Fannie Mae and Freddie Mac took steps last year to continue encouraging homeowners to refinance their mortgages, all while making efforts to stabilize their operations in federal conservatorship.
The Federal Housing Finance Agency (FHFA), which oversees the two GSEs, detailed its measures in a 2015 scorecard report the agency released this week.
According to the report, FHFA conducted outreach with the Treasury Department to homeowners eligible for the Home Affordable Refinance Program (HARP) in places like Newark, Phoenix, and Columbus. The agency noted it wanted to reach out to homeowners who had other factors that could compensate for their low credit scores. To do this, Freddie Mac rolled out a quality control pilot for pre- and post-closing and altered its Home Possible Advantage product.
For its part, Fannie Mae ditched its MyCommunityMortgage product for HomeReady, which offered income limits for properties in low-income census tracts and count documented income from non-borrower household members as relevant in reviewing a borrower’s debt-to-income ratio.
FHFA also highlighted its efforts to expand lender participation. The agency also brought on 102 new small lenders as approved sellers—something it said exceeded its original goals. The agency cast these efforts as ones it made along three conservatorship priorities. These priorities include maintaining credit availability for homeowners eligible to refinance their mortgages, increasing private capital in the mortgage market, and developing new architecture like the single-family loan model.
“This Progress Report underscores our commitment to accomplishing our goals of fostering liquidity and efficiency in the housing finance markets, reducing risk to taxpayers, and building a new mortgage securitization infrastructure, and our commitment to doing so in a safe and sound manner,” FHFA Director Melvin Watt said in a statement.
“Working collaboratively with Fannie Mae and Freddie Mac, we have accomplished a tremendous amount over the past year and we look forward to building on this success in 2016,” Watt added.
Fannie and Freddie entered federal conservatorship during the housing downturn in 2008. Lawmakers, bank executives, and others continue to call for the GSEs’ removal from taxpayer backing. Reuters reports that Bank of America Merrill Lynch called for an end to conservatorship for the GSEs, given their lack of capital cushions.
"We think this opens the door to FHFA pursuing a recapitalization plan, eventually leading to the end of the conservatorships," Reuters reported Bank of America Merrill Lynch’s rates strategist, Ralph Axel, as saying.