Over the past few weeks, speculators have been driving up the price of Fannie Mae and Freddie Mac common stock and “trust” preferred shares in the hope of a payoff somewhere down the line. But according to interviews conducted by Inside Mortgage Finance, the only payoff might come if they can find someone else willing to pay more than they did for stock that is considered virtually worthless. Industry lobbyists, former government-sponsored enterprise executives and some investors say...
In exploring how to attract more private capital into the housing finance system, policymakers should permit the jumbo mortgage market to stand on its own absent a government guaranty and make any future government backing explicit, experts told members of the Senate Banking Subcommittee on Securities, Insurance and Investment this week. Given that loans over the old $417,000 conforming limit account for a quarter of the dollar volume of mortgages per year, a slow and measured hand off of this segment to private capital is a low-maintenance way to reduce the government’s mortgage footprint, according to Mark Willis, resident research fellow at the New York University Furman Center for Real Estate and Urban Policy. Inside Mortgage Finance estimates that loans exceeding $417,000 accounted for 16.8 percent of originations in 2012. “Opening up the market above $417,000 should provide...
The ability-to-repay rule promulgated by the Consumer Financial Protection Bureau is perhaps the single most important mortgage-related regulation the CFPB will produce under the Dodd-Frank Act, and mortgage lenders will need a vigorous and comprehensive strategy if they are going to make qualified mortgages profitably while maintaining the desired level of legal protection. But before lenders get to the compliance pieces of the QM puzzle, they’ve got to figure out “how to get to QM” and what types of loans they want to make. “We’re assuming...
Efforts by the U.S. Attorney for the Southern District of New York to use the False Claims Act to recoup $1 billion in losses suffered by Fannie Mae and Freddie Mac have suffered a big setback. Last week, U.S. District Court Judge Jed Rakoff dismissed claims for treble damages and penalties the federal government brought under the FCA against Bank of America as successor to Countrywide Financial for allegedly selling defective loans to the two government-sponsored enterprises while representing that the mortgages complied with their requirements. The government asserted...
Feedback from residential servicers indicates that the number of new loan modifications on mortgages in non-agency MBS this year will be near levels seen last year.
Guaranty fees need to be raised by roughly 10 basis points in order for the pricing between agency and non-agency deals to be comparable, according to a new report.
The Federal Housing Administration has streamlined requirements for permissible sources of downpayment funds, which should be a boost to borrowers using government financing.
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