Short Takes: Fannie Mae Warns of a ‘Draw’ From Treasury / Blame CECL / Ginnie Places Restrictions on Cash-out Refis of VA Loans / Blank Rome Hires Industry Veteran Samlin
pmuolo@imfpubs.com, dhollier@imfpubs.com
Fannie Mae had a blowout second quarter, posting a strong profit of $3.4 billion but the GSE warned that thanks to the coming “current expected credit loss” (CECL) accounting standard it may suffer a reduction in retained earnings of roughly $4 billion. And since its retained capital is $3 billion, you can do the math…
In its earnings report, the government-sponsored enterprise explained that come January 2020, the CECL standard likely will “introduce additional volatility in the company’s results as credit-related income or expense will include expected lifetime losses on the company’s loans and other financial instruments subject to the standard and thus become more sensitive to fluctuations…”
Presumably, the Federal Housing Finance Agency is well aware of all this…
Ginnie MaeThursday morning placed restrictions on cash-out refis of high LTV loans that can be securitized into Ginnie I and II pools. In an All Participants Memo, the agency states: “This APM revises the pooling eligibility requirements applicable to all VA-guaranteed refinance loans and establishes new pooling criteria for certain cash-out refinances with loan-to-value ratios exceeding 90% … Effective with mortgage-backed securities guaranteed on or after November 1, 2019, High LTV VA Cash-Out Refinance Loans (those with LTV ratios above 90%) are ineligible for Ginnie Mae I Single Issuer Pools and Ginnie Mae II Multiple Issuer Pools. The exception is in cases when the loans are Permanent Financing Construction Loans…”
MORTGAGE PEOPLE: The New York-based Blank Rome law firm hired Scott Samlinas partner in charge of its consumer financial services group. Samlin will provide regulatory counsel related to mortgage banking and consumer issues. He joins the firm from Pepper Hamilton LLP where he was a partner in the financial services practice group. His resume includes stints at Morgan Stanley and Bear Stearns.
