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.
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.
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.
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.
“Donald” Starts 14th Amendment Ruckus and the Lilliputians trip on one another signing up…
Scott Walker immigration foibles. (Note George Will’s wife—as GW always notes-- is involved in the Scott Walker campaign.)
http://www.huffingtonpost.com/entry/scott-walker-14th-Scott Walker Foiblesamendment_55d9d260e4b0a40aa3ab37f6?g5xhto6r
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.)
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.