DS News

DS News January 2021

DSNews delivers stories, ideas, links, companies, people, events, and videos impacting the mortgage default servicing industry.

Issue link: http://digital.dsnews.com/i/1322815

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Page 87 of 99

86 86 INVESTMENT GOVERNMENT PROPERTY PRESERVATION INDUSTRY UPDATES Journal INDUSTRY LEADERS DISCUSS GSE PRIVATIZATION e U.S. House Committee on Financial Services Chairwoman Maxine Waters has been a staunch voice advocating on behalf of, in her words, "current homeowners, renters, potential owners, and more than 19 million prospective millennial homeowners." To that end, Waters in a public statement said it would be "entirely inappropriate" for the FHFA, with the assistance of an outgoing Treasury Secretary, to focus on removing Fannie Mae and Freddie Mac from the gov- ernment conservatorship they have been under since 2008. She encouraged FHFA Director Mark Calabria to stop any attempts to release the GSEs from government oversight. She says that no move in that regard should occur until the new President is sworn in. "At the very least," she added, "the Congress and the American public deserve transparency from you … I urge you to fully engage with Congress by testifying before our Committee and to immediately halt your efforts to raise the enterprises capital require- ments and to release them from conservator- ship. You should instead focus on ensuring that renters and homeowners are receiving the help they need during this pandemic." e Wall Street Journal, in November, published an article about the current admin- istration's plan to privatize Fannie and Freddie prior to President Donald Trump's exit from the White House. According to the article, both Calabria and Treasury Secretary Steven Mnuchin have prioritized the conservatorship dissolution, but the Journal 's Andrew Ackerman reported, "how that is done could affect the cost and availability of mortgages backed by the com- panies, which guarantee roughly half of the $11 trillion in existing home loans." Former Freddie Mac CEO Don Layton, now a Senior Industry Fellow at Harvard's Joint Center for Housing Studies, has written several papers about the eventual privatization. He acknowledges the process in order to be done correctly will take time. He wrote that the release of Fannie and Freddie "requires the (FHFA), their regulator and conservator, and the U.S. Treasury to both separately and together make decisions and take actions involving extremely large amounts of money in an incredibly complex, never-tried-before process with many political sensitivities. He continued, "To implement an unprec- edented undertaking of this scale and scope, the FHFA and Treasury are, in reality, mostly figuring out how to do it as they go along. To date, even though the implementation of this 'by administrative means' plan began a little over a year ago, it has so far only scratched the surface—and so likely has years to go, with many tough and complex decisions still to be analyzed, made, and implemented." Waters has held hearings previously to address the topic. In September, she called a full Committee hearing entitled, "Prioritizing Fannie's and Freddie's Capital over America's Homeowners and Renters? A Review of the Federal Housing Finance Agency's Response to the COVID-19 Pandemic," during which she called the FHFA's pandemic response "inadequate." MBS REPRESENT 'STRONG SOURCE OF CAPITAL' FOR HOMEOWNERS Ginnie Mae announced that mort- gage-backed securities (MBS) have contin- uously been a "strong source of capital for America's homeowners." e company, which funds govern- ment-backed loans, reports more than $76.2 billion of securities issued in November, the fifth consecutive month issuance topped $70 billion. e November numbers represent home financing for more than 274,000 households, according to Ginnie Mae. "Historically low interest rates continue to drive home purchases and mortgage refinanc- ing," Ginnie Mae EVP Eric Blankenstein said. "As we enter a New Year, investors and issuers can be sure that Ginnie Mae is focused on meeting the diverse product needs of investors and issuers that keep capital flowing to mil- lions of families each year." e November issuance of $76.29 billion includes: » $72.43B of Ginnie Mae II MBS » $3.86B of Ginnie Mae I MBS, which includes $3.77 billion of loans for multifamily housing Ginnie Mae's total outstanding principal balance as of November 30 was $2.115 tril- lion, essentially flat with October 2020 and up from $2.111 trillion in November 2019. Ginnie Mae describes its I and II MBS as follows: "Ginnie Mae I MBS are modified pass-through mortgage-backed securities for which registered holders receive separate principal and interest payments on each of their certificates. Ginnie Mae I securities can include single-family, multifamily, manufac- tured home, and project construction loans." Ginnie Mae II MBS are modified pass- through mortgage-backed securities for which registered holders receive an aggregate principal and interest payment from a central paying agent. An Issuer may participate in the Ginnie Mae II MBS either by issuing custom, single-Issuer pools or through participation in the issuance of multiple-Issuer pools, which combine loans with similar characteristics. According to the company, Ginnie Mae Ginnie MBS programs directly support housing finance programs administered by the Federal Housing Administration, the Depart- ment of Veterans Affairs, the Department of Housing and Urban Development's Office of Public and Indian Housing, and the Depart- ment of Agriculture Rural Housing Service.

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