The GSEs are picking winners, not helping to level the playing field and they are blurring the lines between primary and secondary market activities, according to panelists expressing concern over the mortgage giants’ growing market share. As Fannie Mae and Freddie Mac continue to introduce and test pilot programs, the industry questions why the GSEs appear to be expanding their activities instead of shrinking them. During a panel sponsored by the American Enterprise Institute late last week, six participants from several think tanks and the mortgage industry discussed some of the alleged...
The deadline for comments on the Federal Housing Finance Agency’s proposed capital rule for Fannie Mae and Freddie Mac does not close until next month and so far, there have been about 25 official written comments registered and various opinions floated around Washington. Michael Stegman, senior fellow at the Milken Institute, said he was encouraged by FHFA’s proposed capital rule for the GSEs and Ed DeMarco, president of the Financial Services Roundtable Housing Policy Center, said the proposal should compel everyone to think about the implications. “This rule is much too important and far too complex to be digested and commented on in 60-days,” he said. “A critical question in evaluating this...
Analysts speculate that the new capital requirements expected for private mortgage insurers will be higher than current standards. Reinsurer capital requirements under Fannie Mae’s new Enterprise-Paid Mortgage Insurance pilot may be an indicator of upcoming private mortgage insurance eligibility requirements (PMIERs), according to analysts with Keefe, Bruyette & Woods. KBW said with PMIERs expected to be finalized around the time the EPMI starts, it’s possible that reinsuer capital standards could be similar to PMIERs 2.0. “If the capital requirements for reinsurers end up being the same as PMIERs 2.0, we estimate the capital requirements for the MIs would be roughly 10 percent higher than under PMIIERs 1.0,” said KBW.
Mnuchin Wants GSE Reform in Next Congress. Treasury Secretary Steven Mnuchin is worried about Fannie Mae and Freddie Mac expanding their already large role in the mortgage market and said he’s not against taking administrative action absent a legislative solution for reforming the mortgage giants.During the secretary’s annual testimony to the House Financial Services Committee late last week, Mnuchin reiterated his position in wanting lawmakers to reform the GSEs and said he expects that to happen in the next Congress. “This is something that I am determined, in the next Congress, should be a major focus of ours, hopefully on...
The non-agency MBS market had arguably its best quarter since the financial crisis during the April-May production cycle, generating $20.72 billion of new securities, according to a new analysis and ranking by Inside MBS & ABS. [Includes three data charts.]
Mortgage originations have been trending lower but there’s still plenty of demand in the secondary market for new production, according to industry participants. There’s demand from both MBS investors and aggregators that package mortgages for securitization.
As refinance business declines, the government-sponsored enterprises are stepping up efforts to help lenders produce more volume in other areas. At the California Mortgage Bankers Association’s secondary market conference this week in San Francisco, officials from Fannie Mae and Freddie Mac touted various efforts to help lenders and ultimately prop up GSE MBS issuance.
As the term of Federal Housing Finance Agency Mel Watt winds down, the mortgage industry is getting more vocal about perceived shortcomings in the oversight of the government-sponsored enterprises, including the blurring of lines between the primary and secondary markets.
The Federal Housing Finance Agency’s structure was deemed unconstitutional this week by the U.S. Court of Appeals for the Fifth Circuit. And in another rejection for Fannie Mae and Freddie Mac shareholders, the court ruled the Treasury net worth sweep was within the agency’s power.
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