“A significant reduction in the corporate tax rate would result in a significant net loss, and that could result in a loss for the year,” said Fannie CEO Timothy Mayopoulos…

Tax reform legislation from Republicans in Congress could have an outsized impact on borrowers who take out jumbo mortgages, according to industry analysts. The tax reform in the House detailed last week would reduce the amount of debt eligible for the mortgage interest deduction and would limit deductions of state income taxes and property taxes. For new home purchases, the revised MID would only apply up to $500,000 in debt, down from a current cap of $1.0 million ...

Originations of higher-priced mortgages increased significantly in 2016 compared with the previous year, according to an analysis by Inside Nonconforming Markets of data from the Home Mortgage Disclosure Act. The analysis excluded government-insured mortgages, multifamily loans and home-improvement loans. Some $28.61 billion of non-government-insured higher-priced mortgages were originated in 2016, up 28.9 percent from the previous year ... [Includes one data chart]

Members of the House who are drafting housing-finance reform legislation are tackling a number of issues that impact the non-agency market. At a hearing last week by the House Financial Services Subcommittee on Housing and Insurance, Chairman Sean Duffy, R-WI, said the panel’s recent hearings were aimed at getting feedback for a new legislative proposal. Duffy also stressed that the effort should be bipartisan. “I believe that if we’re going to be successful not just in ...

Freddie Mac significantly reduced its holdings of nonprime mortgage-backed securities in the third quarter, according to an analysis by Inside Nonconforming Markets. Freddie held $5.14 billion of nonprime MBS as of the end of September, down 52.2 percent from June. The government-sponsored enterprise sold approximately $5.00 billion of its non-agency MBS holdings during the quarter, according to filings with the Securities and Exchange Commission ... [Includes one data chart]

A proposal in the House Republican tax reform bill significantly lowering the corporate tax rate, at first glance, may seem to put mortgage real estate investment trusts at a competitive disadvantage with non-REITs. However, the disparity would remain beneficial for REITs, according to tax experts.

The special qualified-mortgage treatment for home loans eligible for sale to the government-sponsored enterprises is getting more attention lately as some say that it gives Fannie Mae and Freddie Mac an unfair advantage.

Correspondent-based lending operations are accounting for a growing share of the FHA and VA home loans pooled in Ginnie Mae mortgage-backed securities, according to a new analysis and ranking by Inside FHA/VA Lending. In fact, correspondent originations are the only production channel to see year-over-year growth in FHA and VA business through the first nine months of 2017. Retail and wholesale-broker production is down for both FHA and VA loans. Correspondent programs are most dominant in the FHA market, perhaps reflecting a preference among large producers to have recourse to a primary-market lender if the government later finds defects in how the loan was originated. Correspondents accounted for 48.7 percent of FHA loans pooled in Ginnie MBS during the first nine months of the year, up from 43.1 percent in all of 2016. Volume was up 1.7 percent from the ... [Charts]

Analysts are predicting continued positive results in the forthcoming actuarial report to Congress on the status of the FHA Mutual Mortgage Insurance Fund. The FY 2017 annual report is expected to show stable FHA financials, which could prompt renewed industry calls for a cut to the annual mortgage insurance premium, according to a Bank of America Merrill Lynch analysis. Rising home prices and loan-to-value curing are likely to suppress forecasted losses in the MMIF’s single-family forward portfolio, enabling the fund to stay above its mandated 2.0 percent capital reserve ratio, analysts said. However, the BAML analysts see a “low likelihood of an actual cut in MIPs.” Although Department of Housing and UrbanDevelopment Secretary Ben Carson said he would study MIP reduction once a new FHA commissioner is confirmed, the Trump administration is less likely to ...

A new net tangible benefit test for ensuring that a VA borrower benefits from a refinancing appears to be the obvious solution to the VA’s churning problem, according to analysts at Bank of America Merrill Lynch (BAML). Modeled after the FHA net tangible benefit test, the test seems to be a “foregone conclusion” for VA, analysts said. A Ginnie Mae/VA task force is currently working to resolve the problem, which is causing rapid prepayments in Ginnie mortgage-backed securities and raising serious doubts as to whether aggressive refinancing truly benefits veterans and servicemembers. “There is a critical need to ensure that veteran borrowers are not harmed by repeated refinancings through VA’s Interest Rate Reduction Refinance Loan program,” said Mortgage Bankers Association President/CEO David Stevens during a recent appearance before the House Financial Services Committee. IRRRLs, also referred to ...