Posts Tagged ‘ Fannie Mae ’

FHFA Calls Eminent Domain ‘Threat’ to GSEs, May Consider Legal Action

FHFA Calls Eminent Domain ‘Threat’ to GSEs, May Consider Legal Action

08/08/2013BY: ESTHER CHO

As local governments consider the use of eminent domain to seize underwater mortgages, they may have to deal with the Federal Housing Finance Agency (FHFA) before moving forward with the plan.

In a statement Thursday, FHFA stated it may “initiate legal challenges” to local or state actions that authorize the use of eminent domain to restructure mortgage contracts impacting Fannie Mae and Freddie Mac.

Another action the GSEs’ regulator might take is limit or stop business activity in jurisdictions that authorize the use of eminent domain to restructure mortgages.

According to the statement, the conclusion was based on the law and input received. In an analysis of the input, Alfred M. Pollard, FHFA general counsel, wrote “there is rational basis to conclude that the use of eminent domain by localities to restructure loans for borrowers that are ‘underwater’ on their mortgages presents a clear threat to the safe and sound operations of Fannie Mae, Freddie Mac and the Federal Home Loan Banks.”

Pollard also stated the use of eminent domain “would run contrary to the goals set forth by Congress for the operation of conservatorships by FHFA.”

The statement follows reports that Freddie Mac might take legal action to stop Richmond, California, from using eminent domain to seize underwater mortgages. Recently, officials in the city approved adoption of the controversial approach, but the city was hit with a lawsuit Wednesday from an institutional investor group, according to a report from Reuters.

Mortgage Resolution Partners is the firm that has been actively approaching different cities to propose the use of eminent domain as a solution to address underwater mortgages. As part of the plan, MRP would provide the funds to refinance the mortgages, then take a government-approved flat fee per mortgage, according to the firm’s website.


GSEs Announce New Mortgage Insurance Requirements

GSEs Announce New Mortgage Insurance Requirements


Moving forward on another of its performance goals for 2013, the Federal Housing Finance Agency (FHFA) announced Monday that Fannie Mae and Freddie Mac have completed a major overhaul of mortgage insurance master policy requirements.

Earlier in the year, FHFA laid out its 2013 Conservatorship Scorecard, which—among other things—calls for the GSEs to develop aligned requirements for master policies. Through an ongoing effort, FHFA says both enterprises have worked with the mortgage insurance industry “to address and update gaps in the existing master policy framework.”

“Updating the mortgage insurance master policy requirements is a significant accomplishment for Fannie Mae and Freddie Mac,” said FHFA acting director Ed DeMarco. “The new standards update and clarify the responsibilities of insurers, originators, and servicers, and they enhance the insurance protection provided to Fannie Mae and Freddie Mac, which ultimately benefits taxpayers.”

The new requirements include a number of provisions intended to facilitate faster and more consistent claims processing, establishing specific timeframes, and creating standards for the circumstances under which coverage must be maintained and when it may be revoked.

Also included are requirements for master policies to support recently developed loss mitigation strategies and guidelines to promote information sharing among mortgage insurers, servicers, and the GSEs.

FHFA anticipates the master policies will go into effect in 2014 pending review and approval by state insurance regulators. Both enterprises will provide guidance to lenders and servicers in the coming weeks regarding specific effective dates.

For their parts, Fannie Mae and Freddie Mac both put their support behind the new master policies.

“The updated master policy for mortgage insurance announced today builds on the market reforms of the past five years, and we were happy to work with FHFA to bring about this latest step toward greater operational efficiency and transparency in the mortgage market,” said Paige Wisdom, EVP and chief enterprise risk officer at Freddie Mac. “We look forward to working with our servicers and the nation’s mortgage insurers as they adopt the new master policy.”

“Mortgage insurers are an important part of the mortgage finance system and these changes help lay the foundation for a stronger system going forward,” added Andrew Bon Salle, EVP of single-family underwriting, pricing, and capital markets at Fannie Mae. “These updates will help us better manage our credit risk, which we believe will ultimately benefit Fannie Mae, mortgage insurers, homeowners and taxpayers.”

GSEs Update Short Sale Policies

GSEs Update Short Sale Policies

11/25/2013 BY: CARRIE BAY

Fannie Mae and Freddie Mac announced changes to their Servicing Guides Monday aimed at helping more borrowers avoid foreclosure through short sales and deeds-in-lieu of foreclosure (DILs).

Some of the changes are to align with certain Consumer Financial Protection Bureau (CFPB) rules and regulations that implement the mortgage servicing provisions of the Dodd-Frank Act, and some are simply to ease eligibility requirements for liquidation workout options. The newGSE requirements also become effective January 10, the same effective date as the CFPB’s new mortgage servicing standards.

Documentation Exceptions. Eligibility for a short sale or DIL with borrower documentation exceptions has been expanded to include borrowers whose mortgage debts have been discharged in a Chapter 7 bankruptcy, regardless of the borrower’s FICO score. Additionally, mortgages that were originated as investment properties are no longer eligible for the exception to borrower documentation. Servicers must now review a complete Borrower Response Package (BRP) to evaluate these borrowers for a short sale or DIL.

Cash Reserves. Servicers must now submit a short sale or DIL recommendation to Freddie Mac for approval when the borrower’s cash reserves exceed $50,000.

Foreclosure Delays. Servicers and their counsel must delay the next legal action in the foreclosure process when the first complete BRP is received more than 37 days prior to the scheduled foreclosure sale date and evaluation of the package results in an offer to proceed with a short sale or DIL.

Expedited Reviews. Servicers are no longer required to conduct an expedited review when a completed BRP with a short sale purchase offer is received greater than 37 days prior to a scheduled foreclosure sale date. However, servicers must continue to expedite review of a completeBRP received between 37 days and 15 days prior to a scheduled foreclosure sale date.

Trial Period Plans. If a borrower remains eligible for the original Trial Period Plan (TPP) offer after receiving an appeal decision and accepts the original offer, servicers must reissue the original offer with a new TPP due date. Any delinquent amounts accrued during the appeal review process should be included in the modified principal balance.

New Head of FHFA Expected

New Head of FHFA Expected

11/25/2013 BY: CARRIE BAY

Analysts expect to see a new face at the helm of the agency overseeing Fannie Mae and Freddie Mac now that Democrats in the Senate have changed the rules, eliminating the use of the filibuster to block presidential appointments.

The Senate majority’s instatement of the so-called nuclear option “has cleared the path for Mel Watt’s confirmation” as director of the Federal Housing Finance Agency (FHFA), according to secondary market analysts at Barclays.

Under the chamber’s new rules, the president’s nominees for all positions except Supreme Court judge can be approved with a simple majority vote, rather than the previous requirement of 60 “yay” votes.

Rep. Mel Watt (D-North Carolina) received 56 votes in favor of his confirmation on October 31st, just 4 votes shy of the number needed under the old rules but enough to be confirmed under the new simple-majority requirement.

“[H]e has the required votes and should be confirmed as the new FHFA director. In our view, this raises the level of policy risk,” Barclays said, “as we would generally expect him to be more supportive of the administration’s policies. … [K]ey areas of concern would be principal forgiveness for the GSEs and potential expansion of the HARP [Home Affordable Refinance Program] eligibility date.”

Watt and the administration have previously expressed support for using principal forgiveness as part of the Home Affordable Modification Program (HAMP) waterfall for GSE loans, Barclays notes. While Acting Director Edward DeMarco has resisted its implementation to date on the argument that the taxpayer benefits would be too small, under Watt’s direction, Barclays expects the FHFA to “take a fresh look at the administration’s proposal and be more amenable to implement it.”

In addition, with Watt’s confirmation, Barclays says the administration may renew its push to expand the HARPcut-off date by a year. An extension of the HARP eligibility date would significantly increase the pool of HARP-eligible loans from the 2009 and 2010 vintages carrying interest rates above the 4.5 to 5 percent range, according to Barclays’ analysts.

“We estimate that these cohorts would likely see as much as a 50 percent increase in borrower eligibility,” they said.

While the immediate attention upon Watt’s confirmation will be on potential changes to HARP or decisions surrounding principal forgiveness and will likely spark some near-term uncertainty, analysts with FBR Capital Markets & Co. believe Watt will be “very beneficial to mortgage credit availability.”

“As director, we expect him to focus on removing barriers for well-qualified homeowners from receiving mortgage credit on loans securitized by Fannie and Freddie, and he is unlikely to lower loan limits, increase g-fees [guarantee fees], or implement new limits on multifamily lending,” according to FBR.

Though his confirmation will probably further complicate housing finance reform, it makes it more likely there will be a continued government backstop, FBR said, adding, “We view this confirmation as positive for mortgage originators, homebuilders, and mortgage insurers and as a negative for private-label securitizers and REITS [real estate investment trusts].”

“It should be noted there is some chance his confirmation will not take place until after the Thanksgiving recess, but that is not a reflection of his lacking the necessary votes,” Barclays said.

Report: Recovery Hampered Until Lawmakers Focus on Housing Policy

Report: Recovery Hampered Until Lawmakers Focus on Housing Policy

11/15/2013 BY: ASHLEY R. HARRIS

According to some, there are many issues with the U.S. government, but housing policy ranks highest. A new report published by the Opportunity AgendaNational Fair Housing Alliance, and the National Association of Real Estate Brokers (NAREB) claims that the U.S. housing policy is broken, denying millions of would-be homeowners the credit and financing they need to achieve the American Dream. This broken system can be repaired with immediate executive and administrative action in Washington, D.C., sidestepping a glacially slow and highly partisan Congress, according to the authors of the study.

The report includes ten administrative actions that the Federal Housing Finance Agency (FHFA) should take. These actions would require no legislative support and still achieve housing finance reform, according to the organization.

“Credit worthy American families, currently barred from the conventional market unnecessarily, should not be forced to wait for a legislative process that could take years,” said Jim Carr, author of the policy report and fellow at the Opportunity Agenda, a national organization that works to expand opportunity in housing and homeownership.

An in-depth look at the new roles of the GSEs should also be a key focus of the government as the recovery continues. According to the report, the elimination of Fannie Mae and Freddie Mac is at the core of almost every major proposal aimed at revamping the mortgage finance system. Yet, housing finance reform that requires the wholesale replacement of the government-sponsored enterprises (GSEs), will take many years to approve and to establish. The report suggests a five-year time horizon is a reasonable estimate even under the best circumstances.

“The recent news that Freddie Mac will repay the government next month more than it received in bailout funds drives home the point that the need for FHFA as a conservator is over. Both Fannie Mae and Freddie Mac are generating huge earnings and FHFA’s primary role now should be to rebuild the housing finance market,” Carr said.

What sustainable recovery boils down to is for a concerted effort from regulators to enforce the fair housing laws.

“We do not need legislative action for regulators to effectively enforce the nations’ fair housing laws or expand

access to credit for qualified borrowers,” said Lisa Rice, VP of the National Fair Housing Alliance. “If the GSEs were allowed to effectively serve all borrowers who are willing and more than able to pay their mortgage obligations, our economy would be improving at a greater pace.”

“It is clear that we cannot maintain the status quo. This report contains significant steps that can be taken now to change the status quo and help improve our economy,” she said.

Among the report’s suggested administrative actions are providing a liquid and reliable source of credit for housing in all geographies, including urban, suburban, and rural locations, to all credit-worthy borrowers. Equally important goals include ensuring that the nation’s fair housing and equal credit opportunity laws are strictly followed and that adequate reserves are set aside to protect taxpayers from future bailouts.

“Conventional home lending for people of color has collapsed since the onset of the housing crisis. The result is a near credit shutdown making it more than difficult for African American and Latino borrowers to obtain mortgage financing,” said Donnell Spivey, president of NAREB, a real estate trade association focused on fairness in all aspects of sustainable homeownership for African Americans, in particular, and other minorities, in general.

“The time for thinking about and debating housing finance reform is over. Now is the time to take every action possible to open the housing finance market for all Americans, not just a few,” Spivey added.

“Our nation’s housing crisis severely deteriorated the wealth of Latino families as well as devastated many of the neighborhoods they live in, and five years later, many of these families are still waiting for mortgage relief,” said Enrique Lopezlira, senior policy advisor at National Council of La Raza (NCLR). “However, through administrative actions these families can get the relief they need and deserve. Creditworthy Latinos and other communities of color should not have to wait for new legislation to make sure they have access to mortgage credit.”

Earlier this month, partisan opponents in the Senate blocked the nomination of Rep. Mel Watt to become the new head of the Federal Housing Finance Agency (FHFA), which regulates the government-backed mortgage finance firms and has broad power to make meaningful policy changes. At the moment, the acting head of FHFA is Ed DeMarco, and Watt supporters say DeMarco continues to pursue a range of policies that are neither in the best interest of homeowners nor the housing market, including refusal to permit principal adjustments to loans backed by Fannie Mae and Freddie Mac, rigid underwriting requirements, and unnecessarily high guarantee fees.

“The confirmation of Mel Watt as Director of the FHFA would represent a major step toward establishing the administrative foundation to reform the housing finance system. That action should occur now,” Carr concluded.

Rushmore Approved as Freddie Mac Seller/Servicer

Rushmore Approved as Freddie Mac Seller/Servicer

11/14/2013 BY: CARRIE BAY

Irvine, California-based Rushmore Loan Management Services LLC made announcements of two positive corporate developments Thursday that the company says support a strong outlook for its business.

Rushmore has received approval to act as a Freddie Mac seller/servicer. With the sanction from Freddie, Rushmore is now an approved seller/servicer for both GSEs, Freddie Mac and Fannie Mae, as well as an approved issuer of Ginnie Mae mortgage-backed securities.

“The Freddie Mac approval will significantly expand the company’s business, enabling Rushmore to originate and service loans for a new customer base,” said Terry Smith,CEO of Rushmore. “This is an important designation for both our employees and broker clients, and we are confident that this will be a competitive advantage as we look to grow the business.”

Rushmore also announced that it has received a positive rating from Standard & Poor’s Ratings Services, which assigned an average ranking to Rushmore as a residential special servicer and residential primary servicer.

Standard & Poor’s specifically identified Rushmore’s strengths as its experienced management and staff, its multiple auditing mechanisms, its proprietary technology along with a vendor system, its competitive servicing metrics, and good oversight and controls throughout the default areas. S&P ranked Rushmore’s management and operations as above average.

“This is a great vote of confidence for Rushmore as a growing organization,” Smith said. “[W]e will continue to make investments in the company to ensure excellent service and controls that exceed customers’ expectations.”

More Homeowners Receiving Principal Reductions Under HAMP

More Homeowners Receiving Principal Reductions Under HAMP

11/11/2013 BY: CARRIE BAY

As of September, more than 1.2 million homeowners have received a permanent modification through the Home Affordable Modification Program (HAMP), according to Treasury.

Those granted permanent relief through HAMP are saving approximately $547 on their mortgage payments each month—almost a 40 percent savings from their previous payment on average. Government officials say this represents a total estimated savings of $22.9 billion in monthly mortgage payments since the inception of the program.

Homeowners currently in HAMP permanent modifications with some form of principal reduction have been granted an estimated $12.1 billion in reduced principal, Treasury reports. Of all non-GSE loans eligible for principal reduction entering HAMP in September, 72 percent included a principal reduction feature, according to the Department’s latest report.

Servicers awarded 12,884 permanent HAMPmodifications in September, of which 5,854 included principal reduction. September’s program numbers are down considerably compared to the previous month when an estimated 19,100 permanent mods were granted to struggling borrowers.

The government’s Home Affordable Foreclosure Alternatives (HAFA) program showed even greater monthly falloff. In September, Treasury reports 11,816 homeowners exited their homes through a short sale or deed-in-lieu of foreclosure with assistance from HAFA, compared to approximately 21,000 HAFA transactions completed in August.

As of September, servicers completed more than 226,000HAFA transactions for distressed homeowners, including both non-GSE and GSE activity. Servicers participating in the federal government’s Making Home Affordable program must consider all borrowers denied for HAMP for a short sale or deed-in-lieu of foreclosure through theHAFA program. However, individual investors can impose additional eligibility requirements.

Treasury reports 91,323 v have received assistance through Fannie Mae’s and Freddie Mac’s Standard HAFA programs, 36,837 loans held in servicers’ own portfolios have received HAFA relief, and 98,275HAFA transactions have involved loans held by private investors.

The top three states for HAFA activity include California, where 40 percent of all HAFA deals are conducted; followed by Florida with 16 percent of HAFA short sales and deeds-in-lieu; and then Arizona with just 6 percent of the HAFA market share.

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