Disclosure of Congressional Fees in New Mortgage?

Federal Housing Financing Agency Director, Mel Watt stated that GSE funding of several affordable housing trust fund initiatives, targeting rehabilitation and management of low income rental housing, enacted by congress back in 2008 and never implemented, because of the mortgage melt down, will begin January 1, 2015.

His mandate, that a small portion of revenues at Freddie Mac and Fannie Mae be earmarked for these initiatives, has Republican lawmakers livid.  However, their arguments centering around some future cataclysmic financial crises necessitating the status quo, a restructure or replacement of the GSE’s is being undermined by their profitability.  Fannie and Freddie stand to earn combined profits of $25b in 2014.  

Remember, only those who have taken out a mortgage since 2008 have repaid the U.S. Treasury for the $188b bail out.  It was paid for with increased fees charged to borrowers.  This funding of the affordable housing initiatives will be paid for with these increased fees which will be collected from current and future borrowers.

Home owner taxpayers are paying more for their mortgages in order to fund social programs that they are, for the most part, unaware of.

Dodd-Frank limits what I can charge you for your mortgage and mandates my full disclosure to you, of all charges you are paying. I am subject to dire financial consequences if I, or my staff, do not fully comply with these disclosure regulations.

Why is Congress not required to fully disclose it's actions to it's taxpayers?

Did you know that, in addition to the taxes you are paying, several extra dollars are being added to your mortgage closing costs in order to fund  public and low income housing grants?  Did you?
I believe that maintaining Fannie Mae and Freddie Mac is probably worth using them as a conduit for the distribution, to low income tenants, of these extra charges to home buying taxpayers.  It would just be nice for our lawmakers to have to play by the same “transparency” rules that we in the mortgage industry have been mandated by them to follow.

FHFA and Lender Overlays

Mortgage lenders met at the White House with the administration and Mel Watt, Chairman of FHFA. The discussion centered around lender overlays that have been imposed in an effort to safeguard against loan re-purchase requests from the GSE’s for minor procedural mistakes and documentation errors that do not necessarily reflect on the borrowers’ ability to repay.

It appears that Mr. Watt will be allowing the mortgage industry a 3 year sunset period in which a 3rd party will evaluate GSE claims for re-purchase with regard to whether or not the lender made significant errors in documentation collection, credit evaluation or solving to an ability to repay.

I, for one, recently paid over $80,000 in costs to scratch & dent a loan file for re-sale that had been current for 3 years, went delinquent, was allowed to modify by the loan servicer, went into delinquency once again and finally was foreclosed upon.  I was told that an audit showed that we had made a material error in our credit analysis.

So, after 3 years of paying as agreed, the borrower loses his job, goes into foreclosure and it was deemed that a faulty credit evaluation on our part had led to the loss.

It doesn’t appear that this will happen as easily with the new agreement from Mr. Watt and the FHFA.  Couldn’t have come too soon for me.  The pendulum appears to be moving closer to center.

A less draconian and  more common sense approach to identifying the causes of loan non-performance will be welcomed by the entire mortgage industry.

FHFA and G Fees

The Federal Housing Finance Administration (FHFA) extended its deadline for industry comments on G fees that are charged by Fannie Mae and Freddie Mac  on loans sold to them.  The MBA and 19 other trade associations, including Homebuilders, Realtors, The National Urban League, National Housing Resource Center etc., have presented their comments and calculations showing how many buyer/borrowers are excluded from home ownership because of the record high fees currently being charged, as well as their, proposed increases.