New issuance of agency single-family MBS in October was almost even with the previous month, but there was a sharp swing of market share between the two government-sponsored enterprises, according to a new Inside MBS & ABS ranking and analysis. Total new MBS issuance by Fannie Mae, Freddie Mac and Ginnie Mae came to $113.99 billion last month, a modest 0.5 percent decline from September. But while Fannie production slumped 11.5 percent, Freddie ... [Includes two data charts]
This week, the government-sponsored enterprises reported combined earnings of $7.69 billion in the third quarter of 2017, which was up almost $3 billion from the previous period. As the end of the year approaches, they also continue to reduce their retained investment portfolios as mandated by the Federal Housing Finance Agency. Fannie Mae and Freddie Mac earnings were boosted by a legal settlement with the Royal Bank of Scotland over non-agency MBS ... [Includes one data chart]
Fannie Mae and Freddie Mac earnings remained strong in the third quarter as the GSEs posted a combined $7.7 billion in net income. Fannie reported $3.02 billion, a 5.5 percent decline from the prior quarter. Freddie posted $4.67 billion, more than double the $1.66 billion reported in the second quarter. While the combined number is well above the $4.86 billion total booked in the previous quarter, the bulk of it is attributed to a legal settlement windfall with the Royal Bank of Scotland over non-agency mortgage-backed securities sold to the GSEs. Freddie received the lion’s share of the taxable settlement with $4.5 billion and Fannie received $975 million.
In round two of a House Financial Services subcommittee on Housing and Insurance hearing this week, housing finance reform talks shifted from small lender access to getting the GSEs out of conservatorship. During his testimony, Mortgage Bankers Association President and CEO David Stevens called the extended conservatorship, which is fast approaching a decade, economically and politically unsustainable. “The time to act on comprehensive legislative reform is now,” he said. While Stevens acknowledged that the Federal Housing Finance Agency has taken positive steps as conservator, he reiterated his view that only Congress can provide the “legitimacy and public confidence needed for long-term stability in both the primary and secondary markets.”
Mark Calabria, chief economist to Vice President Mike Pence, said the administration is in the early stages of looking at ways to reform Fannie Mae and Freddie Mac. He also explained why he’s not a fan of the qualified mortgage “patch” during comments this week at a housing finance discussion hosted by the Urban Institute and CoreLogic. He said the Trump administration is committed to not handing Fannie and Freddie over in conservatorship to the next administration and that finding a path forward is just the beginning. “We will do a number of listening sessions to ask questions about what is the best way out of...
Federal Housing Finance Agency Director Mel Watt touted the evolution of the GSEs’ credit-risk transfer programs and said they continue to make progress on exploring new types of ways to transfer risk to the private sector.During remarks at the Mortgage Bankers Association’s annual conference in Denver last week, Watt said Fannie Mae and Freddie Mac now transfer a significant amount of credit risk on at least 90 percent of their targeted single-family loans. “The enterprises’ credit-risk transfer programs have leveraged a receptive private sector market and have made an incredible amount of progress in a really short period of time,” he said. Since 2013, they have transferred a portion of credit risk on $1.6 trillion of mortgages.
The Mortgage Bankers Association is worried about blurred lines between primary and secondary market activities when it comes to Federal Housing Finance Agency objectives, especially in the wake of new technologies. The trade group said there should be a clear separation of the two market activities. In response to the FHFA’s strategic plan for 2018 through 2022, the MBA said it will be important for the agency to make sure the GSEs only undertake activities that support secondary market liquidity, and not displace lenders and vendors operating in the primary single-family and multifamily finance markets.
Fannie Mae announced several new technologies last week, including one that will let lenders validate a borrower’s primary information in one step. Single Source Validation is currently in the pilot testing phase and will be incorporated into the GSE’s Desktop Underwriter tool in 2018. Through the program, lenders can validate a borrower’s income, assets and employment using a single asset report as the source data instead of scanning through a multitude of paper documents. Fannie said that this not only makes it easier to originate loans but it also helps curb costs. Speaking at the annual Mortgage Bankers Association convention in Denver last week, Fannie CEO Timothy Mayopoulos said...
The Federal Housing Finance Agency’s annual report on housing showed that Fannie Mae fell short of meeting two of its affordable housing goals for 2016. The GSE came close at 5.2 percent but did not meet the 5.4 percent benchmark goal for very-low income buyers purchasing single-family homes. Fannie also did not meet the goal for low-income buyers refinancing their mortgages. The goal was 19.8 percent and Fannie topped out at 19.5 percent. However, Fannie did meet the 22.9 percent low-income home-purchase goal and surpassed its low-income area home-purchase goal of 19.7 percent by 0.5 percent.
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