Secondary Market

Fannie Mae announced the winning bidder for its second-ever sale of deeply delinquent non-performing loans (NPLs) on Thursday, which included approximately 3,900 loans.

The proposed housing goals rule for the GSEs was first issued in August 2014. More than 144 comments were made on the proposed rule, all of which were considered by the FHFA in the development of the final rule. According to the FHFA, the final rule sets identical benchmarks in all categories for both Fannie Mae and Freddie Mac.

The latest transaction, CIRT-2015-2, became effective on July 1, 2015, with Fannie Mae retaining the risk for the first 50 basis points of loss on an $8.1 billion pool of loans.

As they promised earlier this year, Fannie Mae and Freddie Mac have intensified their efforts in the last few months to rid their single-family residential mortgage portfolios of deeply delinquent, non-performing loans (NPLs).

The NPLs in this transaction are being serviced by Ocwen Financial, according to Freddie Mac. The loans are deeply delinquent, which means in many cases they are delinquent by two years or more and are likely either in foreclosure or some stage of loss mitigation.

More than half of the total foreclosure prevention actions completed by the FHFA in nearly seven years (1.82 million) have come in the form of permanent loan modifications, according to FHFA.

The quarter-over-quarter increase in net income for Q2 2015 was largely driven by fair value gains, offset by credit-related expense that was negatively affected by an increase in interest rates. Fannie Mae's net fair value gains in Q2 totaled $2.6 billion, compared with losses of $1.9 billion in Q1.

Ask the Economist is an ongoing series in which DS News talks with an economist about the most pressing issues facing the nation's housing industry and the economy. This installment features Sean Becketti, Chief Economist with Freddie Mac.

Also for Q2, Freddie Mac reported $3.9 billion in comprehensive income, a five-fold increase from Q1's total of $746 million. With the inclusion of September 2015's Dividend Obligation of $3.9 billion, Freddie Mac will have returned $96.5 billion to taxpayers. Dividend payments do not include the $71.3 billion bailout Freddie Mac received from Treasury in 2008.

The cap eliminated by Watt slightly more than a month ago was put in place three years ago by then-acting FHFA director Ed DeMarco as a compromise between satisfying the demand for a reduction in those executive salaries while the GSEs remained under conservatorship of the FHFA and maintaining adequate pay for line staff, according to Rood.