From the Editor
By Jim Davis
Jim Davis is editor of Scotsman Guide Residential Edition.
Reach him at (800) 297-6030 or firstname.lastname@example.org.
A decade later, all eyes are on Fannie and Freddie
The newsworthiness of a major event’s anniversary can be debated. Newspapers around the country will
publish stories on the attack at Pearl Harbor this Dec. 7, but what has really changed this year compared to last
year or the year before?
Major news events, even with world-altering significance such as Pearl Harbor, eventually fade from news to
history. Still, stories on anniversaries can be a chance to reflect on what once was and what could be, especially
if the story continues to evolve or hasn’t exactly resolved itself. The story of Fannie Mae and Freddie Mac falls
into this category.
Sept. 6 will mark the 10th anniversary of when the federal government bailed out and
subsequently placed into conservatorship those government-sponsored enterprises
(GSEs.) During the financial crisis, the federal government injected the GSEs with
$187.5 billion in cash. They have since returned to profitability and paid back taxpayers
more than $270 billion.
Yet, Fannie and Freddie remain in conservatorship under the watch of the Federal Housing
Finance Agency (FHFA). Several proposals have been floated outlining what to do next —
what’s referred to in a shorthand way as GSE reform — but none of the ideas have gained
great traction to date. The idea of GSE reform is likely dead until at least next year, if not
For mortgage originators, what happens next with the GSEs will always be newsworthy.
Fannie and Freddie are so important to the business that even minor changes in the
federal government’s relationship with Fannie and Freddie could cause massive ripples
for the industry.
That’s why in this edition — which focuses on the GSEs and government-backed lending programs — a couple of
contributors took up the GSE issue and their fate. On Page 62, Platinum Home Mortgage’s Bill Giambrone writes
that many GSE reforms have already been implemented administratively by the FHFA, adding that Congress may
not be the best venue to make the needed changes. On Page 112, Susan Graham of Financial Industry Computer
Systems writes that originators need to be mindful of the technological changes in the wake of any GSE reform.
On another front, turn to Page 83, where American Financial Resources’ Laura Brandao offers a primer on a number of
government and GSE loan programs. Kraig Spence of Churchill Mortgage writes on Page 97 about the opportunities
and responsibilities related to government-backed loans offered through the U.S. Department of Veterans Affairs.
L. Maria Vergara, president of NAHREP Consulting Services, writes on Page 102 about the need for mortgage
professionals to understand and respond to the changing demographics of the country and the increasing
number of Hispanic, African-American, Asian and other ethnic-minority households.
On Page 135, Jeff Jensen, author of “What A HOOT! Let’s Recruit,” explores the cutting-edge ways that mortgage
companies can attract talent. Think virtual reality is far-fetched? Read about how some companies are using
it already to land the best candidates. Toward the end of the magazine, on Page 156, Academy Mortgage
Corporation’s Patrick Welberg explains how a U.S. Department of Agriculture pilot program could help spur
development of new homes in rural America. Enjoy these and other stories in this edition of Scotsman Guide.