The Federal Housing Finance Agency announced plans to officially launch the “common” uniform mortgage-backed security collateralized by Fannie Mae and Freddie Mac loans on June 3, 2019. The regulator confirmed the exact date this week after previously only revealing the common security would be issued in the second quarter of 2019. The new UMBS will replace the current offerings of to-be-announced-eligible MBS and will be issued through Common Securitization Solutions, a joint venture equally owned by Fannie and Freddie. The Bethesda, MD-based CSS has been working on the project for several years now at a cost of hundreds of millions of dollars.
Servicing-released premiums on Fannie Mae and Freddie Mac whole loans sold into the secondary market are the best they have been in at least five years – and perhaps longer – thanks to higher interest rates, according to interviews conducted this week by Inside The GSEs. “We’ve seen a consistent increase in mortgage servicing rights values since early in the first quarter as a result of greater degrees of certainty for higher interest rates,” said Tom Piercy, managing director of Incenter Mortgage Advisors, Denver. “While the rate curve is not anticipated to be steep, confidence is high that rates will trend higher, hence less volatility around MSR values,” he added. “Combine this with lower production volume and we are seeing SRPs from aggregators increase.”
Freddie Mac loans under the Home Affordable Refinance Program will continue to perform better than pre-crisis mortgages, which Moody’s said bodes well for credit-risk transfers with exposure to those loans, but they will underperform more recent loans. According to an analysis by Moody’s, HARP borrowers benefited from significant payment reductions, were already showing good performance, and are likely to be more credit savvy. Freddie loans originated in 2005-07 that went through HARP had a 60-plus day delinquency rate of just 1.14 percent, as of March 2017. Moody’s said that’s well below the 6.84 percent 60-plus day delinquency rate for loans in that same period that did not go through HARP. But, the delinquency rates for HARP loans are...
Over the past few months, the share price of Fannie Mae and Freddie Mac common has steadily declined – along with the prospects for housing finance reform. As Inside The GSEs went to press this week, Fannie shares were trading for roughly $1.30. The mortgage giant’s 52-week high is $3.31, its low $1.25. Freddie’s common stock currently sells for $1.30. However, midweek, on Wednesday, Freddie lost 8.89 percent of its value with Fannie declining by 7.97 percent. In subsequent days, the prices improved somewhat. Both are traded on the Over-the-Counter market, having been kicked off the New York Stock Exchange.
Self-employed borrowers will have an easier time applying for a mortgage as part of a new initiative from Freddie Mac and LoanBeam. Research shows that about 44 million in the U.S. are either self-employed or working for the self-employed. Last week, the GSE announced that calculating income for a self-employed borrower will be automated and simpler for those using Freddie’s automated underwriting system. The GSE said this will expedite the process by reducing the amount of time it takes to gather information. LoanBeam is a software solution that uses technology to extract data from tax documents to automatically calculate income. It does so by using optical character recognition technology.
Freddie Mac is expected to name Sam Khater, a well-regarded industry monetarist, as its new chief economist, Inside The GSEs has learned. Late this week, a Freddie spokesman declined to comment on Khater specifically, but did say the government-sponsored enterprise was in the hunt for a new chief economist after Sean Becketti, last November, vacated the post. Becketti accepted a position as vice president of portfolio analytics in Freddie’s investments and capital markets unit and remains with the GSE. “We are currently in the process of hiring a new chief economist, and will make an announcement at the appropriate time,” said the spokesman.
The Federal Housing Finance Agency Office of Inspector General worries that the GSEs aren’t reporting potential fraud in a timely manner as their statute stipulates.In a recent audit, the IG reviewed the FHFA’s oversight of how Fannie Mae and Freddie Mac report fraud. They found a possible disparity between the fraud- reporting requirement in the statute and the FHFA’s regulation and guidance. The FHFA’s definition of fraud appears to have a higher reporting threshold, meaning it allows for more time before a report must be made. The GSE is expected to make a “timely report” to the...
More Fannie Mae and Freddie Mac shareholders have initiated lawsuits against the government for the Treasury sweep of the mortgage giants’ profits. Each of the plaintiffs in the three new cases were owners of the GSEs’ junior preferred stock. The cases, Akanthos v. U.S., CSS v. U.S. and Appaloosa v. U.S., have been assigned to Judge Margaret Sweeney, who is also handling other similar complaints. They were filed in the U.S. Court of Federal Claims. According to court documents, Akanthos Opportunity Master Fund owned more than $137 million in junior preferred stock as of Aug. 16, 2016. Akanthos complained of suffering from “severe economic loss” to its holdings.
Fannie Announces Community Impact NPL Winners. Fannie Mae announced this week that the winning bidder for its 11th and 12th Community Impact pools of non-performing loans was VRMTG ACQ, LLC (VWH Capital Management, LP), a minority- and woman-owned business. The transaction is expected to close on May 22, 2018, and includes approximately 182 loans totaling $34.25 million in unpaid principal balance, divided between two pools focused in the Orlando and Tampa areas of Florida. GSE Foreclosure Preventions Surpass 4M. The Federal Housing Finance Agency reported this week that the GSEs completed 67,569 foreclosure prevention actions in the fourth quarter of 2017, bringing the total number of homeowners helped to 4.04 million since 2008. But, thanks to the fall...
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