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FHFA Releases Analysis on Principal Forgiveness as Loss Mitigation Tool

January 28, 2012 Comments off

FHFA Releases Analysis on Principal Forgiveness as Loss Mitigation Tool (PDF)
Source: Federal Housing Finance Agency

In response to a request from members of Congress, the Federal Housing Finance Agency (FHFA) has publicly disclosed the analysis that led the agency to exclude principal forgiveness from its menu of loss mitigation tools. On Friday, FHFA delivered to Representative Cummings, Representative Tierney and other members a letter summarizing the agency’s determination and three separate staff analyses prepared over the past year that formed the basis for the determination.

As requested, the information here provides the analytic and legal basis for FHFA’s previously announced determination on the use of principal forgiveness as a loss mitigation tool. FHFA is not seeking any legislative action in this area. FHFA remains committed to achieving its statutory mandate to conserve the assets and property of Fannie Mae and Freddie Mac in conservatorship while maximizing assistance to troubled homeowners, mindful of the net present value cost to taxpayers. As FHFA has noted before and states in the letter, changing circumstances may call for an updating of our analysis.

+ Full Document (PDF)

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FHFA Reports Fannie Mae and Freddie Mac Guarantee Fees Increased in 2009-2010

September 28, 2011 Comments off

FHFA Reports Fannie Mae and Freddie Mac Guarantee Fees Increased in 2009-2010 (PDF)
Source: Federal Housing Finance Agency (FHFA)

The Federal Housing Finance Agency (FHFA) today released its third annual report on guarantee fees (g-fees) charged by Fannie Mae and Freddie Mac (the Enterprises), concluding that the average “g-fee” on single-family mortgages increased in 2010 relative to 2009, from 22 basis points to 26 basis points.

The report finds that the Enterprises’ g-fees continued to convey cross-subsidies from mortgages that posed lower credit risk, on average, to loans that posed higher credit risk, but overall that cross-subsidization was substantially less in 2009 and 2010 than in 2007 or 2008. Lenders that delivered smaller volumes of mortgages to the Enterprises, on average, paid higher guarantee fees on loans of similar credit quality than did larger-volume lenders.

The Housing and Economic Recovery Act of 2008 requires FHFA to study the fees charged by the Enterprises for guaranteeing securities backed by single-family mortgages that are not insured or guaranteed by the federal government and that finance properties with four or fewer residential units. Those fees cover projected credit losses from borrower defaults over the life of the loans, administrative costs, and a return on capital.

+ Full Report (PDF)

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