|| FHFA Acting Director DeMarco talked
to CUs at NAFCU's Congressional
Caucus about a coming proposal for a
revamped securitization platform.
- Hathcox photo
Sept. 14, 2012 – The Federal Housing Finance Agency’s plans for a new securitization platform to get the secondary market through the housing finance reform period will be detailed in a white paper expected to be released in October, FHFA Acting Director Ed DeMarco told NAFCU Congressional Caucus attendees Wednesday.
FHFA is working closely with Fannie Mae and Freddie Mac to develop plans for the platform, which will take several years to build, he said. Ultimately, the platform is aimed at enabling numerous lenders, including credit unions, to compete in the secondary mortgage market as Fannie and Freddie transition out of conservatorship and a new system is put in place.
Importantly, DeMarco said the FHFA’s “immediate priority” is a single, common platform, not a single GSE security. For now, both Fannie and Freddie will be able to use their current platforms to issue their own mortgage-backed securities. FHFA will also provide new standards for a proposed model pooling and servicing agreement and a variety of other contractual agreements, he said.
The agency will use the white paper, which will detail all of the above, to solicit feedback from market participants about its plans.
DeMarco also explained that FHFA’s newly revised representation and warranty model for conventional loans sold or delivered on or after Jan. 1 is aimed at clarifying lenders’ repurchase exposure and liability on future deliveries. Under the revised framework, lenders will be relieved of certain repurchase obligations for loans that meet specific payment requirements, he said. The GSEs’ quality control reviews will occur earlier in the loan process to help identify potentially defective loans more quickly.
DeMarco also discussed the FHFA’s Aug. 31 announcement that it directed Fannie and Freddie to raise the guarantee fees they charge on single-family mortgages by an average of 10 basis points. He reiterated that the move was to bring pricing closer to the level one might expect to see if mortgage credit risk was borne solely by private capital.
He pointed out that nine out of 10 mortgages are backed by the federal government, which means taxpayers are accountable for 90 percent of U.S. mortgages.