GSE Securitization Down in August
amalatinszky@imfpubs.com
Lenders sold $55.76 billion of loans to the two government-sponsored enterprises in August, according to an Inside The GSEs analysis of recently released loan-level data. This was a 6.2% drop from the July securitization level, which itself was 10.4% lower than June’s $66.35 billion peak.
Fannie Mae usually produces more mortgage-backed securities than Freddie Mac. But last month Freddie out-issued Fannie by a paper-thin margin of $188.7 million. Still, on a year-to-date basis, Fannie maintained a 52.7% share of the GSE market.
United Wholesale Mortgage was once again the top GSE seller, having securitized $6.15 billion worth of mortgages in August. The Michigan juggernaut boosted its market share by 0.3 percentage points to 11.0%. The trick was to allow deliveries to shrink by only 3.6%, well below the average.
Rocket Mortgage, Amerihome and U.S. Bank all had double-digit increases in monthly GSE deliveries in August, while Guaranteed Rate’s securitizations dropped 19.3%.
FHFA Stressing Flexibility With GSE Credit Score Change
September 20, 2023 - Brandon Ivey - bivey@imfpubs.com
The Federal Housing Finance Agency is willing to be flexible as the agency works to implement new credit scoring models for mortgages delivered to the government-sponsored enterprises.
Leda Bloomfield, branch chief for policy and equity at the FHFA, said the agency is willing to make adjustments to the timeline for the credit score transition based on feedback from industry participants.
“We want to be very detailed for the next few quarters — maybe the next year — to give people time, planning and budgeting cycles, but flexible enough to know that things will come up,” she said last week at the Mortgage Bankers Association’s compliance and risk management conference in Washington, DC.
At the MBA conference, Bob Broeksmit, president and CEO of the MBA, asked Bloomfield if the delay in the bi-merge transition suggests other aspects of the transition will also be pushed back, as industry participants have called for.
Bloomfield was noncommittal but reiterated that FHFA aims to be flexible. “One of the conversations that we’ve been having internally is, this is a years-long process,” she said. “So, it’s really difficult to predict with certainty and detail what exactly is going to happen in the third quarter of 2026.”
CFPB Looking for Specificity in Credit Denial Disclosures
September 20, 2023Brandon Ivey
bivey@imfpubs.com
The Consumer Financial Protection Bureau issued a circular Tuesday clarifying disclosure requirements for lenders that use artificial intelligence or complex credit models to make lending decisions.
“The Equal Credit Opportunity Act does not allow creditors to simply conduct check-the-box exercises when delivering notices of adverse action if doing so fails to accurately inform consumers why adverse actions were taken,” the CFPB said.
The “check-the-box” reference is tied to sample adverse action reasons provided by the CFPB for lenders to use when making disclosures required under ECOA. The CFPB stressed that the samples aren’t exhaustive and may not be specific enough for lenders relying on AI or “black box” credit models.
“Creditors must disclose the specific reasons, even if consumers may be surprised, upset or angered to learn their credit applications were being graded on data that may not intuitively relate to their finances,” the CFPB said.
FHA Should Eliminate Downpayment Requirements, Tozer Says
September 19, 2023 - Monica Hogan - mhogan@imfpubs.com
Former Ginnie Mae President Ted Tozer wants FHA to consider adjusting or eliminating its minimum downpayment requirement to put homeownership in the reach of more consumers.
“I think we’ve over-romanticized downpayments,” Tozer said, speaking during a Community Home Lenders of America Roundtable Monday in Washington, DC. He noted that the VA and Rural Housing Service home loan programs don’t require downpayments. He said the focus should be on the borrower’s credit history and not on the downpayment.
He argued that low- and moderate-income homeowners would still have considerable skin in the game even after a 0% downpayment because once they live in a house, the cost to move their family is significant. “We need to ask the question; do we need a downpayment with FHA? Do we have to have an FHA program that requires a 3.5% downpayment?”
FHA Chief of Staff Nathan Schultz said changing FHA’s minimum downpayment rules would require Congress to weigh in. He noted there’s proposed legislation in the HELPER Act of 2023 that would offer 100% financing for first responders seeking a mortgage, and that would be one way to test the concept of zero downpayments at FHA.
