Fannie Mae has updated its premium recapture policy by establishing standards for remediation in cases where a lender exhibits a peculiar prepayment behavior. Under the current guide, Fannie Mae has the right to analyze MBS that have high levels of prepayments, including a review of the lenders origination and refinancing activities to ensure compliance with the government-sponsored enterprises requirements. If a lender shows an unusually high level of prepayments, Fannie may restrict any refinancing practice that might inappropriately affect the prepayment pattern for Fannie mortgages...
The two sibling GSEs experienced a divergent earnings period during the fourth quarter of 2011, as Freddie Mac posted a quarterly gain, on paper anyway, while Fannie Mae announced losses, albeit at a slower pace, in a year that drove both companies even deeper into the red.Freddie posted net income of $619 million during the three month period ending Dec. 31, 2011, compared to a net loss of $4.4 billion during the third quarter. For the full year, the company reported a net loss of $5.3 billion, compared to a net loss of $14.0 billion for the full-year 2010.
A legislative effort to extend Fannie Mae and Freddie Macs guarantee fee hike beyond 2021 to pay for the Gulf Coast cleanup was averted this week following some behind-the-scenes lobbying, but industry insiders remain wary of future attempts by lawmakers to milk the GSEs for cash. An amendment to the Restore the Gulf Coast Act of 2011 would have used revenue generated from GSE g-fees to help pay for the continued clean up from the BP Gulf Coast oil spill. Sponsored by Sens. Mary Landrieu, D-LA, and Richard Shelby, R-AL, the bill would establish a trust fund paid for partly by fines levied against the oil company.
The Federal Housing Finance Agency is proceeding with its initiative to dispose of GSE and government-held real estate-owned properties even as some within the industry question whether such a wide-spread REO program is necessary. Last week, the FHFA announced the first pilot transaction under its REO initiative, which is targeted to the countrys hardest-hit metropolitan areas, including Atlanta, Chicago, Las Vegas, Phoenix and parts of Florida.
Fannie Mae announced this week it will soon implement changes to its Lender-Placed Insurance requirements by overseeing the forced-placed policies itself instead of allowing banks and other financial institutions to do so. In a departure from current practices, Fannie said it would solicit proposals from insurance companies for its LPI business in an effort to significantly reduce costs to homeowners, taxpayers and to the GSE itself.
Fannie Mae said last week that it acted first to end its existing mortgage loan delivery contract with Bank of America because of delays in resolving repurchase issues. The GSEs account in its quarterly filing with the Securities and Exchange Commission is at odds with BofAs announcement two weeks ago where the bank announced in its own SEC filing that it has stopped selling to Fannie due to increasingly inconsistent repurchase requests by the enterprise compared to past practice.
A Federal Housing Finance Agency official said this week that the FHFA’s proposed overhaul of servicer compensation is an “integral part” of the agency’s plan for a post-GSE mortgage market. FHFA Special Advisor Mario Ugoletti told Inside The GSEs this week that the Finance Agency’s servicing compensation reform is “not dead or on the back burner” but the timing of the initiative's roll out remains “uncertain.”
A month after Congress voted to curtail bonus payments conferred to Fannie Mae and Freddie Mac executives, lawmakers have yet to close the deal and send a final bill to the presidents desk for signature. In early February, both the House and Senate overwhelmingly approved the Stop Trading on Congressional Knowledge Act of 2012, which would bar members of Congress and congressional staff from using non-public, inside information for private gain. While the House version of the STOCK Act is weaker than the Senates, both versions retained an amendment sponsored by Sens. John McCain, R-AZ and Jay Rockefeller, D-WV, to prohibit Fannie and Freddie executives from receiving multi-million dollar bonuses while the GSEs remain in federal conservatorship.
The outlook for the private mortgage insurers remains grim as MI companies continued reporting significant operating losses in 2011 and, unless positive factors come into play by mid-2012, time may soon run out for the sector, according to a Standard & Poors analysis. As the U.S. economy struggles in recovery, little hope remains for mortgage insurers to begin reporting operating profits by the end of this year, said S&P senior credit analyst Ron Joas. Sluggish employment growth and the depressed housing market have resulted in more delinquencies that pose further...(Includes one data chart)
Discover Financial Services is a few months away from having a residential mortgage component to augment its direct-to-consumer banking business model, thanks to its pending acquisition of LendingTree, a wholly-owned subsidiary of Tree.com Inc., for approximately $55.9 million. LendingTree, otherwise known as Home Loan Center, originates and processes residential mortgages in all 50 states and the District of Columbia, with the intent to sell them in the secondary market. Loans held for sale consist primarily of residential first mortgage loans that are secured by residential real...