Home prices are improving at a rapid pace throughout the nation, sparking bidding wars in certain markets, according to several different indices. But this rise in “home equity” is also spurring talk that the two largest players in residential finance – Fannie Mae and Freddie Mac – could be sitting on large unrealized gains in both their MBS and whole loan portfolios. One veteran MBS investor told Inside MBS & ABS that home values have improved so much over the past 120 days that the government-sponsored enterprises may be looking at “monster” increases in the value of their holdings. “Keep in mind that these two are sitting on loans where a year ago the loan-to-value ratio was 115 percent,” said this investor. “But most of this stuff isn’t underwater anymore. If [the GSEs] re-calculate their reserves, they will see some huge gains.” In its 10-Q filing for the first quarter, Fannie reported...
A Senate bill filed last week by a Georgia Republican would wind down Fannie Mae and Freddie Mac and create a transitional mortgage program that would be sold to the private sector within a decade of the proposed legislation’s enactment. The Mortgage Finance Act of 2013, S. 1048, by Sen. Johnny Isakson, R-GA, reprises his proposed legislation of the same name from 2011. The bill would replace the two government-sponsored enterprises with a single Mortgage Finance Agency. The MFA created under S. 1048 would be...
According to industry sources, the FHA recently sent out administrative letters to a handful of residential lenders. Meanwhile, yet another new subprime originator has emerged.
Origination trends for non-agency jumbo mortgages were stronger than total mortgage originations in the first quarter of 2013, according to a new ranking by affiliated publication Inside Mortgage Finance. Lenders increasingly see jumbos as an attractive product and a number of smaller players are entering the market or growing their originations. An estimated $54.0 billion in non-agency jumbos were originated in the first quarter of 2013, down 1.8 percent from the previous quarter ... [Includes one data chart]
The new non-agency jumbo mortgage-backed security from JPMorgan Chase has been described as both encouraging and puzzling by non-agency participants. The $442.54 million non-agency MBS shows that Chase thinks the non-agency securities market – largely the domain of nonbanks since 2010 – is strong enough for the bank to issue its second jumbo security this year. Non-agency MBS participants have welcomed the competition, noting that activity from a big bank such as Chase could prompt greater ...
An increase of 10 basis points in the guaranty fees charged by the government-sponsored enterprises would make pricing for agency execution comparable to pricing for non-agency mortgage-backed security issuance, according to industry analysts. Agency g-fees averaged about 50 bps at the end of 2012, with plans for further increases this year. “The economics of non-agency securitization are much closer to GSE securitizations today than they were two years ago,” according to analysts at Barclays Capital ...
Stonegate Mortgage has plans to compete with banks for non-agency jumbo originations and warehouse lending. The company announced recently that it raised $115 million in a private offering of its stock, with plans for the proceeds largely tied to jumbos. “We intend to grow our originations and servicing portfolio by expanding to all 48 contiguous states by year-end,” said Jim Cutillo, Stonegate’s CEO. “We also recently launched a non-agency jumbo loan program and an integrated warehouse ...
The Obama administration extended the deadline to apply for the Home Affordable Modification Program and related loss mitigation program through the end of 2015. The programs under the Making Home Affordable Program were scheduled to expire at the end of this year. HAMP has seen somewhat limited activity among non-agency servicers, even with incentive payments for principal forgiveness. Some $22.7 billion in Troubled Asset Relief Program funds are targeted for non-agency HAMP activity ... [Includes one data chart]
The Consumer Financial Protection Bureau issued a final rule this week creating a fourth category of “qualified mortgages,” expanding on exemptions for small portfolio lenders. Certain small lenders will be allowed to receive QM protections for originations with interest rates higher than allowed for general QMs and the loans won’t have to meet the 43 percent debt-to-income ratio standard. The CFPB said the exemption will allow for originations of non-agency mortgages. “The bureau continues to believe that ...
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