It’s Been 15 Years Since Fannie Mae, Freddie Mac Conservatorship

By CHUCK GREEN Back in 2008, Fannie Mae and Freddie Mac were in trouble. In fact, without government intervention, they faced imminent collapse, and on Sept. 6 of that year, both were placed in conservatorship by the director of the Federal Housing Finance Agency. With those conservatorships hitting their 15th anniversary, William Emmons, an adjunct lecturer at Washington University in St. Louis, said the takeover was historically significant because they were the first large-scale government interventions in what came to be known as the Global Financial Crisis. “In other words, their collapse was a bellwether of things to come. Lehman Brothers failed one week later, which triggered the chain reaction of collapsing banks, AIG, and market confidence,” Emmons told The…

Policy Memoir About Averting 2020 Mortgage Meltdown Published

By PATRICK LAVERY A new book providing insider insight into how millions of Americans were provided mortgage and rental assistance in response to the COVID-19 pandemic has been released. “Shelter from the Storm: How a COVID Mortgage Meltdown Was Averted” is by Cato Institute Senior Advisor Mark Calabria who was, at the outset of the pandemic, the director of the Federal Housing Finance Agency, overseeing Fannie Mae, Freddie Mac, and Federal Home Loan Banks. Calabria’s new policy memoir, promoted as “a story about how you can directly help Main Street without bailing out Wall Street,” not only takes a look at the issues that surfaced in 2020 and beyond but also how the mistakes of the 2008 financial crisis –…

Industry Responds To Thompson Nomination

President Biden will nominate Sandra Thompson to become the permanent director of the Federal Housing Finance Agency (FHFA), the White House announced in a statement on Tuesday. Thompson is the current acting head of the FHFA, having taken over the position in June when Biden replaced Mark Calabria. She would serve a five-year term after her approval by the Senate. Though Thompson has held the position since June, her nomination was at one point in question. Biden faced criticism in September when rumors spread that he was considering nominating Center for Responsible Lending President Michael Calhoun. Thompson maintained support among Democratic politicians focused on housing, especially House Financial Services Chair Maxine Waters, which may have solidified her position. “We will…

Waters Opposes Calabria’s Fannie, Freddie Goals

Mark Calabria wants to pull Fannie Mae and Freddie Mac from conservatorship by the time President Trump leaves office next month. Not so fast, says Rep. Maxine Waters. The chairwoman of the House Financial Services Committee sent Calabria a letter last week urging him to “fully engage with Congress, halt all efforts to raise the capital requirements for Fannie Mae and Freddie Mac and halt all efforts to release them from conservatorship.” “I believe that it is entirely inappropriate for you and your agency to be focusing on releasing the Enterprises from conservatorship during the pandemic with the assistance of a lame duck Treasury Secretary,” Rep. Waters wrote. “At the very least, the Congress and the American public deserve transparency…

Calabria Seeks To End Conservatorship By Jan. 20

Federal Housing Finance Agency Director Mark Calabria is trying to pull Fannie Mae and Freddie Mac out of conservatorship before the Trump Administration ends on January 20, the Wall Street Journal reported. Mark Calabria, a libertarian economist who heads the Federal Housing Finance Agency, has made it a priority to return Fannie and Freddie to private hands, a goal shared by Mr. Mnuchin. How that is done could affect the cost and availability of mortgages backed by the companies, which guarantee roughly half of the $11 trillion in existing home loans. Completing the complex process before President Trump’s term ends on Jan. 20 is a long shot, and President-elect Joe Biden is considered unlikely to continue the effort. But Messrs.…

FHFA Proposes New Fannie, Freddie Product Rule

The Federal Housing Finance Agency on Monday announced a new rule that would require Fannie Mae and Freddie Mac to provide advance notice to FHFA of new activities and obtain prior approval before launching new products. The rule, which was announced by FHFA Director Mark Calabria at the Mortgage Bankers Association’s annual meeting, “establishes revised criteria for determining whether a new activity requires notice to FHFA and for determining if that activity is a new product that merits public notice and comment.”  “The proposed rule will enhance the safety and soundness of the secondary mortgage market by ensuring the Enterprises adhere to their statutory missions,” Calabria said. “This proposed rule is an important step as the Agency works to end…

Calabria Defends Adverse Market Fee

Federal Housing Finance Agency Director Mark Calabria on Wednesday defended his agency’s much maligned “adverse market fee” that is designed to help cover losses at Fannie Mae and Freddie Mac as a result of the coronavirus pandemic. “Conservative estimates price COVID-19 related costs for the Enterprises at roughly $6 billion … (and) $4 billion is from expected loan losses due to projected forbearance defaults,” Calabria testified before the House Committee on Financial Services. “The expected losses associated with the foreclosure moratorium amount to at least $1 billion. Other forbearance-related expenses and fees, such as the $500 fee the Enterprises pay to servicers for loss mitigation, account for another $1 billion.” The fee on refinances – which drew criticism from members…

FHFA: Fannie, Freddie Play Too Big Of A Role

Federal Housing Finance Agency Director Mark Calabria on Monday warned Congress that Fannie Mae and Freddie Mac play a disproportionately large role in the housing market and are badly undercapitalized – creating significant risk to the nation’s economy. In a letter to the banking and housing chairs introducing FHFA’s annual report, Calabria urged Congress to give the agency greater authority to charter competitors to Fannie and Freddie and limit their relative power in the housing market. “A root cause of the 2008 financial crisis was imprudent mortgage credit risk backed by insufficient capital,” Calabria wrote to Congress. “This fundamental problem remains unresolved today. The Enterprises are inarguably undercapitalized for their size, risk, and systemic importance. Calabria said Fannie and Freddie…

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…