Despite heavy volume in new single-family business in recent years, there has been little growth in the outstanding volume of Fannie Mae and Freddie Mac servicing. GSE single-family servicing peaked at $4.794 trillion back in 2009. Up until 2014, refinance activity accounted for over 70 percent of Fannie/Freddie new business; there was a lot of churning in GSE servicing rights but a net decline in outstanding volume. The rebound in purchase-mortgage lending last year began to turn that around. A new Inside The GSEs analysis of Fannie and Freddie mortgage-backed securities disclosures shows total single-family servicing grew modestly in both the third and fourth quarters of 2014. The analysis shows a total of $3.956 trillion of single-family servicing at the ...
Investors are beginning to show renewed interest in buying servicing rights collateralized by Fannie Mae and Freddie Mac loans, in particular “flow” transactions where the product is delivered in the future on a monthly basis. Moreover, there is even talk in the market that some of the megabanks may return as active buyers now that they’ve figured out their capital exposure under the Basel III capital rules. Basel caps mortgage servicing rights at 10 percent of Tier I capital, but some large “flow” buyers of yesteryear – including Wells Fargo – are under the limit and could have room to grow. Phase in of the Basel rule began last year. “We see a day when banks are active buyers again,” said Mark ...
“Obviously we’ve touched a nerve,” Mel Watt, director of the Federal Housing Finance Agency, said of the FHFA’s proposal to revise standards for membership in the Federal Home Loan Bank System. At a hearing this week by the House Financial Services Committee, a number of Congressmen raised concerns about the proposed rule the FHFA issued in September. Rep. Frank Lucas, R-OK, was skeptical of the FHFA’s intentions, asking what problem the FHFA was trying to fix. “There are some potential problems that we are trying to fix, to make sure that the FHLBanks meet the statutory purposes that have been set,” Watt replied. “First of all, you don’t want anybody to be a member of the FHLBank system and get ...
Republicans in the House Financial Services Committee and Mel Watt, director of the Federal Housing Finance Agency, clashed regarding funding of affordable housing funds by the GSEs at a hearing this week. In November, the FHFA directed Fannie Mae and Freddie Mac to begin setting aside funds in 2015 to be allocated to the Housing Trust Fund and the Capital Magnet Fund. The contribution formula calls for Fannie and Freddie to send amounts equal to 4.2 basis points of the principal balance of their new business to the funds, about $290 million based on the GSEs’ activity in 2014. Watt’s directive reversed a suspension that his predecessor, Ed DeMarco, had implemented. Watt repeatedly cited the Housing and Economic Recovery Act ...
Fannie Mae and Freddie Mac can reclaim their pricing edge on mortgages with higher loan-to-value ratios, although it’s not at all clear whether they will. Up until the FHA this week slashed its annual insurance premiums on most loans by 50 basis points, Fannie and Freddie had a fairly clear pricing advantage on higher LTV loans regardless of credit score, according to a new analysis by Deutsche Bank Securities.On loans with LTVs ranging from 90 percent to 95 percent, for example, GSE pricing was better for all borrowers with credit scores over 620. The same was true for loans with LTVs ranging from 95 percent to 97 percent, a program just put in place this year. Things are different ...
Members of Congress on both sides of the aisle continue to work on legislation to reform the GSEs but with strong differences between the parties, there remains little optimism that GSE reform legislation will be enacted in the next two years. “While I realize the odds are long and the political issues to overcome are immense, I do believe that reforming this broken marketplace must remain a priority of this committee,” said Rep. Scott Garrett, R-NJ, at a hearing this week by the House Financial Services Committee. Garrett chairs the subcommittee on capital markets and GSEs. Garrett said previous GSE reform bills introduced on both sides of the aisle in Congress in recent years provide a foundation for what he ...
Fannie Mae and Freddie Mac are more than halfway towards reaching their goal of reducing their retained mortgage portfolios to no more than $250 billion each by 2018, according to Federal Housing Finance Agency Director Mel Watt. Testifying before the House Financial Services Committee this week, Watt said the two government-sponsored enterprises have developed plans to meet their investment targets, $250 billion each, in accordance with terms of their conservatorship. As of Sept. 30, 2014, Freddie’s portfolio stood...
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