Tag Archives: Freddie Mac

Freddie Mac's conservator, the Federal Housing Finance Agency (FHFA), is requiring Freddie Mac and its fellow GSE, Fannie Mae, to reduce the number of non-performing residential loans in their portfolios. This will be Freddie Mac's third sale of nonperforming loans since last summer. In August, the Enterprise sold a bundle of NPLs totaling $596 million and one in February that covered $392 in UPB. Sales of NPLs by the two Enterprises generally include loans that are seriously delinquent, which are those that are 90 days or more past due.

Servicers are now required to evaluate mortgage loans backed by the two GSEs and actively reach out to borrowers to offer a streamlined loan modification if the mortgage loan was previously modified to include a step-rate feature (which allows for a gradual rate increase in the first few years) and if the mortgage rate becomes 60 days delinquent in the first 12 months following a rate increase.

The STACR offering announced Thursday is the GSE’s second this year and 11th overall. Freddie Mac began the STACR program in the second half of 2013 as part of the Enterprise’s goal of reducing risk to taxpayers by increasing private capital’s role in the mortgage market.

In a white paper released Wednesday titled "The Continued Profitability of Fannie Mae and Freddie Mac is Not Assured," the Office of Inspector General of the Federal Housing Finance Agency (FHFA) warned that the profitability of the two GSEs may not continue due to their having to rely on core earnings for profits in the future.

According to Ocwen, the portfolio consists of approximately 55,000 performing loans owned by Freddie Mac. The transaction is subject to approval by Freddie Mac and its conservator, the Federal Housing Finance Agency (FHFA), as well as other customary conditions. Ocwen reported that it expects the transaction to close by April 30, 2015, and expects the loan servicing to transfer in May 2015.

According to the report, Fannie Mae and Freddie Mac exceeded their $90 billion risk transfer goal. During 2014, the two Enterprises executed credit risk transfers on single-family mortgages with unpaid balance transfers of over $340 billion. As part of the FHFA requirement both enterprises continued to reduce their mortgage portfolios. As of December 2014, Freddie Mac’s portfolio stood at $408 billion and Fannie Mae’s stood at $413 billion, for a combined reduction of $131 billion. Both numbers were significantly under the $470 billion cap required by the Senior Preferred Stock Purchase Agreements.

A hugely profitable year in 2013 for both Fannie Mae ($84 billion) and Freddie Mac ($49 billion) shifted widespread speculation from winding down the two GSEs to instead ending FHFA's conservatorship of the two Enterprises, which began in September 2008 after the two received a combined $188 billion from Treasury in bailout funds.

Recent actions by the Federal Housing Finance Agency (FHFA) indicate that the Agency is placing an increased emphasis on the clearing out of Fannie Mae's and Freddie Mac's seriously delinquent loan portfolios and steering more borrowers toward foreclosure prevention and loss mitigation actions, using foreclosure only as an absolute last resort.

FHFA is said to be seeking $1 billion in damages over losses the Agency suffered when the sponsor of the mortgage-backed securities, Nomura, and the securities' underwriter, RBS, did not follow underwriting guidelines on 68 percent of a sample of a bundle of securities backing more than $2 billion worth of mortgages sold to the GSEs prior to the financial crisis of 2008.

Freddie Mac Deputy Chief Economist Len Kiefer, who will be a keynote speaker at the upcoming Five Star Government Forum in Washington, D.C., on March 18, predicted in Freddie Mac's March 2015 Economic and Housing Market Outlook that the coming year would be the best for housing since 2007, immediately prior to the crash.