It’s not easy being a GSE, executives speaking as the Mortgage Bankers Association’s National Secondary Market Conference in New York made clear last week. As Freddie Mac senior vice president Paul Mullings put it, “While we are building, we also need to contract.”
Still, executives from Freddie Mac and Fannie Mae said last week they are doing their best as they weighed in on the following noteworthy issues that investors may want to take note of in drawing up their strategies:
• As guarantee fees need to move closer to those in the private market, there will be gradual increases throughout the year that are made with “as much notice and explanation as possible,” Mullings said.
• Of the agency REO portfolio, he said, Freddie is having some success with various strategies, but “even with these efforts, REO inventories remain high.” Among other moves to address this, Freddie is working on a financing program for bulk agency REO sales it hopes to get approved by its regulator.
• On origination volumes: Fannie senior vice president Zach Oppenheimer said, “We expect to see a small increase in purchase money mortgages this year” but some drop-off in refi volume compared to last year.
Overall, “it seems like good producers are enjoying a pretty good year in 2012,” he said, but noted, “In recent months we’re seeing a big shift in our customer base” with large institutions’ reduction in third-party origination activity. He said the GSE is dedicated to working with all sizes of customers.
• On the secondary market accommodation of HARP 2.0: When Chase SVP Garry Cipponeri, the moderator of the panel of government and GSE executives at the conference, asked about the challenge to securitize higher loan-to-value ratio product, Oppenheimer said Fannie is committed to making the prefix available and said demand from investors seems to be strong.
• On the Uniform Loan Delivery Dataset: This is in the “home stretch” and available to be “road tested” for loan delivery into a test environment last week, Oppenheimer said.
• On the servicing bifurcation program: Oppenheimer said this is being extended to allow more customers to sell loans on a servicing released basis.
• When it comes to the challenge of the retaining staff when “the environment is very uncertain,” Mullings said Freddie is “managing through” the uncertainty, by seeking to minimize anxiety.
He cited as examples: presenting new openings to internal candidates, flexible work arrangement aimed at providing work-life balance, and favorable compensation structures.
Oppenheimer said Fannie has found, “The closer you get to the customer, the more enjoyable the job.”
While its position in the market is a little different from that of the government-sponsored enterprises, Ginnie Mae is also contending with some challenges that its president addressed during the secondary market executives’ conference session.
On frustrations with what can be relatively slow-moving issuer approval and Ginnie’s plan to take the most prepared applicants first, Tozer said, “We’re not trying to use this as a barrier” to issuers.
Ginnie is going to continue adding more account executives to what Cipponeri called its traditionally “lean and mean” staff over the next six months to help serve the mortgage industry, he said.
“We’re trying to become a lot more customer centric,” said Tozer.
