaluating counterparties’ financial conditions, monitoring exposure to potential losses, and working with counterparties to limit realized losses. Fannie Mae, Freddie Mac and the Federal Home Loan Banks can also chose to cease doing business with counterparties that appear to have unacceptable risks.

August 11, 2017 - Inside The GSEs

FHFA Extends Deadline, Again, on Language Preference Question

The Federal Housing Finance Agency reopened and for the second time, extended the deadline for industry participants to offer input on improving access to credit for borrowers that aren’t proficient in English. The original deadline expired July 10, but was extended and closed on July 31. On Aug. 4, the FHFA reopened the request for input and will allow comments on additional information added to the RFI. The new deadline to submit input is Sept. 1. The regulator said it was reopening and extending the input period “to allow interested parties more time to consider additional information on issues facing qualified mortgage borrowers with Limited English Proficiency (LEP) throughout the mortgage life cycle...

August 11, 2017 - Inside The GSEs

Freddie to Release New Single-Security Disclosures in August

In preparation for the launch of the uniform-mortgage backed security in 2019, Freddie Mac will release new single-security-related disclosures for investors beginning on Aug. 28. The UMBS was originally scheduled to launch next year but was delayed to allow more time for development, testing and validation of controls. The disclosures are in conjunction with the single-security initiative, designed to increase liquidity and fungibility in the $3.5 trillion to-be-announced MBS market. Mark Hanson, Freddie’s senior vice president of securitization, called the launch a “successful joint effort among several parties that will enhance the U.S. mortgage industry by modernizing the TBA market for both Freddie Mac and Fannie Mae.”

August 11, 2017 - Inside The GSEs

MBA Says its Reform Plan has Minimal Costs to Consumers

The Mortgage Bankers Association released a paper focused on how the various aspects of its reform proposal could impact consumer costs and concluded any impact would be minimal. The trade group explained that costs under the MBA proposal, which calls for multiple privately owned guarantors, are likely to be similar to costs in today’s mortgage market. “While the precise impact on consumer costs from true housing-finance reform may be difficult to gauge, we know that attempts to shortcut reform through recap and release would lead to much higher costs for consumers,” said the MBA, adding that global investors have been clear that they don’t want to return to a world of implicit guarantees.

August 11, 2017 - Inside The GSEs

Layton Talks SFR and Home Possible Program Changes

Freddie Mac CEO Donald Layton said the GSE is exploring the single-family rental market, in consultation with the Federal Housing Finance Agency, and touted the affordability aspect of the plan. “We believe it’s appropriate to enter that market with care and where there are additional social benefits, and significant affordable characteristics. So it’ll be on a smaller scale,” he told Inside The GSEs. “We have permission to go for a limited amount of volume to learn about the business.” This is in contrast to Fannie Mae’s entry into the single-family market. Earlier this year Fannie did a $1 billion deal with Invitation Homes as a pilot program.

August 11, 2017 - Inside The GSEs

Alternative Credit-Scoring Models Delayed Until 2019, Says FHFA

To minimize confusion with the implementation of the single security, the Federal Housing Finance Agency said it doesn’t plan to introduce new credit- scoring models until at least 2019. A number of groups have been pushing the government-sponsored enterprises to look beyond the FICO score, and Fannie and Freddie have been studying the issue. But FHFA Director Mel Watt said any major change would have to wait until the GSEs have completed the complex single-security project. “Based on the overwhelming feedback we have received from the industry, it is clear that it would be a serious mistake to change credit scoring models before mid-2019,” he told the annual convention of the National Association of Real Estate Brokers last week.

August 11, 2017 - Inside The GSEs

FHLBank Income up 6 Percent, Advances Steady in 2Q17

The Federal Home Loan Bank System saw a 7 percent increase in advances during the second quarter of 2017. The FHLBank’s Office of Finance reported that advances stood at 706.8 billion, at the end of June, up from $660.7 billion reported in the previous quarter. The combined net income for the second quarter was $844 million, up from $812 million the previous quarter. The OF attributes the upswing to an increase in net interest income, partially offset by lower gains on litigation settlements. For the first half of the year net income was $1.66 billion representing a 2.2 percent increase from a year...

August 11, 2017 - Inside The GSEs

Watt Cites Minority-Specific Homeownership Challenges

Federal Housing Finance Agency Director Mel Watt said both old and new obstacles have negatively affected African-American homeownership, which has steadily retrogressed. Before the housing crisis, the homeownership rate for African-Americans was close to 50 percent in 2004. However, by 2017 it declined closer to levels last seen in 1994. “We are worse off today than we were 20 years ago,” said Watt, while speaking at the National Association of Real Estate Brokers’ annual convention in New Orleans last week. He pointed out that because home equity has played a major role in African-American assets, the impact of the economic downturn and foreclosure crisis on wealth in

August 11, 2017 - Inside The GSEs

PHH Settles with HUD, FHFA Over Underwriting Issues

  PHH Corp. announced a $75 million settlement with the Department of Justice and the Federal Housing Finance Agency to settle unspecified allegations tied to the underwriting of legacy loans. However, whether Fannie Mae and Freddie Mac loans can be targeted for False Claims Act purposes is still debatable. The DOJ portion of the settlement covers FHA and VA mortgages originated from January 2006 until the end of 2011. …

August 11, 2017 - Inside The GSEs

FHFA Stress Test Shows GSEs Would Need $100B in Bad Times

In the event of a severe global recession, Fannie Mae and Freddie Mac could need a bailout of up to $99.6 billion, according to the Federal Housing Finance Agency’s annual stress test report released this week. The test of severely-adverse scenarios, required by the Dodd-Frank Act for companies with consolidated assets of more than $10 billion, is based on Fannie and Freddie portfolios as of Dec. 31, 2016. The bailout would be needed on an incremental basis and would also depend on the treatment of the GSEs’ tax-deferred assets. Under this hypothetical economic scenario, elevated stress in corporate financial and commercial real estate markets include situations where...

August 11, 2017 - Inside The GSEs

FHFA Director Watt Tells NAR Not a Fan of ‘Recap and Release’

Although Federal Housing Finance Agency Director Mel Watt is concerned about the GSE capital buffer falling to zero early next year, it appears he’s unlikely to take administrative action anytime soon to fix the situation. At least that’s the message conveyed in a new letter Watt penned to National Association of Realtors President William Brown. According to the Aug. 9 letter, Watt notes he’s “very concerned” about the issue because it “increases the probability of a draw which could cause an adverse market reaction.” The regulator adds: “However, I am sensitive to the prospect that whatever steps FHFA could take might be misperceived as either an effort...

August 11, 2017 - Inside The GSEs

GSE Combined Net Income $4.86B, Capital Buffer Concerns Grow

Fannie Mae and Freddie Mac earnings remained strong in the second quarter with the GSEs posting a combined $4.86 billion in net income, but concerns about the soon to be non-existent capital buffer also remain. The GSEs’ $9.85 billion in net income for the first half of the year more than doubled their combined earnings from the same time period in 2016, according to their second quarter earnings statements released last week. While Fannie posted a net income of $3.20 billion, a 15.4 percent quarterly improvement, Freddie witnessed a 24.7 percent decline to $1.66 billion in the second quarter.

August 11, 2017 - Inside Mortgage Trends

GSE Lenders Reach for Refi Business in 2Q17

Mortgage lenders that sell loans to Fannie Mae and Freddie Mac opened the credit box slightly for refinance borrowers during the second quarter, according to a new Inside Mortgage Trends analysis of mortgage-backed securities data. Some 24.8 percent of refinance loans securitized by the two government-sponsored enterprises during the second quarter had credit scores below 700. That was up from 22.6 percent in the previous period and just ... [Includes two data charts]

August 11, 2017 - IMFnews

What We’re Hearing: 10 Years Already? / When was the First (Subprime) Shot Fired? / And No. Nine for Fannie & Freddie / The New Nonprime Kids on the Block / Watt Seeking Political Cover? / How About $500,000 for the MID?

This year, nonprime production across the U.S. might top $3 billion to $4 billion at best. At its peak last decade, it was a $1 trillion a year business. That’s not a misprint…

August 11, 2017 - Inside MBS & ABS

Freddie Picks Up the Pace in Credit-Risk Transfers During 2Q17, Reinsurance Activity a Little Soft

Fannie Mae and Freddie Mac continued to lean heavily on their structured debt programs to meet credit-risk transfer goals originally set by their regulator that have become key features in their business strategies. The two government-sponsored enterprises issued $4.48 billion of credit-risk transfer debt during the second quarter, a modest 5.8 percent increase from the first three months of the year. Overall MBS issuance by the two GSEs was down during that period, but their CRT debt issuances are typically linked to MBS issued six months prior. Fannie’s Connecticut Avenue Securities program produced...[Includes one data table]

August 10, 2017 - Inside Mortgage Finance

Alternative Credit Scoring Model Possibility Delayed Until Post-CSP Implementation

Federal Housing Finance Agency Director Mel Watt said it will be at least two years until Fannie Mae and Freddie Mac will adopt alternative credit scoring models. A number of groups have been pushing the government-sponsored enterprises to look beyond the FICO score, and Fannie and Freddie have been studying the issue. But Watt said any major change will have to wait until the GSEs have completed the complex single-security project. “Based on the overwhelming feedback we have received from the industry, it is...

August 10, 2017 - Inside Mortgage Finance

Wells Fargo, PHH Agree to Pay $182 Million to Resolve FCA Lawsuits Involving FHA, VA, and Loans Sold to GSEs

The Department of Justice and three other federal agencies will rake in $182 million from separate agreements by Wells Fargo and PHH Mortgage over False Claims Act charges. The PHH settlement features a rare FCA action involving loans sold to Fannie Mae and Freddie Mac. Wells Fargo agreed to pay $108 million to settle a whistleblower lawsuit filed in 2006 and unsealed in 2011. It alleged that the bank overcharged veterans by masking unallowable fees and concealing the fact in order to obtain VA guarantees for the mortgage loans. At the same time, Wells allegedly falsely certified to the VA that it was not charging improper fees. Similar charges were brought...

August 10, 2017 - IMFnews

FHFA Chief Concerned about GSE Zero Capital Buffer, but Doesn’t Want to Promote ‘Recap and Release’

Some have suggested that Watt may act yet, but wants "political" cover...

August 9, 2017 - IMFnews

FHFA Chief Concerned about GSE Zero Capital Buffer, but Doesn’t Want to Promote ‘Recap and Release’

Watt, a former Congressman, wants Congress to reform the GSEs legislatively to solve their conservatorship status and find a path forward for the two enterprises.

August 7, 2017 - IMFnews

Fairholme Predicts Trump’s DOJ Will See (GSE) Things Its Way

“There is a proven blueprint to succeed, and we hope to successfully resolve this matter before reaching the Supreme Court of the United States,” the company told investors.

August 4, 2017 - IMFnews

What We’re Hearing: The Clock is Ticking / Ivanka Trump, the GSEs, Mary Bailey and the Debt Ceiling / How Far will the FHFA Go in Loosening Credit? / Bad Timing on Mortgage M&A Deal / Impac’s Non-QM Plans Revealed

It was thought that Watt, while speaking at the annual convention of the NAREB, might, might say something about the GSE dividend payments...

August 4, 2017 - IMFnews

Cherry Hill Inks MSR Flow Deal with RoundPoint Mortgage

CHMI was launched a few years ago by the privately owned Freedom Mortgage, the nation’s seventh largest originator…

August 4, 2017 - IMFnews

Red Hot Housing: July MBS Total the Largest Monthly Purchase-Mortgage Volume Since Loan-Level Data Became Available

Freddie’s purchase-mortgage business soared 17.1 percent from June to July, while Fannie’s was up 9.0 percent…

August 3, 2017 - Inside Mortgage Finance

Industry Trade Groups Call on CFPB to Address ATR/QM’s GSE Patch, One Way or the Other

As the Consumer Financial Protection Bureau prepares to begin assessing its ability-to-repay/qualified mortgage rule, national representatives of the mortgage industry and other financial services participants this week urged the regulator to deal with what’s known as the “GSE patch.” The patch provides a temporary safe harbor for mortgages eligible to be sold to the government-sponsored enterprises that have debt-to-income ratios that exceed 43 percent, the maximum allowed under the ATR rule. The Housing Policy Council of the Financial Services Roundtable noted...

August 3, 2017 - Inside Mortgage Finance

Big Banks Diverging on Whether to Retain Originations or Sell into the Secondary Market

For years, big banks have delivered nearly all of their conforming mortgage production to the government-sponsored enterprises and retained their jumbo mortgages in portfolio. But some big banks have changed tactics, exploring differing execution options for their originations. Paul Donofrio, CFO of Bank of America, said the bank retained about 90.0 percent of its mortgage production on balance sheet in the second quarter of 2017. BofA had $18.0 billion in originations during the quarter, including first mortgages and home-equity loans. The loans retained...

August 3, 2017 - IMFnews

Short Takes: By September 30, the FHFA will Change the GSE Dividend Payment? / Not All Are in Favor / Profits and Volatility / A Loss for Nationstar but Stock Jumps a Bit / Flagstar Taps Fannie Mae Exec for Top Mortgage Post

September 30 isn't far away...

August 3, 2017 - IMFnews

Fannie Posts Strong 2Q Profit, Will Pay Treasury A $3.1B ‘If FHFA Declares a Dividend in This Amount’

Treasury keeps earning huge dividends from the GSEs, while the junior preferred shareholders can only look on in jealousy...

August 2, 2017 - IMFnews

Fannie Mae Posts Strong 2Q Profit, Will Pay Treasury $3.1B ‘If FHFA Declares a Dividend in This Amount’

In early 2018, the Fannie/Freddie capital buffer falls to zero from $600 million this year...

August 2, 2017 - IMFnews

Short Takes: Freddie Moves Closer to SFR Financing / Room for GSE Legislation to Get Done? / Michael Bright: Acting Ginnie Mae Chief / Applications Decline / A New Hire for Waterstone

Cowen & Co. analyst Jaret Seiberg believes the Senate Banking Committee remains on track to unveil GSE reform legislation late in the fourth quarter...

August 2, 2017 - IMFnews

FHFA Director Mel Watt Rules Out G-Fee Cut

Watt noted that, “Some lenders are finally showing more willingness to extend credit to borrowers who meet the broader credit criteria reflected in the enterprises’ credit boxes…”

August 1, 2017 - IMFnews

FHFA Chief Mel Watt Rules Out G-Fee Cut

“Some lenders are finally showing more willingness to extend credit to borrowers..." said FHFA Director Mel Watt.

August 1, 2017 - IMFnews

Short Takes: Freddie’s CEO Comments on Declining Capital Buffer / This is Not Your Parent’s Freddie Mac / Hensarling Calls for Investigation into Whether CFPB Chief Violated the Law / A Strong Quarter for Arch / Poulin Rejoins Mortgage Network

Freddie Mac CEO Don Layton: "The fundamentals are strong and residual flaws are gone..."

August 1, 2017 - IMFnews

A 25 Percent Earnings Decline for Freddie Mac; ‘Account Surplus’ with Uncle Sam will Swell to Almost $39 Billion

Freddie expects to make a $2 billion dividend payment to Treasury – the holder of its senior preferred stock – sometime in September.

July 31, 2017 - IMFnews

Fannie Expects More Business from DTI Shift

Fannie said that about 3 or 4 percent of DU applications with DTI ratios ranging from 45 percent to 50 percent had been deemed ineligible because they failed the overlay test…

July 31, 2017 - IMFnews

Additional Government Documents Unsealed in GSE Shareholder Case

“This new trove of documents conclusively shows that the net worth sweep was designed solely to boost Treasury’s coffers and prevent the GSEs from rebuilding capital or exiting conservatorship,” said Investors Unite, a shareholder rights group.


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