(This will be a very brief blog, as I head off for a week at the beach with my wife, oldest son and his wife, and 5 grandkids, two of which are from west coast son #2 and his wife.)
My Fourth of July Declaration
Going forward I want to reiterate my support for the GSEs staying prominent in the nation’s mortgage finance system— albeit not as heavily handcuffed—based on my heavy interaction with financial service interests and regulators while working on the Hill, at the Home Loan Bank System, the Fed, as well as my two decades with Fannie.
Simply put, if properly regulated, F&F represent the best model for the nation’s consumers and the many finance professionals in the mortgage finance system.
Those experiences reinforced my belief the pre-conservatorship F&F secondary mortgage model—hands down--produced the most efficient, effective, equitable, and fair system for consumers and major commercial mortgage market participants.
At bottom, it’s the GSEs informal but real regulatory function (won’t accept loans which don’t meet their tough underwriting requirements which discourages their creation) combined—when they had them—with their profit incentive.
Their public mission--when combined with profit for achieving it produced--the ideals which are paramount for risk/reward necessities.
The fact that F&F, in turn, today are tightly regulated by the FHFA, gives a belt and today suspenders approach to the way GSEs should be overseen.
Looking ahead, simply stated, rather than disrupt and crush the mortgage GSEs, the federal government and Congress should recognize their value and strengths and re-enforce them.
Major News of the Past Week—NYT
The leader is the New York Times’ request to Judge Margasret Sweeney to open the depositions of Ed DeMarco and Mario Ugoletti to the public.
The paper’s high profile position adds to all of the rumors associated with the depos and the suggestion of possible conflict with previously understood circumstances, some created by those very gentleman in their official capacities at head of the FHFA (DeMarco) and a senior Treasury official working on the “Third Amendment” (Ugoletti).
Judge Sweeney already gave Treasury two weeks to respond to a similar demand from the Fairholme lawyers.
Here’s hoping the Times financial columnist, Gretchen Morgenson, gets her journalistic hands on the material, since her column about the original government slow walking and obfuscation brought huge attention to DoJ and Treasury hijinks in the “Third Amendment” court cases, when she exposed it in her weekly column about three months ago.
(See the NYT request story from Inside the GSEs, a publication in the Inside Mortgage Finance Group, Guy Cecala publisher.)
New York Times Pushes for Access to FHFA Testimony
The New York Times Company filed a motion
this week and is intervening in a case to have access to
testimony pertaining to Edward DeMarco, former
acting director of the Federal Housing Finance
Agency, stating the government has failed to show
good cause for sealing the documents.
DeMacro, along with Mario Ugoletti, are both
witnesses in the Fair Holmes Funds v. The United
States case and each testified in May.
Ugoletti was a senior official with the
Department of Treasury during the government bailout
of the GSEs and is now special advisor to FHFA
Director Mel Watt.
The plaintiff in the case, Fairholme Funds, moved
to have the “Protected Information” designation
revoked or to have the redacted versions of the
The New York Times argues that it has a right to
intervene as a news organization on behalf of the
public to access documents that arose from discovery.
Court documents stated that every circuit court
that has considered the question has come to the
conclusion that nonparties may permissively intervene
for the purpose of challenging confidentiality orders.
In the motion, The New York Times said that the
party seeking a protective order has the burden of
showing that good cause exists for issuance of that
But it added that it is equally apparent that the
obverse also is true, i.e., if good cause is not shown,
the discovery materials in question should not receive
judicial protection and therefore would be open to the
public for inspection.
“The public’s interest in the underlying facts of
this case is undeniable,” the motion stated.
“The government should not be able to hide from
the public, voters and taxpayers, the facts that were
central to the decisions that the government made as
part of the far-reaching effort to safeguard the U.S.
The court motion goes on to say that by providing
access to the evidence, the public will be able to better
understand the government’s decision.
Here Comes Tim Howard, the real one!
Former Fannie Mae CFO Tim Howard will file an amicus brief on Monday, July 6, in support of Perry Capital, plaintiffs asking for review of Judge Lamberth’s original decision to dismiss Perry claims.
One of the principal arguments made in the Perry appeal was that in dismissing the case, Lamberth relied on a factual record that was both incomplete and improperly supplemented by assertions made by the government with no opportunity for response by the plaintiffs.
I’m told Howard’s brief will highlight facts relating to Fannie Mae’s and Freddie Mac's conservatorship and subsequent treatment that are highly relevant to the case but were either misrepresented or ignored in the factual record put forth by the government.
(Shhh. He’s saying our government sometimes distorts and sometimes lies!!)
What Others Are Saying
Inside Mortgage Finance’s John Bancroft reports on Fannie/Freddie second quarter business volumes.
By John Bancroft
Fannie Mae and Freddie Mac saw a robust 22.3 percent increase in their single-family business during the second quarter of 2015, according to a new Inside Mortgage Finance ranking and analysis.
The two government-sponsored enterprises issued a combined $232.36 billion of single-family MBS during the second quarter. It was their strongest quarterly production level since the third quarter of 2013, and it lifted year-to-date issuance 55.8 percent above the volume generated during the first half of 2014.
However, at $422.28 billion in MBS issuance for the first half of the year, the GSEs would have to see a huge gain over the next six months to break the $1 trillion mark for all of 2015.
A Welcome, New Voice Enters the GSE fray
Rep. Eva Clayton (D-NC.) has some advice for the White House and her former North Carolina congressional colleague, Mel Watt, in a Huffington Post column
Jeb Bush says the Stars and Bars is a “Racist” standard.
Logan Beirne in the National Law Review