FHFA To Re-Propose Minimum GSE Financial Eligibility

The Federal Housing Finance Agency announced Monday that it will not implement new financial eligibility requirements for mortgage lenders that service or sell loans to Fannie Mae and Freddie Mac. The new requirements, announced Jan. 31, were to be implemented this month. “Due to recent market events, the Federal Housing Finance Agency … will be re-proposing the updated minimum financial eligibility requirements for Fannie Mae and Freddie Mac Seller/Servicers,” FHFA said in a statement. “FHFA has determined that it is prudent to work with the Enterprises to reassess and re-propose these requirements, including incorporating lessons learned from the evolving COVID-19 national emergency.” The revised requirements would have forced mortgage sellers and servicers to maintain a base net worth of $2.5…

Redlining Legacy: Reduced Wealth In Black Community

By Jim Perskie More than 50 years after redlining was outlawed, the practice still has a profound impact on the wealth and property values in neighborhoods across the country, according to a report released by Redfin on Thursday. The typical homeowner in a neighborhood that was “redlined” for mortgage lending by the federal government has gained 52 percent less – or $212,023 – in personal wealth generated by property value increases than those in greenlined neighborhoods over the last 40 years. “More than half a century after it was abolished, redlining continues to dictate the racial makeup of neighborhoods and Black families still feel the socioeconomic effects of such a discriminatory housing policy,” Redfin chief economist Daryl Fairweather said. Redlining is…

FHFA Extends Loan Origination Flexibility Through July

Another month. The Federal Housing Finance Agency announced Thursday that it is extending the loan origination flexibilities currently offered by Fannie Mae and Freddie Mac designed to help borrowers during the COVID-19 national emergency.  Originally put in place at the height of the pandemic, this is the second time they have been extended – this time through July 31. They include: Alternative appraisals on purchase and rate term refinance loans;Alternative methods for verifying employment before loan closing;Expanding the use of power of attorney and remote online notarizations to assist with loan closings; andAuthority to purchase mortgages in forbearance. …

Powell: Rates To Stay At 0 Until Economy Improves

Federal Reserve Chairman Jerome Powell said Wednesday that the Fed is committed to “using our full range of tools to support the economy and to help assure that the recovery from this difficult period will be as robust as possible.” That includes keeping interest rates very low. “In March, we quickly lowered our policy interest rate to near zero, where we expect to keep it until we are confident that the economy has weathered recent events and is on track to achieve our maximum employment and price stability goals,” he said. In speaking with reporters after the Fed meeting, Powell stressed the public health crisis caused by the coronavirus pandemic is far from over – and the economic impacts will…

Interest Rates Unchanged; Fed Vows To Buy More MBS

The Federal Reserve on Wednesday kept interest rates effectively at 0 percent and vowed to increase holdings in Treasury securities and mortgage-backed securities to support the economy during the coronavirus pandemic. In a statement following its meeting, the Fed said it “is committed to using its full range of tools to support the U.S. economy in this challenging time.” That includes keeping interest rates in the 0 to 0.25 percent range. “To support the flow of credit to households and businesses, over coming months the Federal Reserve will increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities at least at the current pace to sustain smooth market functioning, thereby fostering effective transmission of monetary policy to…

FHFA Director “Encouraged” By Forbearance Trajectory

By Jim Perskie Federal Housing Finance Agency Director Mark Calabria told Congress that forbearance rates in the United States are “manageable,” noting that the number of homeowners pausing mortgage payments has slowed considerably in recent weeks. In testimony before the U.S. Senate Committee on Banking, Housing, and Urban Affairs on Tuesday, Calabria said that the number of mortgages in forbearance were significantly lower than some had predicted. “Early in the crisis, there were a wide variety of predictions about the future effects of COVID-19 on housing markets,” Calabria testified. “Some observers contended that forbearance rates would reach as high as 25 to 50 percent. Given the unprecedented nature of the pandemic and the high degree of uncertainty about the economic…

Calabria: Congress Must Strengthen FHFA

By Jim Perskie Federal Housing Finance Agency Director Mark Calabria told Congress on Tuesday that he will submit legislative recommendations net week to strengthen the agency’s regulatory and supervisory authority “to fix structural flaws in our housing finance system.” Testifying before the U.S. Senate Committee on Banking, Housing, and Urban Affairs, Calabria also stressed FHFA had done significant work to support borrowers, renters and the housing market as a whole during the COVID-19 pandemic – but challenges lie ahead. “FHFA recognizes that more work remains,” Calabria said. “The crisis caused by COVID-19 is not over. The full economic and financial impact of the pandemic is not yet known. The future state of the labor market remains uncertain. The mortgage market is still…

Ginnie Mae Issues $63.44 Billion In MBS In May

Ginnie Mae announced today that its total outstanding principal balance in May was $2.15 trillion – up from $2.07 trillion a year earlier. Ginnie Mae also said it issued $63.44 billion in mortgage-backed securities in May, providing financing for more than 235,000 homeowners and renters. “Ginnie Mae MBS issuance in May of more than $63 billion financed housing for more than 235,000 families,” Ginnie Mae Principal Executive Vice President Seth Appleton said. “The national economy relies on a strong housing finance system and we at Ginnie Mae are unwavering in our mission to ensure that money flows safely and consistently to communities across the United States while minimizing risks to taxpayers.” Ginnie Mae is a wholly owned government corporation that…

FDIC Balks As OCC Announces Redlining Rule Update

The Federal Deposit Insurance Corporation said Wednesday it will not move forward with revisions to the nation’s anti-redlining law announced moments earlier by the Comptroller of the Currency. Comptroller of the Currency Joseph M. Otting announced the finalization of a rule to “strengthen and modernize Community Reinvestment Act (CRA) regulations,” saying the rule would make “CRA work better for everyone.” But the FDIC – which has joint rulemaking authority with the OCC over the law – responded from Chairman Jelena McWilliams moments later, telling banks its focus is on the coronavirus response and not changes to the CRA.  “While the FDIC strongly supports the efforts to make the CRA rules clearer, more transparent, and less subjective, the agency is not…

GSEs Seek Advisors To Leave Conservatorship

Fannie Mae and Freddie Mac are looking for financial advisors to help them emerge from conservatorship. Each of the GSEs announced they will be issuing a request for proposal on Tuesday to “secure a financial advisor that will facility the company’s responsible exit for conservatorship. The advisors will help Fannie and Freddie on everything from capital considerations to business plans to capital raising activities and more. “Even as we work to stabilize the housing markets during this unprecedented pandemic, Freddie Mac has remained focused on exiting conservatorship responsibly,” David Brickman, Freddie Mac CEO David Brickman said. “Today we begin the competitive selection process for a financial advisor that will ultimately facilitate our return to full private capital ownership. This is…