President Obama this week affirmed his view that Fannie Mae and Freddie Mac should be wound down through a “responsible transition” to a new mortgage finance system that preserves the 30-year fixed-rate mortgage while emphasizing private capital. In a highly anticipated speech in Phoenix this week, Obama listed among his key reform principles that private capital should be in a first-loss position and the government should provide an appropriately priced, explicit guaranty to ensure continued access to the 30-year FRM. Those are the major components of the bipartisan reform legislation drafted by Sens. Bob Corker, R-TN, and Mark Warner, D-VA, although the president did not mention the bill by name. Obama also said...
The wrath of Wall Street has descended upon Richmond, CA, after the city council adopted a plan using eminent domain to seize underwater mortgages, as a last resort, and resell them to beleaguered homeowners at a lower price. The American Securitization Forum, the Securities Industry and Financial Markets Association and the Association of Mortgage Investors condemned Richmond’s decision to implement an April 2 agreement with Mortgage Resolution Partners (MRP) to use eminent domain to address the city’s severe foreclosure problem. The city became the first municipality in the country to adopt such an approach, though not the first to consider the idea. Richmond, like many California cities and municipalities, was hit...
Mary Jo White, chair of the Securities and Exchange Commission, stressed this week that the regulator plans to increase its enforcement activity, including more emphasis on trials. However, she said the SEC needs more appropriations from Congress to accomplish its goals. “We can’t judge at this point how many additional trials we’re going to have, but we already don’t have enough,” White said at a hearing this week by the Senate Committee on Banking, Housing, and Urban Affairs. President Obama’s proposed...
Despite the best efforts of supporters, including a renewed public showing of support from the White House, a new push to enhance the Home Affordable Refinance Program through legislation will go nowhere fast, say industry observers. Introduced by Sen. Jeff Merkley, D-OR, the Rebuilding Equity Act, S. 1373, would modify HARP to cover $1,000 in closing costs for underwater borrowers who choose loan terms of 20 years or less to rebuild equity in their homes. “Both [the Congressional Budget Office] and Fannie Mae have estimated that this bill would have no net cost, because it would reduce the severity of financial loss when defaults do occur,” said Merkley. The bill would require...
House Financial Services Committee Chairman Jeb Hensarling, R-TX, last week pushed through committee his bill to replace Fannie Mae and Freddie Mac with a new securitization “utility” without any government backing, but opponents of the bill warn that the measure will have a much tougher time getting votes on the House floor. The Protecting American Taxpayers and Homeowners Act, H.R. 2767, was approved by a 30-27 margin with all the committee’s Democrats and even two Republicans voting against it. Before last week’s 10-hour bill markup, House Democrats released their principles for housing finance reform. In addition to preserving the 30-year fixed-rate mortgage, Dems aim to establish a system with an explicit government guaranty paid for by the private sector and maintain regulations that the House GOP wants to eliminate.
A pair of newly filed bills by a lone Senate Democrat would see the Home Affordable Refinance Program further expanded as a means to provide underwater homeowners with new refi options. The Rebuilding American Homeownership Act, S. 1375, would modify HARP to allow loans “that lack a government guaranty” to be refinanced through HARP. The bill would also direct Fannie Mae and Freddie Mac to price for the risk that the GSEs would be assuming, so that the program has no net costs, as well as establish an automatic sunset for the program after 24 or 36 months.
Several provisions in FHA solvency legislation are emerging as potential hot-button issues for lenders, according to legal experts. There is growing industry concern over indemnification provisions, which appear to be more stringent in the Senate’s FHA Solvency Act of 2013 than in H.R. 2767, Protecting American Taxpayers and Homeowners Act (PATH Act), which the House Financial Services Committee passed this week. Under Title II (FHA reform) of the PATH Act, a lender may be required to indemnify the FHA if the agency determines that ...
The House Financial Services Committee this week reported out a legislative package of housing finance system reforms, including measures designed to reduce FHA’s role in the mortgage marketplace, strengthen lender oversight and avoid a potential taxpayer bailout. The bill, Protecting American Taxpayers and Homeowners Act (H.R. 2767), passed by a vote of 30 to 27 despite mixed responses from industry experts, academics, financial trade associations and consumer advocates. Critics called for changes. Offered by Rep. Jeb Hensarling, R-TX, chairman of the Financial Services Committee, the bill proposes ...
FHA officials, industry groups and consumer advocates appear to be leaning more towards a Senate FHA reform bill that is moderate and far less ambitious than legislation approved by the House Financial Services Committee this week. Introduced by Senate Banking Committee Chairman Tim Johnson, D-SD, and Ranking Minority Member Mike Crapo, R-ID, the FHA Solvency Act of 2013 “focuses on the right issues, not like the House bill, which tries to dramatically alter the program and affect borrower eligibility,” said an industry observer. Testifying as the sole witness at a Senate Banking Committee hearing on FHA solvency this week, FHA Commissioner Carol Galante said ...
A former FHA commissioner said he supports a proposal in the Protecting American Taxpayers and Homeowners Act (PATH Act) to spin off the FHA from the Department of Housing and Urban Development as an independent government-owned corporation. Brian Montgomery, who was assistant secretary for housing and head of the FHA during the Bush administration, said the separation, if enacted, would transfer authority, resources and personnel from HUD to the FHA to manage the insurance fund. “This is something I have advocated both during and after my more than four-year tenure as FHA commissioner,” said Montgomery, who ...
Some SWFs in other countries have extensive ownership interests in major corporations and sweep much of their profits into state coffers.
News Tailored to Your Needs
Get Focused Coverage
Inside Mortgage Finance's newsletters break the mortgage market down so you get the news and data you need most, whether it's total industry coverage or just the news related to securitization, regulation, profits or other specific topics.