Freddie Mac saw an unusual jump in mortgage-backed securities issuance in February thanks to a huge delivery of seasoned loans from Bank of America. Freddie single-family MBS production rose 30.8 percent from January’s level to $29.91 billion, according to a new Inside The GSEs analysis of loan-level data. It was the highest monthly issuance level for Freddie since August 2013. [Includes one chart.]
While most of the 18 financial institutions sued by the Federal Housing Finance Agency in 2011 have settled allegations of securities law violations, underwriting flaws and fraud related to non-agency mortgage-based securities, one bank, Nomura Holding America Inc., plans to take the case all the way to trial.
The development of the common securitization platform is in the works, but Treasury officials have a slightly different view of its implementation than does the Federal Housing Finance Agency. The FHFA said although progress on building the CSP is continuing, the agency is most focused on moving toward a single security. FHFA Director Mel Watt noted that both of the initiatives are “highly interrelated,” but he made it clear that a single security for the GSEs is a priority for Fannie Mae and Freddie Mac in 2015.
The Community Home Lenders Association last week said that more investigation is needed before the Federal Housing Finance Agency finalizes its proposed increase in capital and liquidity requirements for Fannie Mae and Freddie Mac servicers.
Pennsylvania’s Senator Pat Toomey said the Third Amendment to the terms of the GSE conservatorship is not fair to Fannie and Freddie investors. By claiming all future GSE profits, the Republican lawmaker said, the Treasury effectively eliminated all remaining shareholder value.
High GSE guarantee fees should be lowered because market risks have lessened significantly since the housing market crisis, according to the Community Mortgage Lenders of America. A 25 basis points adverse market fee was imposed when excessive levels of housing inventory and declining values were commonplace in many U.S. housing markets, said CMLA Chair Paulina McGrath.
Fannie Mae and Freddie Mac held $54 billion mortgages more than a year past due as of the end of the third quarter of 2014 and the Federal Housing and Finance Agency is counting on selling more nonperforming loans to the private sector.
In a March 11 report, the Office of Inspector General scrutinized Fannie Mae’s appointment of its chief audit executive. The report highlights “risks” associated with the October 2013 candidate selection. The CAE is responsible for directing Fannie’s internal audit department, a critical element of Fannie’s risk management controls, according to the report.
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