MBA’s
David Stevens Said What???
I keep writing that things are “slow” or meandering in DC
in August. Mainly, because they are. I try and publish or discuss substantive
material, about which the GSE world cares, but those issues don’t always crop
up.
Ergo, since we all are citizens in a bigger world,
occasionally I go off on foreign policy, domestic issues, or pure politics,
especially now with the presidential campaigns in full throat.
But yesterday saved you all (and me) from blathering
blindly about non-GSE issues (although I have a few in this blog), when I was
sent Mortgage Bankers Association (MBA) President David Steven’s latest commentary.
(See below.)
I was stunned reading this declaration,
frankly, because if anyone had asked me—or other mortgage industry observers
trade association observers--”Where is the MBA and Stevens on the future of Fannie
and Freddie,” I would answer, “Are you
kidding, he/it supports doing away with the GSEs.”
But now Stevens claims he wants F&F around (with conditions). Flip-flop.
Does
that square with what his larger bank members want? I know it comports
with what his smaller members want, which trust the big guys in the same way upstream
swimming salmon trust grizzly bears.
Does it even square with what he’s been quoted as saying about the
issue? I’ve always believed that the MBA isn’t homogeneous on this but, it appears quite divisive among the MBA membership.
They have large banks, but also small banks, independent mortgage
companies, and credit unions, which look to F&F for business sustenance.
To support my point that this is a new tact, I
would have offered --and still do offer--the following evidence that David Stevens and the MBA are
not fans of the GSEs.
Or
Or
There is much more out there, too.
Is Stevens a chameleon or a historical revisionist? How can he say he
wants to preserve F&F after loudly supporting various Senate bills,
all of which would do away with the GSEs, as soon as their regulator and
Treasury were able.
Will folks wonder if he is lying now or was then?
(One of
DS’s bitter professional adversaries had far stronger language describing
Stevens, last night, after reading the DS column. I suspect some of that will
show up on Twitter, shortly).
Oh, and his “bright line,” is a totally specious and MBA- conjured non-issue.
When did Fannie or Freddie ever want to get into the primary market—cross his “bright line”--violate the law which limits them to the secondary mortage market and do what primary market lenders now do for the
GSEs, i.e. originate and deliver geographically diverse product for
securitization at minimal costs.
There is no need to waste time and draw a “bright line” between primary
and secondary market responsibilities market, it exists in reality and business practice.
One is hundreds of businesses and originates mortgage loans which meet
F&F underwriting requirements, while the other represents two companies in
the DC area which acquire those loans and--for a guarantee fee—securitize those
loans, making them investment housing bonds which institutional investors buy.
I guess David may think, just because August is a vacation and sleepy
time, everybody is napping.
Ed
DeMarco Says Get Rid of the GSEs!
As if we didn’t know, Ed DeMarco, former FHFA Director (Mel
Watt’s predecessor) last week let us know how he feels about Fannie and Freddie
going forward. He’s against them as he tells the Congress in his Wall Street
Journal op-ed piece (surprised by that placement, hardly)!
Ed tells the Congress, without mentioning his own name, touts the wonderful “common securitization platform” project, which “FHFA set
up in 2012,” which most critics claim was designed to give away for free the
GSE’s “secret sauce” and securitization technology to the very big banks Ed feels
should run the nation’s secondary mortgage market.
Who do you think ran FHFA in 2012 and proposed this less
than crackerjack idea—unless you want the GSEs out of the market-- forcing
F&F to create a single purpose, Delaware charted corporation to underwrite
and carry out Ed’s wet dream??
Anyone guessing it was DeMarco wins.
Real
world to Ed. I don’t think the Congress will have any time
this year to consider doing away with Fannie and Freddie, but that won’t stop
the Conservative rhetoric toward the same.
And, next year, do you think with all of the noise, chaos,
and internecine angina that Mr. Trump is causing the GOP, the RNC’s Reince
Priebus or an equivalent figure, will want to stand up in a
congressional/presidential election year and loudly say to America, “Let’s get rid of Fannie and
Freddie and further screw up the domestic home buying market? Who’s with us?”
Additional
GSE Court Filings
Plaintiffs lawyers for have filed additional views pointing
out that Treasury, DoJ, FHFA filings were flawed, inaccurate, and—in some
instance—just lies, which call into question Judge Royce Lamberth’s
opinion that HERA (Housing and Economic Recovery Act of 2008) allowed federal
regulators to do whatever they wanted to
F&F and its shareholders, as companies under “conservatorship.”
Just as original plaintiffs' arguments suggested the government
bent, exceeded, and likely broke HERA, we are now waiting for one federal court
to agree and issue its opinion.
Naturally the government disagrees with everything the
plaintiffs contend.
In the meantime, as reported, lawsuits have been filed in
Delaware (where Fannie is chartered) and Virginia (Freddie’s home state) arguing
that neither state's laws permits the 2012 “sweep,” which take very penny the two
earn, with a small haircut for a declining amount of capital, and ships it to
the Treasury’s General Fund, for deficit reduction use or earmarked
for other purposes, as some current bills in Congress direct.
But the courts pace and what I believe should be easy
rejections—or non-acceptance--of the defendant’s (the US government) position,
to date bring no positive actions for the plaintiff.
To “conserve and return to private ownership and operation”
(paraphrasing) is not to strip all revenue, possible capital, and hamstring
the entities going forward; “conservatorship” is not receivership and is not
supposed to last six plus years.
The macro regulatory mishandlings have been accompanied by
dozens of micro intrusions and FHFA decision making is retarding the GSEs
return to anything resembling full functioning privately owned enterprises.
Ironically, the FHFA has managed to get F&F to join
them on the last filing opposing the request to overturn Lamberth.
Now who, on either board or among the enterprise execs, wouldn’t want the enterprises
freed? (Exception Don Layton!)
It begs the question to which particular room in Hades,
the public and its elected and legal officials, have consigned the GSEs and for
what reasons?
Anyone who rationalizes, “Who cares, after all, it’s just
Fannie and Freddie….” should as my mother used to say, “Spend the rest of their lives needing Pepto Bismol.”
But courts move to their own drummer and calendar (which
lawyers must love!).
Here are two recent filings, one by the plaintiffs for purposes
of the Lamberth appeal and a second by the government’s outside lawyers,
objecting to the plaintiffs filing.
Plaintiff’s
filing,
Here Comes the White House Counsel
*At the end of last week, the WH Counsel’s
office filed with the court papers asking for access to the documents filed
with the courts in the HERA and Third Amendment law suits.
"Pursuant to paragraph
7 of this Court’s Amended Protective Order dated July 29, 2015 (ECF No. 217),
defendant, the United States, respectfully requests that Jennifer O’Connor,
James Walsh, and Allison Murphy be permitted access to information protected by
the Protective Order. All of the applicants are attorneys representing the
United States within the meaning of Paragraph 4 of the Protective Order, and
work in the Office of the White House Counsel. Counsel for the United States
has consulted with counsel for plaintiffs, Fairholme Funds, Inc., et al.
(Fairholme), who has indicated that Fairholme does not oppose these
applications for access to protected information."
Speculation is rampant as to what it
means, if it means anything at all, legally or politically.
Does the WH need to know more because the
President may get splashed with the government’s legal/regulatory errors; does
the President need to know more because he is contemplating releasing and
recapping F&F; or, do the President’s
lawyers want to know more because they think they can do a better job of
prosecuting these cases than DoJ?
It would be positive to think rumors,
finally, are hitting the WH about gross agency incompetence and flawed policy
positions and someone is getting nervous.
Finally, it could be none of those things,
so I’ll stop guessing until I know more!
What
Others Are Saying
_______________________
Website
recommendation: GSE LINKS is an excellent Internet site for anyone
wanting the latest in public statements and current GSE news. Good dude runs it.
http://www.gselinks.com/
________________________________________
New F&F Goals
FHFA offers new GSE affordable housing goals, as per Jon
Prior, Politico
By Jon Prior
8/19/15 1:00 PM EDT
The regulator for
Fannie Mae and Freddie Mac has finalized a new set of housing goals for the
government-controlled companies that includes an effort to help low-income
renters facing a shortage of options.
The long-awaited
targets from the Federal Housing Finance Agency establish what percentage of
business Fannie and Freddie would direct to finance home loans and multifamily
developments in poor neighborhoods beginning this year through 2017. The
benchmarks were last set in 2012.
While much of the
focus on the rules centers on the companies’ support for those looking to buy a
home, the new standards released Wednesday show the agency under Director Mel
Watt is addressing a dwindling supply of affordable rental properties in many
markets left behind by the housing recovery.
“The
single-family goals advance the Enterprises’ statutory missions to provide
access to credit for creditworthy borrowers and provide liquidity to the U.S.
housing market while operating in a safe and sound manner,” Watt said in a statement.
“The multifamily goals will create rental opportunities for those who need
affordable housing. Together, these goals establish a solid foundation for
affordable and sustainable homeownership and rental opportunities in this
country.”
Watt gave affordable-housing
advocates a victory with the new rules by requiring the two companies to
finance 24 percent of their mortgages in low-income areas, up from 23 percent
under the old standard.
____________________________________________________________________
Presidential
Primary Corner
The
Donald weighs in on Tom Brady and Deflate Gate.
I am certain this is a big
issue in Iowa and Caucus votes will hinge on how the other candidates respond
to Trump’s dramatic defense of Tom Brady.
“Donald” Starts 14th Amendment
Ruckus and the Lilliputians trip on one another signing up…
______________________________________________________
George
Will
says Trump’s immigration plan will kill GOP’s 2016 chances.
https://www.washingtonpost.com/opinions/trumps-losing-immigration-policy/2015/08/21/b58a6d9e-4771-11e5-846d-02792f854297_story.html
Scott
Walker immigration foibles.
(Note George Will’s wife—as GW always notes-- is involved in the Scott Walker
campaign.)
___________________________________________________________
Classy
Guys (Not!), Gov. Chris Christie (R-NJ) and Sen. Ted Cruz (R-Tex.) use
Jimmy Carter as a cudgel to beat up Obama, the week Carter announces he has
brain cancer. (They could have spouted
the same BHO putdowns without ever mentioning Carter’s name.)
http://www.politico.com/story/2015/08/christie-cruz-take-shots-at-jimmy-carter-121633.html?ml=tl_2_b
_____________________________________________________
Joe
Biden and Liz Warren Huddle
Bank
Screw-Up Corner
Violation
after violation, the banks can’t stop themselves from breaking
the rules.
*******************************************************
Citi
settles fraud allegation ($180 Mil)
Bank
of NY Mellon—and another one
__________________________________________________________
Brent
Scowcroft calls for support of the Iran deal.
https://www.washingtonpost.com/opinions/the-iran-deal-an-epochal-moment/2015/08/21/c9c870b4-480f-11e5-8e7d-9c033e6745d8_story.html
_________________________________
Maloni,
8-24-2015
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