As talks of GSE reform intensify with FHFA Director Mel Watt’s speech last month citing concerns about dwindling capital levels, the Mortgage Bankers Association held a briefing this week on Capitol Hill focusing on the urgent need for reform, but stopped short at agreeing with calls to recapitalize the mortgage giants. Reasons to reform Fannie Mae and Freddie Mac appear to be growing like a never-ending laundry list with increased risk to taxpayers at the very top. The MBA said its core concern is that one of the GSEs will have to take a draw from the U.S. Treasury because earnings capacity is much less than it has been over the past few years and is only expected to decline.
Freddie Mac and Fannie Mae recently enhanced the disclosures for their single-family credit risk transfers to give potential investors more information on the deals. Investors and lawmakers have been calling for more transparency since the GSEs began transferring credit risk several years ago.Freddie’s disclosures for all single-family credit risk transfer initiatives will now include quarterly updates on credit scores for outstanding loans in all transactions as well as quarterly updated mark-to-market loan-to-value ratios. Freddie said this leverages the estimated property value from its Home Value Explorer Automated Valuation Model tool. Investors can analyze loan-level mortgage insurance details and identify whether or not the lender or the borrower paid the mortgage insurance on the loan.
One of the companies that purchased a large number of distressed homes from Fannie Mae following the housing crisis was the focus of a recent New York Times piece highlighting the problems brought on by investor-purchased homes that still linger today. Harbour Portfolio Advisors of Dallas is an investment firm that purchased thousands of single-family homes from Fannie in states like Florida, Georgia, Illinois, Michigan and Ohio, by way of a pool sales program that existed from 2010 to 2014. The article accused the firm of targeting and taking advantage of low-income buyers who don’t know what they’re getting themselves into once agreeing to buy a fixer-upper home from Harbour. The investment firm bought...
Bank of America introduced a new affordable lending program last week that allows 3 percent downpayments and no required reserve funds in most instances. The bank partnered with Freddie Mac and Self-Help Ventures Fund, a Durham, NC-based nonprofit, to offer conforming loans to borrowers whose income doesn’t exceed 100 percent of the area median income. There’s also no private mortgage insurance on the loans as “Self-Help Ventures Fund is taking the first loss position in the event of a loan default through a recourse agreement,” said a Freddie spokesman. The Affordable Loan Solution mortgage was designed to let creditworthy homebuyers who meet specific income limits and other requirements to become homeowners at an affordable entry point, said...
The purchase-mortgage market took the biggest hit during the fourth-quarter slowdown in mortgage originations, but strength in first-time buyer activity helped soften the blow. According to a new Inside Mortgage Finance analysis and ranking, refi originations held steady at $175 billion during the fourth quarter. Although refinance activity in the second half of 2015 was down sharply from the first six months of the year, it was still significantly stronger than at any time in 2014 and year-to-date refi originations were up 60.0 percent in 2015. The purchase-mortgage market also grew...[Includes three data tables]
The Consumer Financial Protection Bureau plans to host a call-in with a handful of trade groups shortly regarding delays and secondary market snafus caused by its integrated disclosure rule, but whether any true regulatory relief will be offered remains to be seen. In the meantime, industry officials continue to complain about delays in loan closings caused by the so-called TRID rule and the losses incurred by some nonbanks because loans are sitting on warehouse lines longer, especially non-agency jumbo loans. Late this week, Dave Stevens, president and CEO of the Mortgage Bankers Association, told...
Bond investing giant Pacific Investment Management Co. once again has its ears open for potential acquisitions in the residential finance space, including mortgage franchises or “assets,” according to investment bankers and sources close to the company. These officials, who spoke under the condition their names not be used, identified a handful of acquisitions that have been presented to PIMCO, including a nonbank based in the Charlotte, NC, area. As Inside Mortgage Finance went to press this week PIMCO – and the target acquisition – could not be reached for comment. As a technical matter, the investments are being made...
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