Written By: Joel Palmer, Op-Ed Writer
The Federal Housing Finance Agency (FHFA) issued a Scorecard Progress Report last week summarizing the 2018 activities of Fannie Mae and Freddie Mac.
The activities summarized in the report are designed to achieve FHFA’s three strategic goals as conservator of the two enterprises, which were established in 2014:
•Maintain, in a safe and sound manner, foreclosure prevention activities and credit availability for new and refinances mortgages to foster liquid, efficient, competitive, and resilient national housing finance markets.
•Reduce taxpayer risk through increasing the role of private capital in the mortgage market.
•Build a new single-family securitization infrastructure for use by the Enterprises and adaptable for use by other participants in the secondary market in the future.
2018 activities highlighted in the report include:
•Freddie Mac’s launch of HomeOne, which provides a low down payment option for first-time homebuyers.
•High loan-to-value refinance programs launched by both enterprises to replace the retiring Home Affordable Refinance Program (HARP).
•Increasing financial incentives for lenders/seller/servicers to originate low-balance loans.
•The finalization of a multiyear language access plan and the creation of a website to serve as a clearinghouse for translations of mortgage-related terms and documents.
•Assessing the current appraisal process and identifying challenges, such as the shortage of qualification professionals in some areas.
•Ongoing efforts to promote diversity and inclusion with respect to credit access, which led to a slight increase in the share of minority applicants to the HomeReady and HomeReady/HFA Preferred programs.
•An updated aligned forbearance program, which reduced and simplified seven separate forbearance programs into a single program.
•Revising the eligibility requirements for a distressed borrower to qualify for a short sale or a deed-in-lieu of foreclosure, which expanded borrower eligibility.
•Assessing the mortgage servicing business model.
•Both enterprises achieving an objective to transfer a meaningful portion of credit risk on at least 90 percent of the unpaid principal balance of their acquisitions of single-family mortgage loans targeted for credit risk transfer.
•A number of credit risk transfers for single-family and multifamily business.
•Making significant progress in reducing Fannie’s and Freddie’s retained portfolios during 2018. As of December 31, 2018, Freddie Mac’s portfolio was approximately $218 billion, and Fannie Mae’s was approximately $179 billion, a reduction in their combined portfolios of $87 billion in 2018.
•Announcement of a multi-year initiative to redesign and update Uniform Appraisal Dataset (UAD) and residential appraisal forms to align the appraisal dataset with the industry-standard Mortgage Industry Standards Maintenance Organization (MISMO) Reference Model.
Interested parties can provide input on the report. Feedback can be submitted via FHFA.gov, or to the Federal Housing Finance Agency, Office of Strategic Initiatives, 400 7th Street, S.W., Washington, D.C. 20219.
About the Author
As an NAMU® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.