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 Releases, Statements, Speeches and Testimony

 

 

Statement by Dr. Mark A. Calabria Regarding the Financial Stability Oversight Council Principals Meeting2739912/5/2019 5:00:00 AMSpeech<h2 style="text-align&#58;center;">FINANCIAL STABILITY OVERSIGHT COUNCIL PRINCIPALS MEETING </h2><p><br>Under the Dodd-Frank Act, one of the Council’s core purposes is “to promote market discipline, by eliminating expectations on the part of shareholders, creditors, and counterparties of” large financial institutions “that the Government will shield them from losses…” Simply stated, the Council’s job is to end bailouts.&#160; &#160;&#160;&#160; </p><p>I remain concerned that the actions taken just over a decade ago, such as the TARP, reinforced the expectation of bailouts. I also remain concerned that as memories of the 2008 financial crisis fade, so does the resolve for ending bailouts. Dodd-Frank ultimately leaves ending bailouts to the discretion of regulators, and I, for one, am committed to using all the tools at my disposal to do just that. I believe the nonbank guidance is an important step toward fulfilling that purpose and ending bailouts. </p><p>Some of the previous nonbank designations were done in such a manner that raised the possibility that designated entities would be perceived as “too big to fail.” In doing so, the Council ran the risk that a designation would distort market expectations and reduce market discipline, contrary to its statutory purposes. I believe the approach the Council adopted yesterday reduces that risk.</p><p>Some commentators have suggested that this guidance eliminates the possibility of future nonbank designations. If I believed that claim to be correct, I would not have voted for this guidance. However, I do not believe yesterday’s guidance forecloses the possibility of future designations. For instance, it is hard for me to imagine an entity could be systemic without that entity engaging in activities or practices that are systemic. In fact, I believe the guidance that the Council adopted yesterday will enable the Council to begin the process of considering an activities-based review of mortgage finance markets. Given that our mortgage and housing markets have been at the center of almost every recession and financial crisis in American history, I welcome the start of that process.</p><p>In addition to property markets, there is the global systemic importance of sovereign debt markets. I believe this is an area where an activities approach is urgently needed and is perhaps the only avenue of redress. While the Council’s authorities do not allow us to designate foreign or domestic governments as systemically important, there is no denying the central role that sovereign debt has played in the history of global financial crises.</p><p>Counter to the conventional narrative, it was not any single entity or narrow group of entities that caused the financial crisis. For instance, we were already in a recession for at least a year before the failure of Lehman. It was a property boom and bust that drove the crisis, which was obviously the result of a set of activities and practices, not a single entity. </p><p>Yesterday’s guidance improves the Council’s process of engaging with nonbanks under consideration for designation by making it more efficient, transparent, and robust. Adopting this guidance enables the Council to begin this process of consideration – not to prejudge or foreclose any conclusions. This is critical to fulfilling this Council’s duty to promote financial stability and end bailouts.</p>12/5/2019 8:15:13 PMUnder the Dodd-Frank Act, one of the Council’s core purposes is “to promote market discipline, by eliminating expectations on the part of shareholders, creditors, and 753https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
FHFA Releases Report on Non-performing Loan Sales3010812/2/2019 5:00:00 AMNews Release<p><strong>Washington, D.C.</strong> – The Federal Housing Finance Agency (FHFA) today released the latest report on the sale of non-performing loans (NPLs) by Fannie Mae and Freddie Mac (the Enterprises).&#160; The <em>Enterprise Non-Performing Loan Sales Report </em>includes information about NPLs sold through June 30,2019 and reflects borrower outcomes on NPLs sold through December 31, 2018 and reported through June 30, 2019.&#160; The sale of NPLs reduces the number of delinquent loans in the Enterprises' portfolios and transfers credit risk to the private sector.&#160; FHFA and the Enterprises impose <a href="/Media/PublicAffairs/Pages/Non-Performing-Loan-Sale-Guidelines.aspx">requirements</a> on NPL buyers designed to achieve more favorable outcomes for borrowers than foreclosure.&#160; </p><p>This report shows that, through June 30, 2019, the Enterprises sold 117,466 NPLs with a total unpaid principal balance (UPB) of $22.2 billion.&#160; While the Enterprises conducted NPL sales in the first half of 2019, none of the sales settled by the end of the reporting period.&#160; </p><ul><li>NPLs sold had an average delinquency of 3.0 years and an average loan-to-value ratio of 92 percent.</li><li>NPLs in New Jersey, New York and Florida represented nearly half (45 percent) of the NPLs sold.&#160; These three states accounted for 47 percent of the Enterprises' loans that were one year or more delinquent as of December 31, 2014, prior to the start of NPL program sales in 2015. </li><li>Fannie Mae sold 78,281 loans and Freddie Mac sold 39,185 loans.</li></ul><p>The borrower outcomes in the report are based on 114,745 NPLs that were settled by December 31, 2018 and reported as of June 30,2019.&#160; These outcomes reflect the following&#58; </p><ul><li>Compared to a benchmark of similarly-delinquent Enterprise NPLs that were not sold, foreclosures avoided for sold NPLs were higher than the benchmark.&#160; </li><li>NPLs on homes occupied by borrowers had the highest rate of foreclosure avoidance outcomes (36.6 percent foreclosure avoided versus 14.9 percent for vacant properties).</li><li>NPLs on vacant homes had a much higher rate of foreclosure, more than double the foreclosure rate of borrower-occupied properties (73.4 percent foreclosure versus 31.4 percent for borrower occupied properties).&#160; Foreclosures on vacant homes typically improve neighborhood stability and reduce blight as the homes are sold or rented to new occupants.</li></ul><p>FHFA will continue to provide reporting on NPL sales borrower outcomes on an ongoing basis. </p><p>Link to <a href="/AboutUs/Reports/ReportDocuments/June-2019_NPL-Sales-Report.pdf">Non-Performing Loan Sales Report</a></p><p>Link to <a href="/PolicyProgramsResearch/Policy/Pages/Non-Performing-Loan-Sales.aspx">NPL page on FHFA.gov</a></p>12/2/2019 6:00:41 PMHome / Media / FHFA Releases Report on Non-performing Loan Sales News Release The sale of NPLs reduces the 701https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx
FHFA Announces Deemed-Issuance Ratio for 20203009911/27/2019 5:00:00 AMNews Release<p>​<strong>​Washington, D.C. </strong>– The Federal Housing Finance Agency (FHFA) today announced the <a href="/PolicyProgramsResearch/Policy/Pages/Deemed-Issuance-Ratio.aspx">deemed-issuance ratio</a> for the 2020 calendar year in accordance with Internal Revenue Service (IRS) guidelines on the trading of the Uniform Mortgage-Backed Security (UMBS).&#160;</p><p>The IRS<em> </em><a href="https&#58;//www.irs.gov/pub/irs-drop/rp-18-54.pdf" style="font-family&#58;&quot;source sans pro&quot;, sans-serif;font-size&#58;14px;"><em>Revenue Procedure 2018-54</em></a><em> </em>provides guidance on section 817(h) of the Internal Revenue Code diversification requirements for variable annuity, endowment, and life insurance contracts, as compliance with those requirements is affected by the implementation of the Single Security Initiative and trading in UMBS.</p><p>Revenue Procedure 2018-54 calls for FHFA to determine a deemed-issuance ratio for each calendar year based on the ratio of TBA-eligible securities issued by Fannie Mae and Freddie Mac during the 24-month period ending October 31 of the preceding year.</p><p>The IRS procedure provides that the ratio may be rounded as long as the rounded ratio is further from 50-50 than the actual observed data. Therefore, the deemed-issuance ratio for the 2020 calendar year is 60% Fannie Mae and 40% Freddie Mac.<br><br></p><table cellspacing="0" width="100%" class="ms-rteTable-default" style="text-align&#58;center;"><tbody><tr><td class="ms-rteTable-default" style="width&#58;20%;">​​<br></td><td class="ms-rteTable-default" style="width&#58;40%;"><h4><strong>TBA-eligible securities issued </strong></h4><h4><strong>November 1, 2017 through October 31, 2019 </strong></h4><h4><strong>(billions)</strong></h4></td><td class="ms-rteTable-default" style="width&#58;40%;"><h4><strong>Deemed-Issuance Ratio</strong></h4><h4><strong>(percent)</strong></h4></td></tr><tr><td class="ms-rteTable-default"><p>Fannie Mae</p></td><td class="ms-rteTable-default"><p>$947.251</p></td><td class="ms-rteTable-default"><p>60</p></td></tr><tr><td class="ms-rteTable-default"><p>Freddie Mac </p></td><td class="ms-rteTable-default"><p>$686.309</p></td><td class="ms-rteTable-default"><p>40</p></td></tr><tr><td class="ms-rteTable-default"><p>Total<br></p></td><td class="ms-rteTable-default"><p>$1,633.560<br></p></td><td class="ms-rteTable-default"><p>100</p></td></tr></tbody></table><p>&#160;<br></p><p>FHFA plans to announce the ratio annually at least three weeks prior to the affected calendar year.&#160;​<br></p>11/27/2019 4:00:16 PMHome / Media / FHFA Announces Deemed-Issuance Ratio for 2020 News Release FHFA plans to announce the ratio 634https://www.fhfa.gov/Media/PublicAffairs/Pages/Forms/AllItems.aspxhtmlFalseaspx