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Inside The GSEs

February 11, 2009

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Obama Eyes FNM, FRE for Loan Mod Model

Conspicuously absent from President Barack Obama’s TARP II plans announced this week was any explicit role for Fannie Mae and Freddie Mac. However, the president appears ready to use the two GSEs far more aggressively to deal with foreclosure relief and loan modifications. Federal Housing Finance Agency Director James Lockhart said the new Obama mortgage plan would be... Read More

OTTI Complicates Capital Classifications

The Federal Home Loan Banks are expecting a somewhat more nuanced and sophisticated regime of capitalization classifications under an interim final rule issued by the Federal Housing Finance Agency last month. However, some FHLBank officials believe the vagaries of fair value and market value accounting, combined with the continued pounding of the housing markets, fragile credit... Read More

Fannie, Freddie Keep Losing Market Share to FHA

The erosion that Fannie Mae and Freddie Mac saw in their market share of new originations that began in the third quarter of 2008 accelerated during the fourth quarter, while the Federal Housing Administration continued to surge, largely due to more favorable underwriting terms at FHA. After peaking at 69.6 percent of the market at the end of the second... [Includes one graph] Read More

GSEs Increasingly Rely on Buying Their Own MBS

The long-term fate of Fannie Mae and Freddie Mac and that of their portfolios have yet to be decided by policymakers in Washington, DC, but in the meantime, the GSEs have become increasingly reliant on purchasing their own mortgage-backed securities. Most of the growth of Fannie’s and Freddie’s portfolios came in the fourth quarter, when the pair added about $93.8 billion... [Includes one chart] Read More

Federal Reserve Support of Agency MBS, GSE Debt Hits $109 Billion

U.S. taxpayers, in the form of the Federal Reserve, have increased their aggregate support of agency mortgage-backed securities and GSE debt to $109.3 billion since the Fed program to exert downward pressure on mortgage costs began in December. Of that amount, $91.7 billion has gone toward buying agency MBS as the Fed picked up $22.3 billion in the last week’s worth of... Read More

Lenders Seek GSE Warehouse Funding Help

Independent, non-bank home lenders who sell mortgages to Fannie Mae and Freddie Mac are looking to the GSEs for assistance in restoring liquidity to warehouse lines of credit. The mortgage banking industry and the warehouse lending sector are stepping up their lobbying efforts for action that will help improve warehouse lending capacity, which had declined to approximately... Read More

Volcker Calls for End to GSEs’ Hybrid Nature

Former Federal Reserve chief Paul Volcker, now a top advisor of President Barack Obama, called last week for an end to the hybrid nature of Fannie Mae and Freddie Mac, under which the GSEs strive to earn a profit and generate returns for private shareholders while seeking to fulfill a broad public mission of supporting affordable housing finance. “The GSEs I think, if I may... Read More

Higher Underserved Goals Led to GSEs’ Credit Losses

A preliminary analysis by a Federal Reserve economist has found a correlation between the increasing Underserved Areas Goal mandated by Congress for Fannie Mae and Freddie Mac as part of their housing mission and the mounting credit losses the GSEs have suffered in recent quarters. In explaining his research, Fed researcher Neil Bhutta noted that he identified... Read More

Covered Bonds a Threat to FHLBs? Depends on F/F

Officials within the Federal Home Loan Bank System continue to eye warily policy development at the Federal Deposit Insurance Corp. in terms of the promotion of a covered bond market in the U.S. But whether covered bonds emerge as a viable threat to the Banks’ advance business may have more to do with what happens at Fannie Mae and Freddie Mac, and less with the FDIC... Read More

News In Brief

MBA Splits Difference on FHLB Securitization, Covered Bonds: The Mortgage Bankers Association’s annual public policy update includes... Nomination of Steve Linick As First IG at FHFA in Limbo: The nomination of Steve Linick to be the first inspector general of the... Fannie Cuts Hundreds of Positions In Strategic Retrenchment: Fannie Mae has reportedly eliminated anywhere from 400 to... Read More

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