Tag Archives: FHFA

Fannie, Freddie Could Need as Much as $126 Billion in Crisis

  • Regulator’s stress test subjects companies to severe downturn
  • Companies would still have $132 billion in funding remaining

Fannie Mae and Freddie Mac could need as much as $125.8 billion in bailout money from taxpayers in a severe economic downturn, according to stress test results released Monday by their regulator.

The Federal Housing Finance Agency said that the government-controlled companies, which back nearly half of new mortgages, would need at least $49.2 billion.

The annual test, required by the Dodd-Frank Act, is likely to be used both by proponents of allowing Fannie Mae and Freddie Mac to build capital and by those who think there’s not an urgent need for the government to take that move.

Read on.

Condo legislation finally a law

Housingwire:

H.R. 3700, the “Housing Opportunity Through Modernization Act,” finally finished the legislation process. President Obama signed the housing legislation into law on Friday, which, according to the National Association of Realtors, “will dramatically improve long-fought restrictions on Federal Housing Administration financing for condominiums.”

In light of the news, NAR President Tom Salomone said, “Realtors have reason to celebrate today as legislation easing restrictions on Federal Housing Administration financing for condominiums is finally signed into law. This is a long-awaited victory for NAR and for homebuyers for whom condos are an important and affordable option.”

The U.S. Senate passed H.R. 3700 on July 15 after the bill passed in the House of Representatives by a unanimous vote back in February.

The new changes will make the FHA’s recertification process much easier and will lower the FHA’s current owner-occupancy requirement from 50% to 35%.

The bill also requires FHA to replace existing policy on transfer fees with the less-restrictive model already in place at the Federal Housing Finance Agency.

The FHA’s current restrictions on condominium financing present a significant hurdle for one of America’s most affordable options, according to testimony given on Capitol Hill in 2015 by then NAR President Chris Polychron.

Barclays triumphs in toxic mortgage bond row with U.S. Bank, FHFA

Barclays Bank and a defunct subprime lending unit of the company are off the hook for allegedly misrepresenting the quality of the mortgages that made up a $619 million mortgage bond after the Supreme Court of the state of New York ruled that U.S. Bankand the Federal Housing Finance Agency waited too long to file a lawsuit against Barclays.

Law360 first reported the news of the dismissal.

According to court documents, Judge Marcy Friedman ruled recently that U.S. Bank, acting as the trustee for Structured Asset Securities Corporation Mortgage Loan Trust, and the FHFA, acting as the conservator for Freddie Mac, filed suit against Barclays and the now-shuttered EquiFirst beyond the statute of limitations, and is therefore dismissing the lawsuit.

Read on.

FHFA’s Watt: Congress needs to handle housing finance reform

In recent weeks, several different groups tried to exert public pressure on the Federal Housing Finance Agency in an attempt to end the housing finance system’s current status quo.

Recently, 32 Congressional Democrats attempted to push the FHFA to allow Fannie Mae and Freddie Mac to rebuild their dwindling capital base, while a group of the largest trade organizations in housing said that their view is that “comprehensive reform to the secondary housing finance system must come through Congress,” rather than from the FHFA.

The viewpoint of the Mortgage Bankers AssociationNational Association of RealtorsAmerican Bankers AssociationNational Association of Home Builders, and the National Housing Conference was echoed by several of the Senate’s most ardent supporters of housing finance reform, who recently sent a letter of their own to the FHFA, stating their belief that Congress should be the ones to take on housing finance reform.

Up to this point, the FHFA and its director, Mel Watt, have not responded directly to these efforts, other than Watt’s inclusion in the Financial Stability Oversight Council’s annual report, in which the FSOC members stated that they too believe that Congress needs to take the lead on housing finance reform.

But now, Watt is responding directly to those public salvos, albeit much more quietly than the trade groups or the politicians.

As it turns out, Watt actually sent a letter of his own on Tuesday in response to the letter from the Mortgage Bankers Association, National Association of Realtors, American Bankers Association, National Association of Home Builders, and the National Housing Conference.

Watt’s response was not made public, but it was revealed by the Wall Street Journal’s Nick Timiraos, who tweeted out a copy of the letter.

Read on.

Who is eligible for principal reduction? New report sheds light on groundbreaking program Just how many borrowers are eligible? Where are they located?

Housingwire:

When the Federal Housing Finance Agency announced earlier this year that it was going forward with a groundbreaking plan to offer principal reduction to a select number of borrowers, the details on who exactly would be eligible were somewhat scarce, outside of the stipulations for the program provided by the FHFA.

At the time, the FHFA said that the only borrowers whose loans are owned or guaranteed by Fannie Mae or Freddie Mac are eligible to have their principal reduced.

Additionally, the FHFA said that principal reductions are only being made available to owner-occupant borrowers who are 90 days or more delinquent as of March 1, 2016, and that the program will only apply to borrowers whose mortgages have an outstanding unpaid principal balance of $250,000 or less, and whose mark-to-market loan-to-value ratios are more than 115%.

Under those rules, the FHFA said that approximately 33,000 borrowers were going to be eligible for the “final crisis-era modification program.”

As it turns out, the number is eligible borrowers is actually less than that.

A new report, published Monday by the FHFA, states that the FHFA now estimates that more than 30,000 borrowers will be eligible nationwide – 30,761 to be exact.

According to the FHFA report, the reduction can be attributed to “the fact that the housing market is continuously evolving and may have improved in some areas.”

But where exactly are those eligible borrowers located? According to the FHFA report, eligible borrowers “tend to be concentrated in communities across the country that have not yet fully recovered from the foreclosure crisis, especially in states with long foreclosure timelines.”

The new FHFA report actually sheds more light on that, showing the top ten states where the most eligible borrowers are.

According to the FHFA report, the top ten states with the most potentially eligible borrowers can be found in:

Florida – 6,260 potentially eligible borrowers

New Jersey – 6,257 potentially eligible borrowers

New York – 2,823 potentially eligible borrowers

Illinois – 2,434 potentially eligible borrowers

Ohio – 1,214 potentially eligible borrowers

Pennsylvania – 1,109 potentially eligible borrowers

Nevada – 1,032 potentially eligible borrowers

Maryland – 726 potentially eligible borrowers

Connecticut – 703 potentially eligible borrowers

Massachusetts – 682 potentially eligible borrowers

Corker, Warner, bipartisan Senate coalition to FHFA: Leave GSE reform to us

Housingwire:

Over the last few months, several groups, including 32 congressional Democrats, attempted to push the Federal Housing Finance Agency to allow Fannie Mae andFreddie Mac to rebuild their dwindling capital base.

The letter sent by the congressional Democrats asked FHFA Director Mel Watt to use the supposed authority granted to him by the Housing and Economy Recovery Act of 2008 to let Fannie and Freddie hold capital instead of funneling it to the Department of the Treasury, as is stipulated by the Preferred Stock Purchase Agreements that went into effect when the government took Fannie and Freddie.

…………………………

In the wake of that letter, a group of the largest trade organizations in housingdelivered a strong rebuke to the Democrats’ efforts, as the Mortgage Bankers AssociationNational Association of RealtorsAmerican Bankers AssociationNational Association of Home Builders, and the National Housing Conference said that their view is that “comprehensive reform to the secondary housing finance system must come through Congress,” rather than from Watt and the FHFA.

Thus far, the FHFA has not responded directly to those efforts, but Watt did take part in the Financial Stability Oversight Council’s annual report, which stated that it believes that Congress needs to take the lead on housing finance reform to fully stabilize the country’s housing finance system.

………………………….

But just how far down the road is housing finance reform? The conclusion of the senators’ letter gives insight into the lack of inertia for GSE reform in the current Congress.

Spoiler alert: Don’t hold your breath for GSE reform this year.

“In closing, we are hopeful that housing finance reform will be on the agenda for the next Congress and Administration and look forward to working with you on that effort,” the senators conclude. “Until that time, we strongly encourage you to focus your efforts on steps that would help, not hurt, housing finance reform legislation.”

To read the senators’ full letter, click here.

 

FHFA watchdog blasts lax oversight of rising Fannie Mae headquarters construction costs

The Federal Housing Finance Agency has been lax in its duties as the overseer ofFannie Mae, and needs to do far more to address the dramatically rising cost of Fannie Mae’s new Washington, D.C. headquarters, the FHFA’s watchdog said in a new report.

According to a new report from the Federal Housing Finance Agency Office of Inspector General, the projected cost of Fannie Mae’s new Washington headquarters, which would consolidate several office locations in the D.C. area into one main location, has risen 53.35% from $164.32 per square foot to $252.81 per square foot since Jan. 26, 2015.

And while that cost has been on the rise, the FHFA hasn’t exercised the proper oversight over Fannie Mae and its relocation process, the FHFA-OIG said in its report.

According to the FHFA-OIG report, its review of Fannie Mae’s relocation stemmed from an “anonymous hotline complaint” that accused Fannie Mae of engaging in “excessive spending” in the construction of its new headquarters.

Read on.

And Watt responds to watchdog’s allegations. Click here.

Community lenders “baffled” to see major trade groups push “Wall Street” agenda

The battle lines surrounding the potential reform of Fannie Mae and Freddie Macare becoming firmly drawn, with the Community Mortgage Lenders of Americadenouncing and rejecting a recent letter from several of the largest trade groups in housing that called for the Federal Housing Finance Agency to leave Fannie and Freddie reform to Congress, rather than allowing the government-sponsored enterprises to rebuild capital.

The strong response from the CMLA comes days after the Mortgage Bankers Association, National Association of Realtors, American Bankers Association, National Association of Home Builders, and the National Housing Conference sent a letter to FHFA Director Mel Watt imploring him to not make any further amendments to the GSE conservatorship agreements, including ones that would enable the GSEs to rebuild their dwindling capital base.

Read on.

Freddie Mac may need another taxpayer bailout next week

Another bailout for Freddie Mac.. This continues to be a disaster of bailing out Fannie and Freddie thanks to the Bush Administration that had Freddie and Fannie is conservativeship under the FHFA. Both mortgage giants need to be reformed and taken out of the conservativeship from FHFA.

The mortgage giant under government control is expected to report a Q1 loss thanks to interest rate derivative bets.

Freddie Mac FMCC, -1.21%  is expected to report a loss when it announces first-quarter earnings before the bell on Tuesday. That’s bad news for any public company, but especially critical for the mortgage provider because of its tangled history with the federal government.

Freddie and its counterpart, Fannie Mae FNMA, -0.58% were put into conservatorship in 2008 as the mortgage meltdown ensnared the financial system. They have lingered as wards of the state ever since. The Treasury Department modified the deal in 2012, requiring Fannie and Freddie to send all quarterly profits to the government — and shrink their reserves to zero by 2018.

As Mel Watt, the chairman of Fannie and Freddie’s regulator, put it in a speech in February, Fannie and Freddie are quickly approaching the point where they won’t be able to weather quarterly losses without going back to the Treasury for taxpayer dollars.

Read on.

 

FHFA makes it official: Principal reduction is coming

A day that many in the housing industry thought would never come is finally and actually here, as the FHFA is making official – widespread principal reduction is coming. In what it is calling a “final crisis-era modification program,” the FHFA announced Thursday that it will be launching a principal reduction program for some borrowers whose loans are owned or guaranteed by Fannie Mae or Freddie Mac. Click here to learn more.