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Key Legislation


​Short Title (Citation)



Federal Home Loan Bank Act

12 U.S.C. 1421 et seq.
(Public Law 72-304 (1932))

Established the Federal Home Loan Bank System.

​​GPO Text / PD​F


Federal Housing Enterprises Financial Safety and Soundness Act of 1992

12 U.S.C. 4501 et seq.
(Public Law 102-550 (1992))

Primary statutory authorization for FHFA’s regulation of Fannie Mae, Freddie Mac and the Federal Home Loan Bank System, including supervision of housing mission and goals and actions as conservator or receiver for Fannie Mae, Freddie Mac or any Federal Home Loan Bank.

Housing and Economic Recovery Act of 2008

(Public Law 110-289 (2008))

Amended the Safety and Soundness Act to create FHFA, place regulation of Fannie Mae, Freddie Mac and the Bank System under one regulator, enhance supervision of these regulated entities, and enhance FHFA's authorities as conservator or receiver. 






​Federal Home Loan Mortgage Corporation Act

12 U.S.C. 1451 et seq.
(Public Law 91-351 (1970))

Created Freddie Mac and provided authority for Freddie Mac’s activities.

GPO Text / PDF​


Federal National Mortgage Association Charter Act

12 U.S.C. 1716 et seq.
(Public Law 84-345,National Housing Act, Title III (1934), as amended by the Housing and Urban Development Act of 1968)

Created Fannie Mae and provided authority for Fannie Mae’s activities. Amendment in 1968 created the Government National Mortgage Association (Ginnie Mae), supervised by the Department of Ho​using and Urban Development.

GPO Text / PDF

​Find regulations pertaining to FHFA supervision at eCFR.




 Related Information



FHLBank Changes to Internal Market Risk Models19768<table width="100%" class="ms-rteTable-default" cellspacing="0"><tbody><tr><td class="ms-rteTable-default" style="width&#58;100%;"><p><strong>​ADVISORY BULLETIN</strong></p><p><strong>AB 2016-02</strong></p><p><strong>FHLBANK CHANGES TO INTERNAL MARKET RISK MODELS</strong></p></td></tr></tbody></table><p>&#160;</p><p style="text-decoration&#58;underline;"><strong><em>Purpose</em></strong></p><p>This Advisory Bulletin updates previous guidance on how a Federal Home Loan Bank (Bank) may obtain approval to implement significant changes to a previously approved internal market risk model after proper notification to the Federal Housing Finance Agency (FHFA).<a href="file&#58;///C&#58;/Users/greenleer/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/JP2QTDS2/AB_Market-Risk-Model-Approval_Final.docx"><span style="text-decoration&#58;underline;">[1]</span></a>&#160; This Advisory Bulletin describes the procedures and documentation for the notification process.&#160; </p><p>This Advisory Bulletin rescinds 2005-AB-06, <em>Changes to Internal Market Risk Models</em>.</p><p><a href="file&#58;///C&#58;/Users/greenleer/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/JP2QTDS2/AB_Market-Risk-Model-Approval_Final.docx"><span style="text-decoration&#58;underline;">[1]</span></a> A Bank that follows the guidance described in this Advisory Bulletin will satisfy the regulatory requirement of prior FHFA approval of material adjustments to a market risk model set forth in 12 CFR § 932.5(d).</p><p style="text-decoration&#58;underline;"><strong><em>Background</em></strong></p><p>Each Bank received approval of an internal market risk model used to calculate the market risk component of risk-based capital prior to implementing its capital plan pursuant to 12 CFR&#160; §&#160;932.1.&#160; Further, 12 CFR § 932.5(d) states&#58;</p><p>Each Bank shall obtain&#160; . . . approval of an internal market risk model …. including subsequent material adjustments to the model made by the Bank, prior to use of any model.&#160; Each Bank shall make such adjustments to its model as may be directed by the Finance Board.<a href="file&#58;///C&#58;/Users/greenleer/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/JP2QTDS2/AB_Market-Risk-Model-Approval_Final.docx"><span style="text-decoration&#58;underline;">[1]</span></a> </p><p>This section does not establish a specific process to follow for obtaining approval of &quot;subsequent material adjustments.&quot;&#160; In the absence of specific procedures in a regulation for obtaining a required approval, 12 CFR § 1211.3 (Section 1211.3) establishes a general approval process for the Banks and FHFA to follow.&#160; Section 1211.3 authorizes the Deputy Director for Federal Home Loan Bank Regulation or his/her designee to grant approvals for any matters requiring approval under FHFA regulations, and specifically authorizes the Deputy Director, or his/her designee, to &quot;prescribe additional or alternative procedures for any application for approval of any transaction, activity, or item.&quot;&#160; Section 1211.3, including the authority to prescribe additional or alternative procedures for seeking approval, is substantially similar to a Finance Board rule which FHFA adopted as its own subject to certain conforming modifications in 2014.<a href="file&#58;///C&#58;/Users/greenleer/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/JP2QTDS2/AB_Market-Risk-Model-Approval_Final.docx"><span style="text-decoration&#58;underline;">[2]</span></a>&#160; </p><p>In 2004, the Finance Board issued Regulatory Interpretation 2004-RI-01, which addressed the predecessor provision to the current FHFA rule.&#160; Because the prior rule had allowed the Finance Board to prescribe alternate processes for a required approval, the Regulatory Interpretation permitted a Bank to implement reported changes to its internal market risk model immediately after filing a notice with the Finance Board, absent a Finance Board objection.&#160; In particular, the Regulatory Interpretation noted that the process did not affect the Finance Board's authority under 12 CFR § 932.5(d) to direct a Bank to reverse any change made to the model or to make other changes to the model.&#160; As a result, the regulatory interpretation stated that using a notification process to fulfill the prior approval requirements of 12 CFR § 932.5(d) represented &quot;a change in process rather than a change in the substance of . . . supervisory oversight.&quot;&#160; Given that Regulatory Interpretation 2004-RI-01 addressed a provision that FHFA substantively carried over from the Finance Board rules into Section 1211.3, these conclusions also apply to FHFA's authority under current rules.</p><p>The specific procedures described in Regulatory Interpretation 2004-RI-01 as later modified by Advisory Bulletin 2005-AB-06 currently govern the process under which Banks fulfill the regulatory requirement that they obtain approval of significant changes to a previously approved internal market risk model.&#160; This Advisory Bulletin embodies a further modification to the process.<a href="file&#58;///C&#58;/Users/greenleer/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/JP2QTDS2/AB_Market-Risk-Model-Approval_Final.docx"><span style="text-decoration&#58;underline;">[3]</span></a>&#160; It does not represent a change in FHFA's supervisory oversight.&#160; FHFA staff will continue to review a Bank's internal risk model during regularly scheduled examinations and may undertake a special review if circumstances warrant.&#160; FHFA also retains the authority to require model changes under 12 CFR § 932.5(d) if it deems such changes necessary.</p><p><a href="file&#58;///C&#58;/Users/greenleer/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/JP2QTDS2/AB_Market-Risk-Model-Approval_Final.docx"><span style="text-decoration&#58;underline;">[1]</span></a> This rule was originally adopted by the Federal Housing Finance Board (Finance Board).&#160; All Finance Board rules remain in effect until repealed, amended or re-adopted by FHFA.&#160; <em>See</em> 12 U.S.C. § 4511, note.</p><p><a href="file&#58;///C&#58;/Users/greenleer/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/JP2QTDS2/AB_Market-Risk-Model-Approval_Final.docx"><span style="text-decoration&#58;underline;">[2]</span></a> <em>See</em>, Final Rule, Procedures and General Definitions, 79 Fed. Reg. 64661 (Oct. 31, 2014).&#160; <em>See, also</em>, 12 CFR&#160; §&#160;907.3 (2008).</p><p><a href="file&#58;///C&#58;/Users/greenleer/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/JP2QTDS2/AB_Market-Risk-Model-Approval_Final.docx"><span style="text-decoration&#58;underline;">[3]</span></a> Therefore, Banks should rely on the process described in this Advisory Bulletin for fulfilling the approval requirements of 12 CFR § 932.5(d).&#160; While this Advisory Bulletin supersedes the procedures described in Regulatory Interpretation 2004-RI-01, the reasoning and conclusions of that Regulatory Interpretation remain valid.&#160; </p><p style="text-decoration&#58;underline;"><strong><em>Guidance</em></strong></p><p>A Bank may implement a significant model change to a previously approved internal market risk model after proper notification to FHFA.<a href="file&#58;///C&#58;/Users/greenleer/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/JP2QTDS2/AB_Market-Risk-Model-Approval_Final.docx"><span style="text-decoration&#58;underline;">[1]</span></a>&#160; All model change notifications should be signed by a Bank officer and sent to the Manager, Risk Modeling Branch, FHFA Division of Bank Regulation.&#160; A Bank may notify FHFA of a significant model change in one of two ways depending on certain conditions.&#160; </p><p>Under the first option, a Bank may implement a significant model change that does not involve replacing its existing market risk model, absent a specific objection from FHFA, immediately upon notification to FHFA, provided that the Bank meets each of the following conditions&#58; </p><ol><li>The Bank's most recent Report of Examination (ROE) composite and market risk ratings were a 1 or 2;</li><li>The Bank's most recent ROE contains no Matters Requiring Attention (MRA) or violations pertaining to the Bank's market risk modeling;</li><li>The proposed model change does not decrease the Bank's estimated Value at Risk (VaR) by more than 10 percent relative to the existing approved model; and</li><li>The Bank provides appropriate documentation described below&#58;</li></ol><ol style="list-style-type&#58;decimal;"><ol style="list-style-type&#58;lower-alpha;"><li>Assumption Template (see <a href="file&#58;///C&#58;/Users/greenleer/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/JP2QTDS2/Modeling%20Assumptions%20Template.xls"><span style="text-decoration&#58;underline;">Modeling Assumptions Template</span></a> attachment);</li><li>Written description of the model change indicating why the model change is an improvement over the current production model, and its effect on the Bank's market risk metrics, including but not limited to market value sensitivity to parallel and nonparallel interest rate shocks, duration of equity, convexity, key rate duration, constant prepayment rate (CPR), and VaR for at least two time periods no less frequently than monthly; and</li><li>Certification that the proposed model change meets the Bank's Information Technology signoff requirements (e.g., change control procedures) and copies of other required signoff approvals. </li></ol></ol><p>If FHFA has no objections, it will acknowledge receipt of a Bank's proposed model change notification.&#160; Alternatively, if FHFA objects to a specific model change or does not believe the Bank meets the conditions described above, it will inform the Bank of the reasons for its objection or for believing the Bank does not qualify to implement the model change immediately upon notification.</p><p>Under the second option, a Bank seeking to replace its existing market risk model, or a Bank not meeting the conditions to implement a model change immediately upon notification, must obtain FHFA approval prior to implementing any material change to its market risk model.&#160; Under the second option, a Bank should provide the following documentation as part of its submission to FHFA&#58;</p><ol><li>Assumptions Template (see <a href="file&#58;///C&#58;/Users/greenleer/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/JP2QTDS2/Modeling%20Assumptions%20Template.xls"><span style="text-decoration&#58;underline;">Modeling Assumptions Template</span></a> attachment);</li><li>Written description of the model change indicating why the model change is an improvement over the current production model, and its effect on the Bank's market risk metrics, including, but not limited to, market value sensitivity to parallel and nonparallel interest rate shocks, duration of equity, convexity, key rate duration, CPR, and VaR;</li><li>Detailed instrument and sub-portfolio level results of parallel model runs and any other relevant testing the Bank performed.&#160; The Bank should submit parallel testing for at least two time periods no less frequently than monthly along with any internal analysis;</li><li>Any spreadsheets used to prepare input data for the model if these are affected by the proposed model change; and</li><li>Certification that the proposed model change meets the Bank's Information Technology signoff requirements (e.g., change control procedures) and copies of other required signoff approvals.</li></ol><p>Upon receipt of the notification, FHFA will determine whether a Bank's submitted documentation is complete within 30 calendar days, and will advise the Bank in writing whether additional documentation is needed.&#160; Once documentation is complete, FHFA will provide an approval or objection to the model change within 30 calendar days.<a href="file&#58;///C&#58;/Users/greenleer/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/JP2QTDS2/AB_Market-Risk-Model-Approval_Final.docx"><span style="text-decoration&#58;underline;">[2]</span></a></p><p><a href="file&#58;///C&#58;/Users/greenleer/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/JP2QTDS2/AB_Market-Risk-Model-Approval_Final.docx"><span style="text-decoration&#58;underline;"><sup>[1]</sup></span></a> What constitutes a significant model change depends on qualitative and quantitative factors determined by the Bank.&#160; The following modifications would constitute a significant model change regardless of any change in model output metrics&#58; replacing, adding, or eliminating model input sources; replacing, adding, or eliminating model parameters and assumptions; changing a software product's processing components or computer code; or changing an application of the model. </p><p><a href="file&#58;///C&#58;/Users/greenleer/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/JP2QTDS2/AB_Market-Risk-Model-Approval_Final.docx"><span style="text-decoration&#58;underline;">[2]</span></a> Thus, if a Bank submits appropriate documentation with the model change notification, the Bank could expect to receive an approval to the model change from FHFA within 30 calendar days.</p><table width="100%" class="ms-rteTable-default" cellspacing="0"><tbody><tr><td class="ms-rteTable-default" style="width&#58;100%;"><p>​Advisory bulletins communicate guidance to FHFA supervision staff and the regulated entities on specific supervisory matters pertaining to the FHLBanks, Fannie Mae, and Freddie Mac.&#160; This bulletin is effective immediately upon issuance. &#160;Contact Stefan Szilagyi, Manager, Risk Modeling Branch, FHFA Division of Bank Regulation at <a href="mailto&#58;Stefan.Szilagyi@fhfa.gov">Stefan.Szilagyi@fhfa.gov</a> with comments or questions pertaining to this advisory bulletin. </p></td></tr></tbody></table><p>&#160;</p>4/21/2016 4:13:31 PM210http://www.fhfa.gov/SupervisionRegulation/AdvisoryBulletins/Pages/Forms/AllItems.aspxhtmlFalseaspx
Principal Reduction Modification19026<p>&#160;</p> <table width="100%" class="ms-rteTable-default" cellspacing="0"><tbody><tr class="ms-rteTableEvenRow-default"><td class="ms-rteTableEvenCol-default" style="width&#58;50%;"><p>​<span class="ms-rteForeColor-9"><strong>PRINCIPAL REDUCTION MODIFICATION </strong></span> </p><p><span class="ms-rteForeColor-1"><strong>BACKGROUND</strong></span></p> <font color="#000000" face="Times New Roman" size="3"> </font> <p> The Federal Housing Finance Agency (FHFA) undertook an extensive evaluation to determine whether to implement a Principal Reduction Modification program for seriously delinquent, underwater borrowers whose loans are owned or guaranteed by Fannie Mae or Freddie Mac (the Enterprises).&#160; FHFA’s objective was to develop a program that helped targeted borrowers avoid foreclosure while also adhering to FHFA’s mandate to preserve and conserve the assets of the Enterprises.&#160; Below are details about the one-time Principal Reduction Modification program announced on April 14, 2016. </p><p>&#160;</p><p>​<span class="ms-rteForeColor-1"><strong>PRINCIPAL REDUCTION MODIFICATION PROGRAM</strong></span></p><ul><li><p>Underwater borrowers who meet the program's eligibility criteria will receive a solicitation letter containing terms for a modification no later than October 15, 2016.</p></li><li><p>The modification terms include capitalization of outstanding arrearages, an interest rate reduction down to the current market rate, an extension of the loan term to 40 years, and forbearance of principal and/or arrearages up to a certain amount to be converted later to forgiveness.<span style="text-decoration&#58;underline;"><font color="#0066cc">[i]</font></span></p></li><li><p>Upon completion of three timely payments and acceptance of the final modification, the principal forbearance amount calculated under the Streamlined Modification will instead be forgiven.</p></li><li><p>Servicers will require time to implement the Principal Reduction Modification program.&#160; Before the program is fully implemented, borrowers who believe they <span style="text-decoration&#58;underline;">may</span> be eligible for a Principal Reduction Modification and wish to pursue one before the program is fully implemented can accept an offered Streamlined Modification that will halt foreclosure proceedings but will not guarantee principal forgiveness.</p></li><ul><li><p>If the borrower is later determined to be eligible for a Principal Reduction Modification, the Streamlined Modification's principal forbearance will be converted to principal forgiveness.&#160; </p></li><li><p>Non-eligible borrowers will continue to benefit from the payment relief granted under their Streamlined Modification but will not receive principal reduction. </p></li></ul><li><p>Borrowers should not default on their mortgage or on an existing modification in an attempt to become eligible for a Principal Reduction Modification.&#160; To be eligible, borrowers must be at least 90 days delinquent as of March 1, 2016.&#160; Borrowers struggling to pay their mortgage or who have additional questions about the program should contact their servicer (the company to which they send their mortgage payments). </p></li></ul><p><span style="font-size&#58;7pt;"><span style="text-decoration&#58;underline;"><font color="#0066cc">[i]</font></span></span><span style="font-size&#58;7pt;"> For borrowers with mark-to-market loan-to-value (MTMLTVs) ratios over 115 percent, the Enterprises' standard and streamlined modifications forbear post-capitalization principal (which may include arrearages) down to a 115 percent MTMLTV ratio or, if forbearance would exceed 30 percent of the post-capitalization UPB, forbear 30 percent of principal.</span></p><p>&#160;</p> <font color="#000000" face="Times New Roman" size="3"> </font></td><td class="ms-rteTableOddCol-default" style="width&#58;30%;"><p>​<strong>KEY POINTS ABOUT THE PRINCIPAL REDUCTION MODIFICATION</strong></p><p><span class="ms-rteForeColor-9">Seriously delinquent, underwater borrowers must meet the following eligibility criteria&#58;</span></p><ul><li><p><span class="ms-rteForeColor-9">Are owner-occupants.</span></p></li><li><p><span class="ms-rteForeColor-9">Are at least 90 days delinquent as of March 1, 2016.</span></p></li><li><p><span class="ms-rteForeColor-9">Have an unpaid principal balance of $250,000 or less.</span></p></li><li><p><span class="ms-rteForeColor-9">Have a mark-to-market loan-to-value ratio of more than 115% after capitalization.</span></p></li></ul><p><span class="ms-rteForeColor-9">Builds on the Enterprises' existing Streamlined Modification programs.</span></p><p><span class="ms-rteForeColor-9">Eligible population expected to be approximately 33,000 borrowers.</span></p><p><span class="ms-rteForeColor-9">Final crisis-era modification program to give seriously delinquent, underwater borrowers a last opportunity to avoid foreclosure while also addressing negative equity remaining from the financial crisis.</span></p><p><span class="ms-rteForeColor-9"></span>&#160;</p><p><strong>KEY FACTS</strong></p><p><span class="ms-rteForeColor-9">The number of underwater homeowners with loans owned or guaranteed by Fannie Mae or Freddie Mac has declined by 80 percent in the last four years.</span></p><p><span class="ms-rteForeColor-9">Of all underwater loans nationally, only about 2 percent are severely delinquent, underwater loans owned or guaranteed by Fannie Mae or Freddie Mac.</span></p><p><span class="ms-rteForeColor-9">As recently as Q1 2015, 50 percent of bank portfolio loan modifications included principal reduction.</span></p><p><span class="ms-rteForeColor-9">Investors in non-performing loan sales commonly use principal reduction modifications.</span></p></td></tr><tr class="ms-rteTableOddRow-default"><td class="ms-rteTableEvenCol-default" colspan="2"><p>​ <strong class="ms-rteForeColor-1">​PRINCIPAL REDUCTION MODIFICATION KEY DATES</strong></p><ul><li><p><strong>March 1, 2016</strong> – Eligibility cut-off date; borrowers who become more than 90 days delinquent after this date are not eligible.</p></li><li><p><strong>July 15, 2016</strong> – Loan servicers must solicit, for a Streamlined Modification, all borrowers who are <em style="text-decoration&#58;underline;">potentially</em> eligible for Principal Reduction Modification on or before this date.</p></li><li><p><strong>October 15, 2016</strong> – Loan servicers must solicit all borrowers eligible for the Principal Reduction Modification starting no later than this date. </p></li><li><p><strong>December 31, 2016</strong> – Final date by which servicers may solicit borrowers eligible for the program or inform borrowers that they are eligible to have principal forgiven.</p></li></ul><p>&#160;</p><p><span class="ms-rteForeColor-1"><strong>TAX IMPLICATIONS</strong></span></p><ul><li><p>All borrowers should consult with a tax advisor regarding the tax consequences of accepting a Principal Reduction Modification.&#160; The terms of the Mortgage Forgiveness Debt Relief Act may apply. </p></li></ul><p><span style="font-size&#58;7px;">[1] For borrowers with mark-to-market loan-to-value (MTMLTVs) ratios over 115 percent, the Enterprises’ standard and streamlined modifications forbear post-capitalization principal (which may include arrearages) down to a 115 percent MTMLTV ratio or, if forbearance would exceed 30 percent of the post-capitalization UPB, forbear 30 percent of principal.</span></p></td></tr></tbody></table><h3></h3><p><a href="/Media/PublicAffairs/Pages/FHFA-Announces-PRM-Program-and-Further-Enhancements-to-NPL-Sales-Reqts.aspx">Related News Release</a></p>4/14/2016 6:00:49 PM157http://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
FHFA Announces Principal Reduction Modification Program and Further Enhancements to NPL Sales Requirements19029<p><strong>Washington, D.C. – </strong><strong>&#160; </strong>The Federal Housing Finance Agency (FHFA) today announced that Fannie Mae and Freddie Mac will offer principal reduction to certain seriously delinquent, underwater borrowers who are still struggling in the aftermath of the financial crisis to help them avoid foreclosure and stay in their homes.&#160; The new Principal Reduction Modification program is a one-time offering for borrowers whose loans are owned or guaranteed by Fannie Mae or Freddie Mac and who meet specific eligibility criteria.&#160; The modification will be available to owner-occupant borrowers who are 90 days or more delinquent as of March 1, 2016, whose mortgages have an outstanding unpaid principal balance of $250,000 or less, and whose mark-to-market loan-to-value (MTMLTV) ratios exceed 115 percent.&#160; Other eligibility criteria apply (see attached <a href="/Media/PublicAffairs/PublicAffairsDocuments/Principal-Reduction-Modification-Fact-Sheet.pdf">Fact Sheet</a> for eligibility criteria and key dates).&#160; </p><p>The program was approved under FHFA's statutory authority in the Emergency Economic Stabilization Act of 2008 &quot;to implement a plan that seeks to maximize assistance for homeowners and … minimize foreclosures,&quot; including through a &quot;reduction in loan principal,&quot; while minimizing losses for the Enterprises (12 USC 5220(b)) as well as other provisions of law.</p><p>FHFA expects that approximately 33,000 borrowers will be eligible for a Principal Reduction Modification.&#160; Servicers must solicit borrowers eligible for a Principal Reduction Modification no later than October 15, 2016. </p><p>FHFA also announced today that it has approved further enhancements to its requirements for Freddie Mac and Fannie Mae's sales of non-performing loans (NPLs).&#160; The new enhancements&#58; 1) establish that NPL buyers must evaluate borrowers whose MTMLTV ratio exceeds 115 percent for modifications that include principal reduction and/or arrearage forgiveness; 2) forbid NPL buyers from unilaterally releasing liens and &quot;walking away&quot; from vacant properties; and, 3) establish more specific proprietary loan modification standards for NPL buyers.</p><p>The new enhancements draw on the experiences of Freddie Mac and Fannie Mae with NPL sales over the past year and are consistent with current practices of most NPL investors.&#160; They are designed to minimize foreclosures, help mitigate the potential for neighborhood blight and decay, and help improve loan modification success rates. &#160;</p><p>&quot;The national housing market has significantly improved in recent years but there are still areas of the country where home values have not recovered and negative equity remains a real problem,&quot; said FHFA Director Melvin L. Watt.&#160; &quot;The Principal Reduction Modification program we are announcing today, along with the changes we are making to our NPL sales guidelines, will allow an opportunity for delinquent, underwater borrowers in these areas to avoid foreclosure and save their homes,&quot; he said.&#160; </p><p>In announcing the Principal Reduction Modification program, Director Watt also said&#58; &quot;This plan will no doubt be viewed by some as too small and too late and viewed by others as too large and unnecessary.&#160; However, the plan is consistent with FHFA's statutory obligation to 'maximize assistance for homeowners' by providing some borrowers what could well be their final opportunity to avoid foreclosure.&#160; It is also consistent with our statutory obligation to provide this assistance in ways that we reasonably expect will not have adverse economic consequences for the Enterprises.&#160; By meeting both of these statutory obligations, the program satisfies my commitment to implement a principal reduction plan only if we could structure one that would be a 'win-win' for both borrowers and the Enterprises.&quot;</p><p>Attachments&#58;</p><p><a href="/Media/PublicAffairs/PublicAffairsDocuments/Principal-Reduction-Modification-Fact-Sheet.pdf">Fact Sheet&#58; Principal Reduction Modification</a></p><p><a href="/Media/PublicAffairs/PublicAffairsDocuments/Borrower-FAQs_04-14-16.pdf">Frequently Asked Questions&#58; Principal Reduction Modification</a></p><p><a href="/Media/PublicAffairs/PublicAffairsDocuments/Public-Analysis_4-14-16.pdf">FHFA's Analysis of a Principal Reduction Modification Program and Enhanced Non-Performing Loan Sales Requirements </a></p><p><a href="/Media/PublicAffairs/PublicAffairsDocuments/NPL-Fact-Sheet_04-14-16.pdf">Fact Sheet&#58; Enhanced Non-Performing Loan Sale Guidelines</a> </p>4/14/2016 6:00:51 PM7758http://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
Refinance Report - February 201619014<h2>​February 2016 Highlights</h2><div><p></p><ul><li><span style="line-height&#58;22px;">​​</span><span style="line-height&#58;22px;">Total refinance volume continued to decrease in February 2016 as&#160;</span><span style="line-height&#58;22px;">mortgage rates remained just under 4 percent over the&#160;previous three&#160;</span><span style="line-height&#58;22px;">months. Mortgage rates decreased in February&#58; the average interest&#160;</span><span style="line-height&#58;22px;">rate on a 30‐year fixed rate mortgage fell to 3.66 percent from 3.87&#160;</span><span style="line-height&#58;22px;">percent in January.​</span><br></li></ul></div><blockquote style="margin&#58;0px 0px 0px 40px;border&#58;none;padding&#58;0px;"><div><p><span style="font-style&#58;normal;font-variant&#58;normal;line-height&#58;22px;">​​In February 2016&#58;</span></p></div></blockquote><ul><ul><li><span style="line-height&#58;22px;">Borrowers completed 6,424 refinances through HARP, bringing&#160;</span><span style="line-height&#58;22px;">total refinances from the inception of the program to 3,393,217.</span></li><li><span style="line-height&#58;22px;">HARP volume represented 5 percent of total refinance volume.</span></li><li><span style="line-height&#58;22px;">Nine percent of the loans refinanced through HARP had a&#160;</span><span style="line-height&#58;22px;">loan‐to‐value ratio greater than 125 percent.</span></li></ul></ul><blockquote style="margin&#58;0px 0px 0px 40px;border&#58;none;padding&#58;0px;"><p>​Year to date through February 2016&#58;</p></blockquote><ul><ul><li><span style="line-height&#58;22px;">Borrowers with loan‐to‐value ratios greater than 105 percent&#160;</span><span style="line-height&#58;22px;">accounted for 23 percent of the volume of HARP loans.</span></li><li><span style="line-height&#58;22px;">Twenty five percent of HARP refinances for underwater&#160;</span><span style="line-height&#58;22px;">borrowers were for shorter‐term 15‐ and 20‐year mortgages,&#160;</span><span style="line-height&#58;22px;">which build equity faster than traditional 30‐year mortgages</span><span style="line-height&#58;22px;">.</span></li><li><span style="line-height&#58;22px;">HARP refinances represented 10 or more percent of total&#160;</span><span style="line-height&#58;22px;">refinances in Florida and Georgia, double the 5 percent of total&#160;</span><span style="line-height&#58;22px;">refinances nationwide over the same period.</span></li></ul></ul><p><span style="line-height&#58;22px;"></span></p><p><span style="line-height&#58;22px;"></span></p><ul><li><span style="line-height&#58;22px;">Borrowers who refinanced through HARP had a lower delinquency&#160;</span><span style="line-height&#58;22px;">rate compared to borrowers eligible for HARP who did not refinance&#160;</span><span style="line-height&#58;22px;">through the program.</span><br></li><li><span style="line-height&#58;22px;">Ten states accounted for over 60 percent of the nation's HARP&#160;</span><span style="line-height&#58;22px;">eligible loans with a refinance incentive as of September 30, 2015.​</span><br></li></ul><p><span style="line-height&#58;22px;"></span></p>4/13/2016 3:00:45 PM832http://www.fhfa.gov/AboutUs/Reports/Pages/Forms/AllItems.aspxhtmlFalseaspx
Foreclosure Prevention Report - January 201619010<h2>​January 2016 Highlights</h2><p><strong>​The Enterprises' Foreclosure Prevention Actions&#58; </strong></p><ul><li>The Enterprises completed 15,192 foreclosure prevention actions in January 2016, bringing the total to 3,658,641 since the start of the conservatorships in September 2008. Over half of these actions have been permanent loan modifications. </li><li>There were 9,925 permanent loan modifications in January, bringing the total to 1,908,751 since the conservatorships began in September 2008. </li><li>The share of modifications with principal forbearance remained at 19 percent. Modifications with extend-term only accounted for 48 percent of all permanent modifications in January due to improved house prices and a declining HAMP eligible population. </li><li>There were 2,329 short sales and deeds-in-lieu completed in January, down 14 percent compared with December.</li></ul><p><strong>The Enterprises' Mortgage Performance&#58; </strong></p><ul><li> The serious delinquency rate increased slightly from 1.46 percent at the end of December to 1.47 percent at the end of January. </li></ul><p><strong>The Enterprises' Foreclosures&#58; </strong> </p><ul><li>Third-party and foreclosure sales increased 13 percent from 8,051 in December to 9,062 in January. </li><li>Foreclosure starts dropped 24 percent from 23,593 in December to 17,831 in January. </li></ul>4/12/2016 5:00:41 PM895http://www.fhfa.gov/AboutUs/Reports/Pages/Forms/AllItems.aspxhtmlFalseaspx

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