Page 19 - February 2018 Disruption Report Flip Book

FANNIE MAE AND FREDDIE MAC JAN.U-FAERBY. 2018
Appendix 8A recommends a number of changes, which would increase FHA’s loan sustainability and wealth-building for low-income households.
1. Institute a consumer disclosure regarding an FHA loan’s likelihood to default under stress conditions.
2. Ensure that FHA’s underwriting standards do not result in higher concentrations of delinquencies and claims in LMI neighborhoods or promote higher real home prices during extended periods of a seller’s market
3. Address appraisal and appraiser shortcomings
4. Implement capital plan targets for monitoring the capital ratio of the Mutual Mortgage Insurance Fund under boom conditions:
5. FHA should adopt pricing and underwriting changes to encourage loan terms of twenty-years or less.
6. Revert to historical techniques used to incorporate mortgagee risk sharing in the FHA’s foreclosure and claims paying process
The authors presented this paper at a February 27 event, which is available here, along with the event’s slides and paper. (The Taxpayer Protection Housing Finance Plan Gradually Winding Down Fannie Mae and Freddie Mac and Improving the FHA, Peter J. Wallison, Edward J.
Pinto, Alex J. Pollock, Patrick Lawler, Norbert Michel, Stephen D. Oliner, and Tobias J. Peter, 02/27/18)
Supreme Court rejects hedge funds’ appeal on their challenge to Treasury’s profit sweep
On February 20, the Supreme Court rejected—without comment—appeals by Perry Capital LLC, Fairholme Fund and other Fannie Mae and Freddie Mac shareholders, leaving intact a federal appeals court ruling. The 2017 ruling found that a 2008 law barred federal judges from hearing most shareholder claims over the GSEs’ bailout, but said the funds could pursue some contract- based claims before a federal judge in Washington.
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