Risk management and technology systems at the Federal Housing Administration lag decades behind Fannie Mae and Freddie Mac and desperately need to be revamped, according to a top official at HUD.
The bill aimed at helping struggling homeowners also requires documentation of servicer behavior and FHFA evaluation of the services provided to borrowers.
Republican Bob Corker of Tennessee and Democrat Mark Warner of Virginia are acknowledging the legislative efforts to end government control of Fannie Mae and Freddie Mac are dead, at least for now.
For nearly a decade, the FHFA has restricted Fannie Mae and Freddie Mac from trying to influence the raging debate over whether they should live or die.
Freddie Mac has quietly started extending credit to nonbanks that issue mortgages, a move it says will help the companies maintain access to a crucial stockpile of cash if their home loans go sour.
Fannie Mae's first-quarter profits were enough for it to rebuild its minimum capital buffer and pay the Treasury Department dividend after being forced to take a draw during the previous fiscal period.
If Freddie Mac's credit-risk transfer activities continue to grow, mortgage lenders could eventually see a reduction in the guarantee fees they pay to the government-sponsored enterprise, according to CEO Donald Layton.
The Treasury secretary has said that he doesn't see changes to the housing finance system happening this year, but he's hopeful something can be done after the elections.
The reserve bank's proposal to address banks and nonbanks that remain "too big to fail" does not include two of the largest such institutions: Fannie Mae and Freddie Mac.
Momentum to overhaul the mortgage finance system had been slipping, and with Democrats divided over the Senate's banking relief bill there's virtually no chance more bipartisan deals can be worked out.
