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...

Capital requirements regarding bank holdings of non-agency MBS increased significantly after federal regulators implemented Basel III reforms in 2014. And while banks have largely been reluctant to re-enter the market for non-agency MBS issuance, a recent report by the Government Accountability Office suggests that the impact of bank involvement in the non-agency MBS market is unclear. The GAO was asked to explain how capital requirements for a mortgage depend on how the loan is financed and how the requirements have changed since the financial crisis. The report was requested by Sen. Richard Shelby, R-AL, who until recently was the chairman of the Senate Committee on Banking, Housing and Urban Affairs. The GAO noted...

With financial markets awaiting, with some uncertainty, the public policy positions of the incoming Trump administration and the new Congress, industry analysts say ABS investors can expect most sectors to turn in stable performances in 2017. “As we look back on 2016 and consider the 2017 global structured finance outlook, most markets and their credit conditions seem favorable, and in some cases, even ideal. However, 2017 has many unknowns, especially the specific policies and priorities that will be adopted by the new U.S. administration,” said analysts with S&P Global Ratings in a recent outlook report. “Some would suggest government-sponsored enterprise privatization is possible, risk retention could be revised, and an appropriate/globally consistent capital treatment for structured finance products could be approved.” Further, “For the most part, we expect...

Heavy refinance activity at the end of the year lifted single-family business at Fannie Mae and Freddie Mac to a three-year high in 2016, according to a new Inside The GSEs analysis and ranking. The two firms guaranteed $973.72 billion of single-family mortgage-backed securities during 2016, up 18.1 percent from the previous year. That included a 5.7 percent increase from the third to the fourth quarter that was fueled by a 24.5 percent jump in refi loans delivered into new GSE MBS. While both companies saw solid gains from 2015 activity, Fannie’s 23.3 percent increase was more than double the 11.0 percent rise in Freddie volume. [includes two charts]

With interest rates up 75 basis points since the election – and staying there, at least for now – residential production is likely to slip in the quarters ahead, leading to layoffs, especially at firms that focus on refinancings. “It’s coming,” said industry consultant Don Henig, a former top sales executive for loanDepot, a top-10 ranked originator. “Maybe we haven’t seen too many layoffs quite yet, but just look at volume numbers and do the math.” Henig added: “Right now, a lot of shops ...

The recent run-up in mortgage rates appears to have suppressed short-term home purchase expectations among prospective homebuyers, who nonetheless otherwise feel optimistic about the housing market over the longer term, according to new data from government-sponsored enterprise Fannie Mae. Fannie’s latest Home Purchase Sentiment Index (HPSI), released earlier this week, dipped 0.5 points to 80.7, the fifth consecutive monthly decline. The index is down ...

The New York Department of Financial Services made some concessions to industry participants by revising proposed cybersecurity standards. Some mortgage-industry officials were happy with the revisions while reiterating concerns about the proposed standards. The NYDFS first proposed cybersecurity standards in September. The proposal was the first of its kind from a state regulator and more prescriptive than guidance from the Federal Financial Institutions Examination ...

While mortgage interest rates remain at historic lows, an increase of even one percentage point is not going to have a dramatic effect on affordability and any negative homebuyer response to rising rates is likely to be short-lived, according to a new Redfin survey. Even if mortgage rates climb to 5 percent, homebuyers would lower their expectations and shop for less expensive homes, said 49 percent of the 827 Redfin real estate agents who responded to the survey. Redfin conducted ...

Black Knight Financial Services is developing a mortgage-specific credit score that could be more useful for lenders than traditional credit scores. It’s not clear how much traction the score will gain, considering that Fair Isaac’s FICO score remains the dominant metric for assessing the creditworthiness of mortgage borrowers. Wesley Winter, a senior modeler at Black Knight, said a traditional credit score may not be the best predictor of mortgage default. “The FICO score is trying to ...

Mortgages guaranteed by the Department of Veterans Affairs accounted for 29.4 percent of insured home loans securitized in the agency mortgage-backed securities market in the fourth quarter of 2016, a new Inside Mortgage Trends analysis reveals. That was up from a 27.2 percent share for the VA during the third quarter. The home-loan guaranty program has become a refinance dynamo, accounting for a whopping 44.6 percent of insured refi loans ... [Includes one data chart]