FHFA

The Fifth Circuit Court of Appeals has declared the Federal Housing Finance Agency (FHFA) to be unconstitutionally structured, making it the second federal regulatory body to receive such a ruling within the past month.

The ruling has meaningful implications for those advocating Fannie Mae and Freddie Mac to be recapitalized and released from conservatorship under the FHFA.

Learn some of the details that led to the ruling by the three-judge panel.

As part of an effort to reorganize federal agencies in a way to make them more efficient and accountable, President Donald Trump’s administration is proposing to end the conservatorship of the government-sponsored enterprises (GSEs) and allow other privately owned entities to enter the secondary market to increase competition.

The proposal has elicited responses from trade associations representing mortgage bankers and credit unions, noting their hopes for what can be done to improve on the current guarantor structure.

Learn more details about how the plan would impact the housing finance system and what the industry is saying about it.

The Federal Housing Finance Agency’s (FHFA) proposed rule implementing new risk-based capital requirements for the government-sponsored enterprises (GSEs) gained industry support before it was published in the Federal Register. However, financial trade advocates still have some suggestions for improving the proposed rule before it is finalized.

An alliance of trade organizations issued a letter to FHFA Director Mel Watt, offering two recommendations to improve the proposal.

Find out what provisions are being considered in the proposed rule and what suggestions the industry is offering.

Federal Housing Finance Agency (FHFA) Director Mel Watt said a new risk-based capital and minimum leverage capital rule is in the works, which would replace Office of Federal Housing Enterprise Oversight (OFHEO) capital standards put in place prior to the conservatorship of the government-sponsored enterprises (GSEs).

Some financial industry participants have expressed support for the forthcoming proposed rule Watt talked about while testifying before the Senate Banking Committee.

Find out more about what the agency hopes to accomplish with the rule and what other topics were addressed in the FHFA’s 2017 Report to Congress.

Freddie Mac’s compliance team will be under new leadership with the hiring of John Krenitsky, who recently joined the government-sponsored enterprise as senior vice president and chief compliance officer.

Krenitsky, who comes to Freddie Mac from Discover Financial Services, will oversee and manage Freddie Mac’s compliance with legal and regulatory requirements, as well as related controls that govern the company’s business activities.

Find out more about what experience he brings to the table.

Fannie Mae recently updated its Selling Guide to clarify certain policies and procedures that permit a lender to help fund closing costs and prepaid fees, typically charged to the borrower. 

The updated guide includes a list of limitations on such contributions.

Read on to learn specifics about the revisions. 

Fannie Mae and Freddie Mac soon will implement a new Uniform Mortgage-Backed Security (UMBS), the Federal Housing Finance Agency (FHFA) recently announced.

FHFA Director Melvin Watt said the announcement is intended to offer certainty to market participants regarding the timing of the transition to the UMBS and to enable them to make necessary preparations for a smooth transition. 

Find out more about the new development and what it will mean for the industry.

The revelation that Fannie Mae is requesting to draw from the Treasury to make up for a $3.7 billion deficit after a $6.5 billion loss in the fourth quarter of 2017 has reinvigorated the debate over whether the government-sponsored enterprises should be reformed or allowed to establish capital buffers.

Fannie Mae CEO Tim Mayopoulos said that the loss is an isolated incident, while some argue that it has much broader implications for how the secondary market should be structured.

Find out what an industry trade leader and a high-level legislator are saying about the company’s funding request.

The Mortgage Bankers Association wrote to Congress in support of S. 2361, the Housing Opportunity Mortgage Expansion Act. The bipartisan bill proposes to amend the Federal Home Loan Bank (FHLB) Act to allow certain captive insurance companies to have their FHLB memberships continued or restored.

Captive insurance companies lost FHLB membership eligibility in February 2017 upon the effectiveness of a Federal Housing Finance Agency final rule, stipulating that such entities should be excluded from the definition of “insurance company” under the FHLB Act.

Read on to learn more about the legislation and why it has gained industry support.

As the economy, housing market and lending quality have improved, many lending institutions are reconsidering the level of reserves they created to offset potential exposure if the government-sponsored enterprises (GSEs) launch a large-scale repurchase campaign, similar to the one they embarked on during the financial crisis.

Milliman Principal and Consulting Actuary Jonathan Glowacki and Milliman Actuarial Analyst Edem Togbey told Dodd Frank Update why lenders should consider releasing those reserves as income, and explained why many have yet to do so.

Find out what advise they had to offer about the matter.