Fannie Mae and Freddie Mac would levy extra guaranty fee charges on mortgages securing property in five states to account for the increased cost of foreclosures in those states under a proposal outlined this week by the Federal Housing Finance Agency. The FHFA proposes to target five states – Connecticut, Florida, Illinois, New Jersey and New York – for an additional, one-shot guaranty fee ranging from 15 basis points to 30 bps. “The size of the fee adjustments is intended to reflect the disparity in costs, as compared to the national average,” explained the FHFA. The five states were...

Fannie Mae’s High Touch Servicing Program, an initiative that utilizes specialty servicers to deal with at-risk borrowers to help reduce the number of defaults, is basically sound, but there are some issues with controls and cost savings, a new inspector general’s report found. “An internal audit conducted by Fannie Mae raised questions about the controls surrounding the High Touch Servicing Program, as well as the likelihood that it would achieve the projected savings,” the Federal Housing Finance Agency Office of Inspector General said in a report issued this week. “Fannie Mae relied...

Royal Bank of Canada this week issued the first covered bond registered with the Securities and Exchange Commission. The $2.50 billion transaction was backed by a pool of Canadian mortgages, issued in U.S. dollars and received AAA ratings from major rating services. The SEC registration allowed RBC to sell pieces of the covered bond to non-institutional investors in the U.S. “The sale of covered bonds to retail investors will modestly expand the investor base, in our estimate,” said Howard Esaki, global head of structured finance research at Standard & Poor’s. The covered bond has...

Waypoint Real Estate Group confirmed this week that it received a $65.0 million loan from Citigroup to finance rentals of real estate owned properties. Industry analysts suggest that the financing from Citi is the first for the emerging sector from the debt markets and securitization of REO rental proceeds is expected soon. Officials at Waypoint said they could issue an REO rental security fairly quickly. However, before the Citi deal they noted that they were seeing better terms from balance-sheet lenders than from REO rental securitization. The rating services have issued...

The most pressing concern of the Federal Housing Finance Agency’s efforts to develop a post-Fannie Mae and Freddie Mac secondary mortgage market infrastructure is engineering a state-of-the-art securitization platform that could be used by either company, as well as private issuers, the agency head noted during a speech last week. Speaking at the National Association of Federal Credit Unions Congressional Caucus, FHFA Acting Director Edward DeMarco said the agency’s “immediate priority” is a single, common platform, not a single government-sponsored enterprise security. “A cornerstone of what we are seeking to build is...

Banks and thrifts held a record $158.5 billion of non-mortgage ABS in their investment portfolios as of the midway point in 2012, according to a new Inside MBS & ABS ranking and analysis. The depository institutions increased their ABS holdings by 3.1 percent during the quarter, pushing them past the previous record of $154.9 billion at the end of 2009. Bank and thrift ABS holdings have jumped by 14.1 percent since the fourth quarter of 2011. The biggest chunk of bank ABS holdings is...[Includes one data chart]

The Federal Reserve’s plan to purchase an additional $40 billion in agency MBS per month, above and beyond the $25 billion to $30 billion the Fed has been buying, will primarily benefit the agency MBS sector but could also spur revitalization of the non-agency market, analysts say. The open-ended plan, in effect until the U.S. economy and employment picture show significant improvement, adds some $480 billion in annual demand for agency MBS, a market that is on track to produce about $1.5 trillion in gross issuance. “The pressure on asset values to richen further will be substantial,” said analysts at Bank of America/Merrill Lynch. The additional MBS purchases and ongoing principal investments will...

House Financial Services Committee member John Campbell, R-CA, last week introduced H.R. 6397, the Defending American Taxpayers From Abusive Government Takings Act, legislation that would prohibit the origination of taxpayer-guaranteed mortgages in jurisdictions of the country where the power of eminent domain would be used to seize mortgages. If Campbell’s legislation is enacted – which is unlikely in the few days remaining in the legislative calendar of the 112th Congress, but probably will be resurrected in the 113th – it could prove fatal to a controversial eminent domain mortgage seizure plan proposed in recent months by Mortgage Resolution Partners. MRP’s plan would involve...

Fannie Mae and Freddie Mac mortgages originated in five states that have unusually slow foreclosure timelines would be subject to an additional, upfront guaranty fee, according to a proposal unveiled late this week by the Federal Housing Finance Agency. If implemented, the Finance Agency’s proposal would target five states – Connecticut, Florida, Illinois, New Jersey and New York – for an additional, one-shot guaranty fee of between 15 and 30 basis points in 2013. “The size of the fee adjustments are intended to reflect the disparity in costs, as compared to the national average,” explained the FHFA.

Although all of Fannie Mae’s nearly 700 real estate-owned properties sold earlier this month as part of the Federal Housing Finance Agency’s first announced REO pilot transaction moved at near or above market value, a market analyst says it remains to be seen whether this deal is the shape of things to come. San Diego-based Pacifica Companies LLC was the winning bidder of 699 Fannie properties throughout Florida. The firm paid $12.3 million for a share in a joint venture with Fannie, resulting in an estimated transaction valuation to the GSE of $78.1 million or nearly 96 percent of the properties’ estimated value, according to the transaction summary.