Browse articles from all of our Newsletters related to Treasury.

January 20, 2017 - Inside MBS & ABS

GSE Shareholder Case Outlook, Will the Trump Administration Make a Difference?

As a number of shareholder lawsuits against Fannie Mae and Freddie Mac hang in the balance, a new administration offers reasons for some to be optimistic on the cases coming to a close and the Treasury’s sweep of the government-sponsored enterprises’ profits coming to an end. During a Jan. 18 call hosted by Investors Unite, legal experts weighed in on the outlook for GSE shareholder cases just days before the inauguration. Plaintiffs have been arguing that a government bailout of the GSEs and the subsequent Treasury sweep was unnecessary and illegal. “As GSE shareholders, we are...

January 20, 2017 - Inside MBS & ABS

Investor Cuts Stake in the Nation’s Largest Mortgage REIT Annaly as Rising Rates Cause Nervousness

International Value Advisors recently cut its stake in Annaly Capital Management – the nation’s largest mortgage real estate investment trust – by roughly half, a development that could be repeated by other investors as rising rates cause new concerns about MBS prices. At year-end, International owned 4.55 percent of Annaly compared to 9.60 percent a year earlier. Annaly’s largest investment is in agency MBS, of which it owned $73.5 billion at Sept. 30. The publicly traded REIT is...

January 19, 2017 - Inside Mortgage Finance

Fannie and Freddie are About to Provide a Revenue Gift to the Trump Administration

Thanks to stellar fourth quarter MBS issuance – coupled with higher interest rates at Dec. 31 – Fannie Mae and Freddie Mac are likely to report their best quarterly earnings of 2016, money that will go directly into the U.S. Treasury. According to interviews conducted by Inside Mortgage Finance this week, the general consensus among observers is that the two government-sponsored enterprises will post a combined profit north of $5.5 billion. In 2016, the two guaranteed...

January 19, 2017 - Inside Mortgage Finance

Trump’s Plans for Corporate Tax Reduction Could Prompt Treasury Draw by GSEs and Spur GSE Reform Activity

Legislative reform of the government-sponsored enterprises doesn’t appear to be a high priority for Republican lawmakers, but President-elect Donald Trump’s plans to reduce the corporate tax rate could inadvertently prompt some GSE reform activity, according to industry analysts. As of the end of the third quarter of 2016, Fannie Mae and Freddie Mac had a combined $53.80 billion in deferred tax assets. The DTAs result from differences between the carrying amounts of existing assets and liabilities under generally accepted accounting principles and their respective tax bases. The DTAs are...

January 19, 2017 - Inside Mortgage Finance

Trump Administration Expected to Freeze Cut in FHA Mortgage Insurance Premiums

The Trump administration is expected to put a temporary freeze on the 25 basis point cut in FHA annual premiums that is scheduled to take effect Jan. 27. One industry source noted: “On Jan. 20, President Trump will be issuing an executive order that freezes all past actions over a certain period of time. The FHA premium reduction gets swept into this.” Sources told...

January 13, 2017 - Inside The GSEs

GSE Roundup

Moody’s says HAMP Replacement Program Credit Neutral for CRTs. The GSEs’ new Flex Modification foreclosure prevention program that will replace the expired Home Affordable Modification Program has a neutral credit impact on GSE risk-risk transfer deals. Moody’s said that the volume of modifications and the re-default performance under the Flex program will be comparable to modification levels and performance under the current programs. The firm also noted that the new program will not result in increased modification volume. Servicers have until Oct. 1, 2017, to implement the new program. Freddie’s Recent ACIS Transaction. Last week, Freddie Mac announced its last Agency Credit Insurance Structure of 2016 in the form of a $285 million offering. The GSE said it...

January 13, 2017 - Inside The GSEs

Treasury Dept. Talks Housing Progress and New Goals

As the guard prepares to change in a week, Treasury Secretary Jacob Lew said in an exit memo released last week that only legislation can comprehensively address “the ongoing shortcomings of the housing finance system.” In the memo, Lew documents the Treasury’s progress over the last eight years and outlines his goals for the future of the department. He said that fixing the housing finance system remains the major unfinished piece of work of post-financial crisis reform. While he said the housing market has improved, Lew acknowledged that many homeowners and neighborhoods continue to struggle. “A starting point for such legislation should be the principles President Obama laid out in 2013, which stressed a clearly-defined role for the...

January 13, 2017 - Inside The GSEs

Investors Unite Hopes Privatization Leads to Shareholder Fairness

With increased talk of privatizing Fannie Mae and Freddie Mac, Investors Unite wants reassurance that shareholders will be treated fairly. The GSE shareholders rights trade group said, “Now everybody is talking about ending the conservatorship,” in a recent blog posting. While that may be an exaggeration, since the presidential election there has been a renewed interest in bringing the GSEs out of its eight-plus years conservatorship, where they’ve been since September 2008. Recent talks began with and snowballed after Treasury-secretary designee Steve Mnuchin said that getting the GSEs out of government control would be a top priority for the new presidential administration. And Mnuchin said that he plans to do this “reasonably fast.”

January 13, 2017 - Inside MBS & ABS

The Outlook for GSE Reform Brightens, But When and How is a Different Story

Change in the political balance in Washington that put the GOP in control of both houses of Congress and the executive branch has fueled speculation that something will finally be done to resolve the conservatorships of Fannie Mae and Freddie Mac. As in the past, there is no shortage of competing proposals. At an Urban Institute seminar this week, Rick Lazio, former Republican congressman from New York, said...

January 6, 2017 - Inside MBS & ABS

Treasury Officials Favor Explicit Government MBS Guarantee and Credit Access in all Economic Cycles

The only word from the incoming Trump administration about the fate of Fannie Mae and Freddie Mac is that the prospective Treasury secretary wants to bring them out of conservatorship. The Obama administration, however, commits only to preserving an explicit government guarantee for a “defined class” of MBS. “The explicit government guarantee would be funded by financial institutions and would act as insurance against catastrophic losses,” said the Treasury in a late December blog posting by Jane Dokko, deputy assistant secretary for financial economics, and Sam Valverde, a counselor in the Office of Domestic Finance. However, the authors don’t elaborate on what would shape the defined class. Under the new guarantee, investors would be assured...

January 6, 2017 - Inside MBS & ABS

With So Many Foreign Investors Owning Ginnie MBS, Who Becomes President of the Agency is Paramount

The incoming Trump administration has yet to pick a new president for Ginnie Mae, but foreign investors will be keeping a close eye on the selection for the simple reason they own a ton of the agency’s MBS. According to Sept. 30 figures provided to Inside MBS & ABS, foreign investment in Ginnie MBS is now at a record $552 billion, or roughly 35 percent of all outstanding securities. The agency could not provide...

January 5, 2017 - Inside Mortgage Finance

Regulators Seek to Track Mortgage Process More Closely, Focusing on Time Between Origination and Final Funding

Regulators are working to get a better understanding about the ownership of mortgages, particularly for the span between origination and final funding, according to the Office of Financial Research. “Regulators now collect origination data and loan performance data about much of the home mortgage market,” the OFR said in its recently published 2016 financial stability report. “However, they do not collect data about ownership of a mortgage between origination and final funding. Information on this short phase in the life of a loan is needed for a full picture of risks.” The OFR, an office of the Treasury Department that was established by the Dodd-Frank Act, noted...

December 16, 2016 - Inside MBS & ABS

FOMC Finally Raises Interest Rates, Projects More in 2017. Higher Rates May be Here to Stay, Analysts Say

This week, for only the first time this year and only the second time in the last decade, the Federal Reserve raised interest rates by 25 basis points, a move widely expected by market participants. What captured more attention was an upward adjustment of the Federal Open Market Committee’s so-called “dot plot,” suggesting that the U.S. central bank anticipates possibly raising rates three times during each of the next three years. Last year at this time, the FOMC raised...

December 16, 2016 - Inside MBS & ABS

As Rates Continue to Rise, mREITs Face Declines In MBS Book Value, But Slower Prepayment Speeds

Real estate investment trusts that invest in agency MBS could be in for some turbulence on their book values in the coming quarters if rates continue to rise – as they have since the November election. As Inside MBS & ABS went to press, most analysts had come to the same conclusion: that publicly traded mortgage REITs have underperformed most financial stocks, including nonbank lender-servicers such as Ocwen Financial, PHH Corp. and Walter Investment Management Corp. Then again, investing in so-called mREITs has never been...

December 16, 2016 - Inside MBS & ABS

CBO Suggests Higher GSE G-Fees and Lower Loan Limits to Help Reduce Deficit Over Next 10 Years

The Congressional Budget Office is looking for ways to reduce the budget impact of government-backed mortgage programs and recommends that Fannie Mae and Freddie Mac increase their guarantee fees and/or significantly lower their loan limits. But the CBO admits those changes would result in raising the cost to borrowers and could potentially restrain the housing market. Under CBO scorekeeping, MBS guarantees provided by the two government-sponsored enterprises from 2017 to 2026 will cost the government $12 billion. Reducing subsidies also would help renew private sector participation in the secondary market, the CBO said. It proposes...

December 16, 2016 - Inside MBS & ABS

No Consensus Among Non-Agency Market Participants on How to Pay for a Deal Agent

In the past few years, efforts facilitated by the Treasury Department and the Structured Finance Industry Group have helped develop standards for a deal agent in non-agency MBS. The concept took a major step forward last week when SFIG published a draft deal-agent agreement. However, the agreement didn’t delve into the specifics about how a deal agent would be compensated and industry participants have a wide range of opinions on the issue. A lawyer involved with the creation of the deal agent standards said...

December 9, 2016 - Inside The GSEs

The ‘Mnuchin Effect’: GSE Common Shares Spike, Then Retreat Slightly

Although the common stock of Fannie Mae and Freddie Mac has been deemed near worthless by stock analysts (and others), the share price of the two has been on a tear of late thanks to comments made two weeks ago by investment banker Steven Mnuchin, President-elect Donald Trump’s pick to head the Treasury Department. As Inside The GSEs went to press this week, Fannie common was trading at just $4.00 a share, Freddie at $3.90. And while that might not seem like much, it represents a stunning 166 percent gain since right before the November election. Mnuchin set the stocks in orbit when he said during a cable TV interview that resolving...

December 9, 2016 - Inside The GSEs

Mnuchin GSE Privatization Comments Cause a Stir

Comments made by Treasury Secretary Designate Steven Mnuchin about privatizing Fannie Mae and Freddie Mac caused much speculation around Washington last week. But analysts predict that privatization in the near term is unlikely. Mnuchin criticized the fact that the GSEs have been in conservatorship this long. During a cable television interview he said, “We’ve got to get Fannie and Freddie out of government ownership,” adding that it often displaces private lending in the mortgage markets. “So let me just be clear. We’ll make sure that when they’re restructured they’ll be safer and they won’t get taken over again, but we’ve got to get them out of government control.”

December 9, 2016 - Inside MBS & ABS

GSE Risk-Sharing Deals Seen as Less Attractive To Investors Under Trump Administration

Risk-sharing transactions from Fannie Mae and Freddie Mac have delivered strong returns for investors in the past year, but that could change under the monetary policies of the Trump administration, according to analysts at Bank of America Merrill Lynch. The analysts recently dialed down their recommendation on the risk-sharing transactions issued by the two government-sponsored enterprises to “underweight.” “Trump’s victory paves...


HUD has announced a 25 basis point cut in FHA premiums, which is slated to take effect in late January. Is your lending shop for or against a cut in FHA premiums?

For. It should help lending volumes.
Against. The private MI sector should take on this risk, not the government.
Too early to say.
I believe the new White House may scuttle the idea so it doesn’t matter.

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