Page 28 - The GSE Report March-April 2018

FANNIE MAE AND FREDDIE MAC MJARN.U-ARPYR.20210818
“The transition to the new, common security requires planning, investment, and preparation by
a wide variety of market participants,” said FHFA Director Melvin L. Watt. “We have now set the specific date that the Enterprises will start issuing the UMBS and I urge the industry to get ready now to ensure smooth, successful implementation.” (Press Release, Federal Housing Finance Agency, 03/28/18)
FHFA publishes a 2017 scorecard progress report
On March 29, the Federal Housing Finance Agency published the 2017 Scorecard Progress Report (Progress Report), which measures the performance of Fannie Mae and Freddie Mac in 2016 against FHFA’s 2014 strategic plan’s specific goals.
FHFA concludes that Fannie Mae and Freddie Mac made progress in the goal of maintaining
“in a safe and sound manner, foreclosure prevention activities and credit availability for new and refinanced mortgages to foster liquid, efficient, competitive, and resilient national housing finance markets.”
Specifically, Fannie Mae launched its “Day 1 Certainty” initiative in 2016, which enables lenders using the enterprise’s Desktop Underwriter and Collateral Underwriter tools to be shielded from buyback risk under certain conditions. Day 1 Certainty provides representation and warranty relief on the appraised value when the appraised value is within limits set by Collateral Underwriter, according to FHFA’s report. Approximately 60% of appraisals submitted to Fannie Mae are expected to be eligible for this relief, according to FHFA.
Freddie Mac is working on its own version of Day 1 Certainty, which is expected to be rolled out in 2019, according to FHFA.
Fannie and Freddie continue their review of alternative credit scoring models for underwriting mortgages. “FHFA continued to work with the Enterprises to study the costs and benefits of migrating to or implementing additional or alternative credit score models within the Enterprises’ businesses,” according to the Progress Report. “FHFA and the Enterprises also sought to understand the costs, operational implications, and potential impact on access to credit from the point of view of lenders, investors, trade associations, consumer groups and other industry stakeholders.”
The Progress Report also notes Freddie Mac’s announcement in May that it plans to provide access to credit to applicants without credit scores through its automated assessment of payment
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