Expect a gradual but deliberate increase in Fannie Mae and Freddie Mac guarantee fees to a level that more closely reflects what a private market would charge, the head of the Federal Housing Finance Agency announced this week. In a speech at the American Mortgage Conference in Raleigh, NC, FHFA Acting Director Edward DeMarco said that since Fannie and Freddie were placed into government conservatorship three years ago this month, the two government-sponsored enterprises have steadily increased g-fees and lessened the degree of cross subsidization in credit pricing. Yet, DeMarco noted, the GSEs’ current pricing for credit guarantees “is...

Industry groups are ramping up efforts to extend conforming loan limits currently available in high-cost markets that are set to expire at the end of the month, focusing their lobbying efforts on appropriations legislation in the House. The National Association of Realtors and the National Association of Home Builders are dou-bling their efforts to persuade Congress to extend current limits for Fannie Mae, Freddie Mac and the FHA, which top out at $729,750 for single-family units in the lower 48. Barring legislative action, the top loan limit will drop to $625,500 on Oct. 1. In addition to the lower ceiling, loan limits in most high-cost markets will...

With additional rulemaking still expected from the Consumer Financial Protection Bureau to flesh out some loan originator compensation provisions of the Dodd-Frank Act, state regulators are getting ready to release their own examination guidelines related to mortgage originator compensation for non-depository institutions, based on the Federal Reserve’s rule issued earlier this year. The Conference of State Bank Supervisors and the American Association of Residential Mort-gage Regulators have been working together since May drafting guidelines for implementation of the...

Securitization participants and financial services providers flatly rejected a proposal to create an independent federal board that would assign credit rating agencies to initially rate non-agency MBS, ABS and other structured finance transactions. In separate comments, two industry trade groups and Fitch Rating Services opposed the proposal, which is being studied by the Securities and Exchange Commission. The Dodd-Frank Act instructs the SEC to study the concept and report back to Congress by July 2012 with its recommendations for regulatory or statutory changes. The idea of establishing a board to oversee credit rating agencies and address...

One of the primary sponsors of mortgage refinance legislation pending in the Senate told colleagues this week that her legislation could save homeowners and Fannie Mae and Freddie Mac tens of millions of dollars, while acknowledging that it could cost the Federal Reserve billions of dollars in lost investment income. Testifying on behalf of her legislation before a Senate subcommittee on Wednesday, Sen. Barbara Boxer, D-CA, said S. 170, the Helping Responsible Homeowners Act of 2011, “would result in up to 54,000 fewer defaults and produce a net savings up to $100 million for Fannie and Freddie.” Homeowners would see immediate relief. “A one and a half percent reduction in...

The ongoing debate over the need for a government guarantee to sustain the benefits of the to-be-announced MBS market moved this week to the Senate Housing, Banking and Urban Development Committee, where researchers covered both sides of the issue for a group of lawmakers who aren’t likely to act on their counsel any time soon. “Proponents of privatization ignore that the jumbo market does benefit from a government guarantee indirectly in multiple ways,” said Adam Levitin, professor of law at Georgetown University. “The jumbo market has long aped the standards set by the [government-sponsored enterprises] in the conforming market, including...

The Department of Housing and Urban Development said it would work with Congress to strengthen the FHA and Ginnie Mae in a way that protects taxpayers and facilitates the return of private capital despite its mixed views of a Republican draft bill to reform the two programs. Assistant Secretary for Housing and FHA Commissioner Carol Galante told members of the House Financial Services Subcommittee on Insurance, Housing and Economic Opportunity last week that HUD is willing to work with lawmakers to increase access to credit and strengthen risk management and lender enforcement. But while the GOP draft bill contained elements similar to...

The Senate Banking, Housing and Urban Affairs Committee may not be moving any closer to a decision on reforming the mortgage finance system, but lawmakers should be getting well versed in the various analytic perspectives on the role of the federal government. At a hearing this week, the committee heard testimony from researchers who support winding down Fannie Mae and Freddie Mac as soon as possible and others who say private capital won’t be drawn back into the system unless there is a government guarantee. “There’s absolutely no reason to believe that private capital would immediately step-up – even if it would eventually...

With the shelf life of the National Flood Insurance Program about to expire once again, the Senate Banking, Housing and Urban Affairs Committee last week passed the latest program reauthorization legislation, the “Flood Insurance Reform and Modernization Act” that includes a five-year extension of the NFIP along with various program reforms. This bill would reauthorize the program and its funding through 2016, phase in premium rates that more accurately reflect the risk facing a property, and allow for the NFIP to build reserves and modernize flood maps. The bill also requires that lenders provide to all purchasers a disclosure of the availability of flood insurance under the Real Estate Settlement Procedures Act.

Private investors in agency MBS could lose $13 billion to $15 billion from a new government effort to help current Fannie Mae, Freddie Mac and FHA borrowers refinance, according to a new Congressional Budget Office staff working paper. The Obama administration is expected to announce a revved-up refinance program as part of a new strategy to strengthen economic growth. A “stylized” refinance program analyzed by the CBO would have a relatively small impact on the overall economy, the analysts said. The biggest impact would be on private MBS investors and the estimated 2.9 million households that would likely be brought into the...