The chairmen of Fannie Mae and Freddie Mac, who have occasionally enlivened the annual conferences of the Mortgage Bankers Association with sharp clashes on policy issues, kept a low profile at this year's installment.
James A. Johnson of Fannie Mae, formally the Federal National Mortgage Association, and Leland Brendsel of Freddie Mac, the Federal Home Loan Mortgage Corp., chose instead to reassure attendees that both government- sponsored enterprises have lenders' interests in mind.
Mr. Johnson pointed to the recently announced changes in its policies for requesting that lenders buy back loans. "I've done all of this as a personal commitment to end repurchase requests," he said.
The issue had been hot among MBA members because virtually all the requests stemmed from special affordable-housing programs they were encouraged to conduct.
Mr. Brendsel also addressed the issue of buyback requests. "We have worked to redefine investment quality, and we want to have 100% alignment with our customers on this definition," he said. "Buyback requests now represent less than half of 1% of all loans, and the number should recede further."
Mr. Brendsel added that "quality lenders" presently get no buyback requests.
But the Freddie Mac chairman said he did not expect repurchase requests to end completely. "We now absorb 95% of all credit losses, but it won't become 100%," he said. "That would deny that you as the mortgage banker have any role in underwriting."
Mr. Johnson of Fannie Mae also said some buyback requests would continue, but they would be limited largely to cases involving ineligible loans or fraud.
He also gave a progress report on Fannie Mae's commitment to provide $1 trillion in funds to targeted groups whose members need extra help to become homebuyers. He said that through the third quarter, $269 billion had been provided. The seven-year program is now in its third year.
In an earlier session, Aida Alvarez, director of the Office of Housing Enterprise Oversight, repeated her view that the risk-based capital standards for Fannie Mae and Freddie Mac that her office is developing will require them to hold more capital.
But Ms. Alvarez emphasized that she saw no necessity for Fannie Mae and Freddie Mac to raise guarantee fees as a result. "They may decide to reduce their securities purchases or hedge them more carefully, which could have a substantial effect on their capital needs," she said. "Such a choice would have no obvious implications for guarantee fees, which relate only to credit risk exposures and administrative costs."
Ms. Alvarez said that if the agencies chose to pass some of the cost to homeowners, the amounts would not be significant. "Nor can I easily imagine the enterprises would want to, or have reason to, raise their fees enough to materially affect their loan purchase volumes."
