- The Federal Housing Finance Agency released its 2016 Scorecard outlining conservatorship priorities for Fannie Mae and Freddie Mac, and Common Securitization Solutions.
- The Joint Center for Housing Studies released its Rental Housing Report and created an interactive map series that shows where renters are experiencing housing cost burdens.
- The Labor Department’s latest report finds that there were 292,000 jobs created in December, particularly in temporary-help services, health care, transportation and construction.
Tag Archives: Fannie Mae
Tuesday’s Regulatory & Legislative Round-Up
- The Federal Housing Administration (FHA) has announced relaxed requirements, effective immediately, for condominium project approval. The move is intended to increase options for affordable housing for 1st time and low income homebuyers. Among the changes are streamlining project recertification, expanding the definition of owner occupancy, and expansion of the eligible condominium project insurance coverage.
- The Federal Housing Finance Agency (FHFA) has released its 2015 Annual Performance and Accountability Report which describes its regulatory activities with regard to the Federal Home Loan Bank and as conservator of Fannie Mae and Freddie Mac
Friday’s Government Reports Roundup
- HUD’s Office of Policy Development & Research released its most recent issue of Cityscape, featuring research from a symposium about affordable housing and neighborhood qualities.
- The HOME Coalition released “Building HOME: The HOME Investment Partnerships Program’s Impact on America’s Families and Communities”, analyzing the program’s impact. The report analyzes the economic impact on leveraged investments, jobs supported, and local income generated.
- The FHFA released its Annual Housing Report for 2014 Fannie Mae and Freddie Mac.
Friday’s Government Reports
- The U.S. Census Bureau/HUD has released the New Residential Construction Statistics which show new building permits down slightly since August but 4.5% higher than Sept. 2014. Housing completions are up both month over month and year to year.
- The New York Federal Reserve has released a paper: The Rescue of Fannie Mae and Freddie Mac and a related blog post: Evaluating the Rescue of Fannie Mae and Freddie Mac in which the authors evaluate the now seven years and running government conservatorship which injected $187.5 billion into the two entities. The authors conclude that the short term intervention was necessary “because of the central role of Fannie Mae and Freddie Mac in the U.S. mortgage market, and the GSEs’ interconnections with the rest of the global financial system.” They go on to argue that the conservatorship was meant to be a temporary “time out” and characterize the lack of mortgage finance reform a “striking failure” and cite broad consensus that the GSEs should be replaced with a private system.
Monday’s Adjudication Roundup
- New York federal judge dismisses suit against Bank of America Corp. over “hustle” high-speed mortgage approval process for allegedly defrauding Fannie Mae and Freddie Mac.
- Midtown TDR Ventures LLC and Midtown GCT Ventures LLC, real estate developers that currently own Grand Central Terminal, file a complaint against the City of New York and SL Green, another developer, claiming that they were robbed of potential profits from air rights when the City and SL Green worked to rezone the area in which Grand Central sits and devalued the property.
Friday’s Government Reports Roundup
- The FHFA releases it 2015-2017 Housing Goals for Fannie Mae & Freddie Mac.
- The US Department of Agriculture released its 20th Annual Food Security Report. The reports shows that 1 in 7 people live in food insecure households, but there has been a slight decline over the past few years.
Credit Risk Transfer Deals
The Federal Housing Finance Agency released an Overview of Fannie Mae and Freddie Mac Credit Risk Transfer Transactions. It opens,
In 2012, the Federal Housing Finance Agency (FHFA) initiated a strategic plan to develop a program of credit risk transfer intended to reduce Fannie Mae’s and Freddie Mac’s (the Enterprises’) overall risk and, therefore, the risk they pose to taxpayers. In just three years, the Enterprises have made significant progress in developing a market for credit risk transfer securities, evidenced by the fact that they have already transferred significant credit risk on loans with over $667 billion of unpaid principal balance (UPB).
Credit risk transfer is now a regular part of the Enterprises’ business. The Enterprises are currently transferring a significant amount of the credit risk on almost 90% of the loans that account for the vast majority of their underlying credit risk. These loans constitute about half of all Enterprise loan acquisitions. Going forward, FHFA will continue to encourage the Enterprises to engage in large volumes of meaningful credit risk transfer through specific goals in the annual conservatorship scorecard and by working closely with Enterprise staff to develop and evaluate credit risk transfer structures. (2)
This is indeed good news for taxpayers and should reduce their exposure to future losses at Fannie and Freddie. There is still a lot of work to do, though, to get that risk level as low as possible. The report notes that these transactions have not yet been done for adjustable-rate mortgages or 15 year mortgages. Most importantly, the report cautions that
Because the programs have not been implemented through an entire housing price cycle, it is too soon to say whether the credit risk transfer transactions currently ongoing will make economic sense in all stages of the cycle. Specifically, we cannot know the extent to which investors will continue to participate through a housing downturn. Additionally, the investor base and pricing for these transactions could be affected by a higher interest rate environment in which other fixed-income securities may be more attractive alternatives. (22)
Taxpayers are exposed to many heightened risks during Fannie and Freddie’s conservatorship, such as operational risk. These risk transfer transactions are thus particularly important while the two companies linger on in that state.
