The Federal Housing Finance Agency declared this week that Fannie Mae and Freddie Mac will finish making claims on pre-conservatorship mortgage acquisitions by the end of this year. “It is time for us to wrap up all our open issues dealing with that period and move on,” said FHFA Acting Director Edward DeMarco during a speech at the annual convention of the Mortgage Bankers Association. “I look forward to a speedy resolution of remaining claims in the coming months.” The two GSEs became wards of the federal government in September 2008. For years, lenders have complained...
A significant number of issuers, lenders, consumer advocates, congressmen and even some investors are urging federal regulators to conform to the definition for qualified residential mortgages with the Consumer Financial Protection Bureau’s standards for qualified mortgages. However, securitization industry participants have raised a number of other concerns about the risk-retention rule required by the Dodd-Frank Act. The DFA requires that certain securitized assets that don’t meet qualification standards should be subject to mandatory risk retention of at least 5 percent by the issuer or lender. Lenders and consumer advocates widely agree...
The jumbo MBS market is frozen because investors in the AAA tranches are scarce and still lack confidence in the product following the housing bust and the ensuing tidal wave of litigation swamping issuers and underwriters. According to MBS pioneer Lewis Ranieri, there’s only one to fix the problem: give investors more information on the deals. At a speech this week during the annual convention of the Mortgage Bankers Association, Ranieri, the chairman and CEO of Shellpoint Partners, noted...
It was pretty much stimulus as usual at the Federal Open Market Committee this week, as the Fed showed not the slightest indication of when it would begin winding down the third phase of its quantitative easing program, known informally as QE3 when it was first unveiled, but increasingly referred to as QE Infinity by those who emphasize its long, drawn-out nature. The status quo results mean the Fed will continue adding to its agency MBS portfolio at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month, and keep plowing its principal payments from its agency debt and MBS holdings back into agency MBS and rolling over maturing Treasury securities at auction. Among those voting in favor of keeping the Fed’s pedal to the metal were...
As leaders of the Senate Banking, Housing and Urban Affairs Committee continue their slow but steady efforts to craft a comprehensive, bipartisan mortgage finance reform bill, experts generally agreed on the necessity for some sort of government backstop for MBS but differed on the details. This week’s hearing was the first of several planned by Committee Chairman Tim Johnson, D-SD, and Ranking Member Mike Crapo, R-ID, as they work to build out their own reform legislation on top of the bill, S. 1217, filed earlier this year by Sens. Bob Corker, R-TN, and Mark Warner, D-VA. Johnson said...
Fannie Mae and Freddie Mac each managed to meet its risk-sharing objectives for 2013 without breaking the link to the to-be-announced market, but their regulator wants the government-sponsored enterprises to go beyond the comfort zone. The risk-sharing transactions undertaken by the GSEs this year were very positive, but they relied on the “underlying infrastructure” of Fannie and Freddie MBS, said Edward DeMarco, acting director of the Federal Housing Finance Agency, in a speech at this week’s annual convention of the Mortgage Bankers Association. The Structured Agency Credit Transactions and Connecticut Avenue Securities launched, respectively, by Freddie and Fannie, involved selling relatively small amounts of debt that will pay investors based on the performance of separate MBS pools that were issued and trade in the TBA market. DeMarco wants...
In a sign that Senate leaders are continuing their work on comprehensive housing finance reform, representatives of the mortgage lending industry were given an opportunity this week to opine on the exact features such a package should have, and they took full advantage of it. Gary Thomas, president of the National Association of Realtors, speaking before the Senate Banking, Housing and Urban Affairs Committee, offered a baker’s dozen of specific proposals for elements of a future finance system, including an “efficient and adequately regulated secondary market,” which he said is essential to providing affordable mortgages to consumers. Also, the government-sponsored enterprise system “with private profits and taxpayer loss” must be replaced...
Efforts to redefine the FHA’s mission under the pretense of eliminating taxpayer risk would be counterproductive to the goal of housing finance reform, warned FHA Commissioner Carol Galante. In recent remarks to a housing reform forum in Washington, DC, Galante said that while housing reform is necessary, restricting the FHA’s ability to perform its dual mission in response to perceived risk is not the way to go. This type of over-correction would damage access to affordable credit, she cautioned. Apparently referring to pending House Republican reform proposals for the government-sponsored enterprises and the FHA, Galante said...
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