GSE observers say that the Federal Housing Finance Agency’s Office of Inspector General appears to be blurring the line between constructive critic and backseat driver following the OIG’s most recent report which takes the agency to task for deficient oversight of Fannie Mae’s and Freddie Mac’s business decisions. In a report issued last week, the OIG determined that the FHFA has not established criteria or policies to ensure a rigorous review of GSE business decisions.
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The Federal Housing Finance Agency late this week followed through on its promise to develop a post Fannie Mae and Freddie Mac secondary mortgage market infrastructure by releasing for public comment its proposed new securitization platform that could be used by either GSE, as well as by private issuers. The FHFA’s white paper proposed a framework for both a common securitization platform and a model pooling and servicing agreement. Public input on the proposal is due to the Finance Agency by Dec. 3.
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The House Ethics Committee has closed the case against the second highest ranking Democrat on the Financial Services Committee after finding “no evidence” of ethics violations. Rep. Maxine Waters, D-CA, had been the subject of a two-year investigation amid allegations that she had violated House rules by improperly influencing the bailout of a bank where her husband owned stock.
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The Federal Housing Finance Agency this week announced a second winning bidder of its pilot program to move GSE real estate-owned properties from money-losing foreclosures to money-making rentals and eventually off the books entirely. The FHFA announced that New York-based Cogsville Group LLC was the winning bidder of 94 Fannie Mae-owned properties as part of the FHFA’s REO pilot initiative. The firm paid $2.1 million for a share in a joint venture with Fannie, resulting in an estimated transaction value to the GSE of $11.8 million or 86.2 percent of the properties’ estimated value, according to the transaction summary.
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Heavy refinance volume pushed both Fannie Mae and Freddie Mac single-family mortgage securitization up sharply during the third quarter of 2012, well ahead of the pace the two GSEs set in 2011, according to a new Inside The GSEs analysis. Fannie and Freddie issued $335.38 billion in single-family mortgage-backed securities during the third quarter, a 22.4 percent increase from the second quarter, a rebound from the GSEs’ slump during the April-through-June period.
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Freddie Mac last week cut some slack in the form of a lifeline to MGIC Investment Corp. which will allow the mortgage insurer to write additional policies even as the MI and the GSE work through a simmering dispute over pool insurance. On Sept. 28, MGIC announced that Freddie has reduced the amount of capital contribution MGIC Investment must pay its principal subsidiary MGIC to $100 million from $200 million. The GSE also extended the deadline for this contribution from Sept. 30 to Dec. 1.
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The use of Federal Home Loan Bank advances rose among bank and thrift members overall during the second quarter of 2012, with one top-three member moving up a notch due to increased advance use both on a quarterly and on a year-over-year basis, according to the Inside Mortgage Finance Bank Mortgage Database. All of the nation’s banks and thrifts used a combined $325.6 billion in advances as of June 30, 2012, up 6.5 percent from the first quarter of 2012, but off 4.5 percent from the same period a year earlier. Top-ranked Citigroup increased its advance use by 55.7 percent at the end of the second quarter and up 7.0 percent from the same period last year. One year earlier, Citigroup ranked third after having moved down one position from the previous quarter.
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Neither Freddie Mac nor its regulator, the Federal Housing Finance Agency, purposefully limited refinancing opportunities in order to protect the value of the GSE’s investment portfolio, concluded a report by the FHFA’s official watchdog last week. The FHFA’s Office of Inspector General said it found “no evidence” that the GSE or the Finance Agency obstructed homeowners’ abilities to refi in an effort to influence the yields of inverse floating-rate bonds.
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