%1

Just as the Trump administration appears focused on releasing a framework to overhaul the housing finance system, Senate Banking Committee Chairman Mike Crapo (R-Idaho) on Friday signaled Congress wants to reassert its role in the reform effort, National Mortgage News reported. The legislative outline released by Crapo is another stab by lawmakers to reform the government-sponsored enterprises following a string of failed attempts. Crapo's latest plan also shifts some attention away from whatever administrative overhaul the White House and acting Federal Housing Finance Agency Director Joseph Otting are readying without Congress. Otting has reportedly said the administration may unveil a plan in the coming weeks possibly to end the conservatorships of Fannie Mae and Freddie Mac. But Crapo's plan focuses on more comprehensive structural changes to the housing finance system, which require legislation. Crapo's framework suggests turning Fannie and Freddie into private guarantors while allowing for other private guarantors to compete with the mortgage giants, using Ginnie Mae to provide a government backstop.

Fannie Mae and Freddie Mac’s regulator told congressional Democrats yesterday that he welcomes their input on coming up with a plan to free the mortgage giants from federal control, Bloomberg News reported. “As we begin the journey of evaluating the enterprises and developing a framework for ending conservatorship, I would welcome your insight and perspective," Joseph Otting, the acting director of the Federal Housing Finance Agency, wrote in a letter to House Financial Services Committee Chairwoman Maxine Waters and Senator Sherrod Brown, the top Democrat on the Senate Banking Committee. Waters and Brown are among lawmakers who raised concerns that the Trump administration was considering going it alone to pursue sweeping changes to housing-finance policy. Last week, the Democrats demanded answers from Otting after he said at a private meeting earlier this month that the Treasury Department and White House would soon release a proposal, and that Trump-appointed officials were willing to circumvent Congress to get something done.

One of the principal gatekeepers to housing-finance markets is stepping up scrutiny of nonbank mortgage lenders, concerned that some may not have the financial heft needed to overcome stressed conditions, the Wall Street Journal reported. The increased oversight by the Government National Mortgage Association, or Ginnie Mae, comes as nonbank lenders play an ever-bigger role in making mortgages to Americans and as housing markets are cooling. Many of these companies flourished after the financial crisis as banks stepped back from the mortgage market but haven’t yet been tested by an economic downturn. For the first time in recent memory, the agency has asked a handful of these lenders to improve certain financial metrics before granting them full ability to continue issuing Ginnie-backed mortgage bonds, according to Maren Kasper, who stepped in as Ginnie’s acting head this month. In the meantime, it has been granting approvals with shorter time frames to the lenders. Kasper declined to name the firms involved but said they are both large and small. Ginnie has also undertaken its first stress tests of business partners. The exams look at how lenders’ and servicers’ monthly cash-flow obligations would hold up if they reduced loan production and margins while increasing delinquencies. The results are expected shortly.