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» VISIT US ONLINE @ DSNEWS.COM Compiled by the DS News Staff FIVE MINUTES WITH EARL M. CUMMINGS CHAIRMAN AND CEO OF BESTASSETS PAGE 31 inside the journal // movers & shakers // on the web // the app spectrum GSEs' Rep and Warranty Guidelines Expected to Bring Clarity for Lenders The Federal Housing Finance Agency (FHFA) released new representation and warranty guidelines to clarify lenders' risk regarding repurchase requests from Fannie Mae and Freddie Mac. The agency also outlined steps lenders can take to challenge claims they feel are without grounds. Under the new guidelines, if a loan will be relieved of certain repurchase obligations. loan is current for 36 consecutive months, lenders Under the new guidelines, if a is current for 36 consecutive months, lenders "will be relieved of certain repurchase obligations," according to FHFA. Loans created under the Home Affordable Refinance Program (HARP) also free of certain rep and warranty risks after 12 months of "acceptable payment history." Additionally, to avoid further losses to Fannie Mae, Freddie Mac, and taxpayers, FHFA is directing the GSEs to review loan quality earlier than they have in the past—within 30 to 120 days of purchase. Lenders also have new timeline requirements for submitting loan files for the GSEs' review. "Ultimately, better-quality loan originations and underwriting, along with consistent quality control, help maintain liquidity in the mortgage market while protecting Fannie Mae and Freddie Mac from loans not underwritten to prescribed standards," said Edward DeMarco, FHFA's acting director. The changes will apply to all loans sold or delivered to the GSEs starting in the new year. Fitch Ratings says FHFA's new framework for representations and warranties has the potential to positively impact both the mortgage lending and housing markets. The increased focus on quality control—Fannie and Freddie are urged to review loans earlier in the process—and the expiration of repurchase claims after loans have shown consecutive on-time payments will provide more certainty for lenders, thus leading to increased credit availability, the ratings agency said. Of course, several other issues loom overhead preventing widespread clarity in the market, according to Fitch, including the future of the GSEs and housing reform, impacts from Basel III, and regulatory uncertainty as the Consumer Financial Protection Bureau continues to take shape. A look at facts you didn't know you couldn't live without As of June, the mortgage banking and brokerage sectors employed 276,600 people, according to the U.S. Bureau of Labor Statistics. State top10 inside the numbers Take a look data bits smallest discounts on pre-foreclosure short sales* Avg. Sales Price Minnesota Utah South Carolina Hawaii Nevada Michigan New Hampshire Nebraska Iowa Oregon $165,402 $176,893 $149,137 $409,633 $122,388 $90,985 $165,287 $124,121 $119,830 $183,460 Avg. Discount 14.35% 18.02% 18.32% 19.18% 19.31% 19.78% 20.13% 20.78% 21.37% 23.43% State on pre-foreclosure short sales* biggest discounts Avg. Sales Price Texas Massachusetts District of Columbia Missouri Rhode Island Georgia California Kentucky Maryland Connecticut $100,541 $219,559 $304,487 $98,856 $135,228 $109,730 $266,636 $101,317 $187,261 $205,922 Avg. Discount 41.64% 40.12% 39.31% 38.90% 38.72% 37.11% 36.79% 36.67% 35.52% 35.02% between the average sales price of pre-foreclosure properties and the average sales price of non-foreclosure properties, based on sales data from Q2 2012. Source: RealtyTrac. *Discounts calculated as the percentage difference There were 2.39 million existing homes for sale as of the end of June, down 24.4% from a year earlier, the National Association of Realtors reports. 13