Servicers working for Fannie Mae and Freddie Mac are now prohibited from being reimbursed altogether for expenses associated with lender-placed insurance practices, the Federal Housing Finance Agency announced this week. The FHFA’s action follows a notice the agency published in March calling for seller/servicers to be prohibited from accepting sales commissions or fees related to lender-placed or force-placed insurance where a conflict exists between them and the insurance providers and their affiliates.
Spencer Stuart, a search firm working for the Federal Housing Finance Agency, has talked to a top official at the Consumer Financial Protection Bureau about being the CEO of the fledgling Common Securitization Solutions platform project, Inside The GSEs has learned. The candidate for the CEO job is Peter Carroll, who currently serves as assistant director for mortgage markets at the CFPB.
The Federal Housing Finance Agency spent the last two weeks racking up several legal settlements in its massive litigation action against some of the nation’s financial institutions. Look for more to come predict industry analysts. On Oct. 25, JPMorgan Chase agreed to pay $4.0 billon to settle claims on $33.8 billion of non-agency mortgage-backed securities purchased by Fannie Mae and Freddie Mac.
Despite this year’s implementation of a new Fannie Mae and Freddie Mac representations-and-warranties framework that promises repurchase relief with a three-year sunset on liability, the GSEs still hold all the cards and a very big stick when it comes to lenders managing their buyback risks, according to an expert during an exclusive Inside Mortgage Finance webinar this week. Jonathan Jaffe, a partner at the law firm of K&L Gates, told webinar participants that Fannie’s and Freddie’s hyper-aggressive enforcement of their repurchase options and frequently updated rules creates a near constant state of uncertainty for lenders who have been made all too aware that too much buyback resistance could result in them being on the wrong end of a “nuclear” exchange.
Freddie Mac’s “account balance” with the U.S. Treasury will go into the black by yearend – thanks to stellar third-quarter earnings – and Fannie Mae likely will accomplish the same by the end of March 2014. But mortgage bankers shouldn’t pop any champagne. That’s the view of Dave Stevens, president of the Mortgage Bankers Association who worked at Freddie once and also served as FHA commissioner. Stevens believes that despite their strong performance in the third quarter and beyond, both are just “insurance brokers” that have benefitted from the Federal Reserve buying their mortgage-backed securities. [Includes one data chart.]
Fannie Mae and Freddie Mac issued $67.7 billion in single-family mortgage-backed securities during the month of October, a 13.8 percent decline from September but a 4.6 percent rise for the first 10 months of 2013, according to a new Inside The GSEs analysis. October’s decline was less steep than September’s 20.0 percent month-to-month fall off in MBS.Top-ranked Wells Fargo’s Fannie and Freddie securitization at $11.6 billion fell both on monthly and year-to-date bases by 27.0 percent and 23.3 percent respectively. [Includes one data chart.]
Court Dismisses Freddie Shareholders Subprime Lawsuit. A federal appeals court this week dismissed a lawsuit brought by Freddie Mac shareholders accusing the GSE of hiding the state of its finances and it subprime mortgage exposure before the 2008 financial crisis.The shareholders – led by Central States, Southeast and Southwest Area Pension Fund – accused Freddie of hiding its potential insolvency even after revealing a $2 billion quarterly loss in November 2007. Freddie, along with fellow GSE Fannie Mae, was placed into conservatorship in September 2008.
How many loans per month should a loan officer be closing when times are lean? According to Dave Lykken of Mortgage Banking Solutions, if an LO isn’t closing at least six loans per month, they might want to consider employment elsewhere.
Figuring out the details on how to structure, capitalize and operate new secondary-market facilities for small lenders are key challenges for the Senate Banking, Housing and Urban Affairs Committee as it pushes to mark up mortgage reform legislation by the end of this year. This week, lawmakers pushed lender trade groups to come together and find answers. The bipartisan Senate blueprint for secondary mortgage market reform includes several key provisions designed to facilitate small-lender access when Fannie Mae and Freddie Mac are no longer around, including creation of a new mutual or cooperatively-owned institution through which lenders could issue conventional mortgage-backed securities guaranteed by the government. If a new MBS mutual for small lenders is going to be competitive, it will have to be capitalized...[Includes one data chart]
Some SWFs in other countries have extensive ownership interests in major corporations and sweep much of their profits into state coffers.
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