Tag: GSE

1
Senators Attempt to Chip Away at Housing Reform with “Jumpstart GSE Reform Act” and Budget Amendment
2
Administration’s Proposed Refinancing Plan for Non-GSE Loans Is Illusory
3
Freddie Mac’s Refinancing Policy

Senators Attempt to Chip Away at Housing Reform with “Jumpstart GSE Reform Act” and Budget Amendment

By: Kristie D. Kully, Andrew L. Caplan

Senators Bob Corker (R-TN), Mark Warner (D-VA), David Vitter (R-LA), and Elizabeth Warren (D-MA) have introduced legislation that, if enacted, may make a partial dent in the U.S. housing reform effort. The “Jumpstart GSE Reform Act” (the “Legislation”), introduced on March 14 in the Senate Committee on Banking, Housing and Urban Affairs (the “Senate Banking Committee”), would prevent any increase in guarantee fees (“g-fees”) imposed by Fannie Mae and Freddie Mac (the “GSEs”) from offsetting other government spending. The Legislation would also prohibit the sale of GSE preferred stock by the United States Treasury (the “Treasury”) without Congressional approval and structural housing finance reform. Furthermore, on March 22, Senator Tim Johnson (D-SD), chairman of the Senate Banking Committee, offered a bipartisan amendment (the “Amendment”) to the Senate budget that would prohibit Congress from using g-fee increases to offset additional government spending. The Amendment was agreed to in the Senate by unanimous consent. Although this budget will not become law, the Amendment shows growing support for this issue. Read More

Administration’s Proposed Refinancing Plan for Non-GSE Loans Is Illusory

By: Laurence E. Platt

The Administration’s newly announced plan to provide low cost refinancings to underwater, current borrowers whose residential mortgage loans are not owned or securitized by the GSEs is high on hope and low on likelihood of success. The plan creates a form of a “streamlined” refinancing on a stated income basis and without an appraisal. Eligibility criteria include that the loan to be refinanced has been current for the past six months, the borrower must meet a minimum credit score of 580 and be an owner-occupant and the new loan must fall within FHA loan limits and a to-be-determined high loan to value ratio. Holders may need to write down principal of the existing loan if the LTV exceeds a certain percentage in excess of 100%, much like the wildly unsuccessful 2010 FHA Short Refinance program. Read More

Freddie Mac’s Refinancing Policy

By: Kerri M. Smith

NPR and ProPublica charged Freddie Mac with investing in securities that would lose value if homeowners refinanced their mortgages. The primary allegation is that such investments undercut Freddie Mac’s public mission and resulted in a more stringent refinancing policy. Read More

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