Origination/Lending
OFHEO Gives GSEs More Breathing Room on Portfolio Caps
By PAUL JACKSON
September 19, 2007 9:03 PM CST
Today the Office of Federal Housing Enterprise Oversight said it will change how it calculates the portfolio caps in place for each of the GSEs, as well as looking to bring Fannie Mae into parity with Freddie Mac regarding annual portfolio increases.
From the Wall Street Journal, a quick summary:
In May 2006, Ofheo capped Fannie Mae’s portfolio at $727 billion because of the company’s past accounting problems. But Ofheo’s new policy would allow Fannie Mae to grow its portfolio 0.5% per quarter, or no more than 2% in one year. Ofheo has a similar growth structure agreement in place with Freddie Mac, which like Fannie Mae is a government-sponsored enterprise.
Ofheo said it will set the portfolio cap for both companies at $735 billion, effective July 1, 2007. Both companies will be allowed to grow 2% annually from this level beginning in the fourth quarter. In the fourth quarter, they will be allowed to grow 1.0%, though Ofheo said the 2% annual cap would remain.
(Side note: Ofheo? Like Oreo? Really?)
Beyond the percentages, the OFHEO also said it will change how portfolio caps at each company are calculated — ditching the current GAAP number (a balance sheet number) to adopt the use of Unpaid Principal Balance (UPB) instead. A UPB-based calculation would be less senstive to daily market fluctuations that currently force each GSE to stay well below formal cap limits, the OFHEO said in its statement.
It’s clear that many on Capitol Hill interpreted today’s move as a signal to start actively pushing to have the portfolio caps lifted entirely, however, with numerous outlets reporting that Sen. Chuck Schumer (D-NY) was more than willing to take credit for today’s changes.
“Whatever they call it, there is no doubt that this is an increase in the portfolio caps that I have been calling for,” Schumer is quoted as saying in numerous media outlets.
recent stories by department
Origination/Lending
Secondary Market/Investors
Get your HW Fix
Join nearly 10,000 bold subscribers who already get our daily email delivered to their inbox -- it's free, and a great way to ensure you don't miss something.
Events
2009 Jul 09 -- 2009 Jul 10
USFN Legal Issues in Mortgage Servicing Seminar
Geared towards in-house counsel, designed to discuss current legal issues in the mortgage servicing industry and real estate finance. Closed event in Chicago, Ill.; for more information, visit www.usfn.org.
2009 Oct 04 -- 2009 Oct 05
IMN's 15th Annual ABS East
Hosted at the Foutainebleau Resort Miami Beach in Miami, FL, the theme of this year's event is "Navigating a Path to Recovery" and alludes to decisive actions by the government and industry leaders to set a course that will hopefully lead to a revived and robust US securitization market. For more information, visit www.img.org.
2009 Oct 20 -- 2009 Oct 21
RMBS: Assessing Value and Risk
This two-day course in Washington, DC will equip market participants with the knowledge and skills to evaluate prime, Alt-A and subprime RMBS portfolios in order to assess their value and understand inherent risks. For more information, visit www.fitchratings.com.
Print This Article





