GSEs

The federal government's recent decisions to lower annual premiums for new borrowers and reduce down payment requirements suggest it has little interest in making room for private capital in the mortgage market.

A recap of the informed opinions (and the discussions they generated) on BankThink this week.

While put-backs and litigation risk are widely recognized as factors that have contributed to tight credit conditions, another factor — high servicing costs for nonperforming loans — is being overlooked.

A federal agency's plan to tighten membership rules for Federal Home Loan banks would hurt community banks and credit unions — and could endanger the financial system, according to a broad array of stakeholders, including state regulators, lawmakers and institutions.

Lenders and homebuyers should not expect further reductions in Federal Housing Administration's mortgage insurance premiums this year, according to Housing and Urban Development secretary Julian Castro.

As banks look to cuts costs and improve efficiency, many are actively trying to reduce the number of times they "touch" a loan file. The goal: get the application right the first time so it doesn't have to be sent back to the underwriter for time-consuming and costly fixes.

WASHINGTON — More than two dozen Senate lawmakers signed a letter this week that urges the Federal Housing Finance Agency to drop its proposal to tighten Federal Home Loan Bank membership rules.

Federal Housing Finance Agency Director Mel Watt's decision Thursday to stand up the affordable housing trust funds sharply divided lawmakers along party lines, with Democrats welcoming the decision as overdue while Republicans denounced it as a mistake.

After a six-year delay, Fannie Mae and Freddie Mac will finally begin setting aside a portion of their revenues to fund the development of rental housing for low-income families.

Fannie said it will immediately begin accepting applications for fixed-rate 97% loan-to-value financing of borrowers with FICO scores as low as 620. Freddie, meanwhile, took a more cautious approach, delaying the start of the program, requiring credit counseling, and in some cases only allowing FICO scores as low as 660.

The Federal Housing Administration said no county in the nation will experience a decrease from this year's loan limits.

Officials at Fannie Mae, Freddie Mac, and Ginnie Mae all heaped praise on nonbank mortgage lenders for stepping up to provide loans for home purchases at a time when many banks have scaled back.