FHFA tripled the requirement for each GSE in 2014 from transferring arnportion of credit risk on single-family mortgages with an unpaid principalrnbalance of $30 billion in 2013 to $90 billion in 2014.  Each surpassed that benchmark by executingrncredit risk transfer transactions on m mortgages with a combined UPB of overrn$300 billion. </p

In 2014, the Enterprises also offered transactions that targeted privaterncapital in the insurance and reinsurance markets. Freddie Mac completed threernreinsurance deals, and Fannie Mae completed one. </p

Building on this success, the requirement for Fannie Mae in 2015 will be torncomplete transactions to transfer credit risk on single-family mortgages withrnunpaid principal balances of $150 billion and Freddie Mac’s goal will be $120rnbillion.   In addition the GSEs will be expected tornrefine and innovate in their existing credit risk transfer strategies – for examplernmore transfers of first loss positions – and to develop ways of transferring riskrnto different kinds of market participants including broadening diversity tornengage with minority-, women-, and disabled-owned businesses. </p

Watt said there were no surprises in 2015 for the goal to Maintain; the agency merely wants torncontinue with two objectives.  The firstrnis maintain, promote, and expand access to credit in a safe and sound mannerrnand the second is to continue to improve the GSE’s loss mitigation andrnforeclosure prevention activities. </p

The first objective was furthered in several ways in 2014.  The updating and clarification of the<bRepresentation and Warranty Framework provided lenders with greater certaintyrnabout when and under what circumstances they would be required to repurchase orrntake back loans, and servicers with a greater comfort level about theirrnobligation to pay compensatory fees.  Arnsecond effort, updating and enhancing counterparty standards for mortgagernservices, set minimum net worth requirements for all servicers who work withrnthe GSEs and capital and liquidity requirements for nonbank servicers.  These standards will improve access to creditrnby reducing uncertainty about GSE expectations for servicers.</p

The GSEs are also under orders to reduce the number of severely delinquentrnloans – there are approximately 300,000 that are a year or more in arrears -rnand to do so in a responsible way.  Thernsale of non-performing loans (NPLs) is one of the key tools FHFA believes thernGSEs can use to meet this Scorecard priority. When NPL sales are transferred tornnew buyers and servicers in a responsible way these new entities will have therncapacity, self-interest, and track records to provide borrowers withrnforeclosure alternatives.  </p

This past week FHFA released new requirements for future NPL sales.   Thernnew requirements will necessitate substantial outreach by the GSEs to identifyrnbidders who can meet established modification and loss mitigation standards.  The winning bidders will also be required torntrack and report what happens with borrowers so FHFA and the Enterprises canrnmonitor and document the success of the program.

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.