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...
There’s more to federal regulators’ risk-retention proposed rule and qualified residential mortgage requirements than the 30 percent downpayment option that the industry has strongly pushed back against. Lenders are also concerned about proposed disclosure requirements, horizontal risk retention and sunset provisions for risk-retention requirements. In August, six federal regulators issued a revised proposed rule for risk-retention requirements mandated by the Dodd-Frank Act. Non-agency securities backed by mortgages that don’t meet QRM requirements will be subject to required risk retention of at least 5 percent by the issuer or contributing lenders. If regulators conform the definition for QRMs with the standards for qualified mortgages established by the Consumer Financial Protection Bureau, more than 95 percent of originations will meet...
Early Thursday, EverBank disclosed that it is selling $13.4 billion of Ginnie Mae servicing rights, while transferring $6.9 billion in subservicing to Walter Investment Management Corp.
The long-rumored sale of roughly $60 billion in mortgage servicing rights by Flagstar Bancorp is likely to get signed in the fourth quarter, but the bank continues to be coy about which investor it’s negotiating with. According to servicing advisors familiar with the transaction, Two Harbors Investment Corp. has been talking to the thrift about buying MSRs, but at press time it was unclear if the real estate investment trust is the winning bidder on the deal. Officials from both firms declined to comment. Flagstar, in a recent earnings call, confirmed...
Although Fannie Mae and Freddie Mac are working through the pile of potential repurchases related to pre-conservatorship loans, lenders remain concerned about buyback risk – even under the more lender-friendly policies that went into effect this year. “The representations and warranties framework we have in this industry absolutely does not work,” said Brian Fitzpatrick, president and CEO of LoanLogics, during a panel session at this week’s annual convention of the Mortgage Bankers Association. The new reps-and-warranties framework devised by the Federal Housing Finance Agency in January provides...
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