In a recent conference call, Fairholme Capital Management founder and Chief Investment Officer Bruce Berkowitz stood his ground regarding the firm’s investment in Fannie Mae and Freddie Mac junior preferred shares, believing that the bet will pay off in time. He made it clear that Fairholme, at this time, has no plans to sell its stake, which the firm has valued at roughly $115.7 million. But Berkowitz also made it clear he sees little chance of GSE reform passing any time soon, and he anticipates that Federal Housing Finance Agency Director Mel Watt will not permit the Fannie/Freddie capital position to fall to zero in early 2018.
The banking industry reported a widespread increase in net income from mortgage-banking activities during the second quarter of 2017, according to an exclusive Inside Mortgage Trends analysis of earnings reports from publicly traded companies. All 25 companies in the roundup reported positive mortgage-banking results for the most recent quarter, which saw increased production volume and stable mortgage interest rates. As a group, they earned $2.673 billion from ... [Includes one data chart]
Fannie Mae says it expects “a slight increase” in the share of its single-family business that has higher debt-to-income ratios as a result of a tweak to the company’s Desktop Underwriter system. The government-sponsored enterprise generally limits DTI ratios to 45 percent. Under the previous version of DU, applications with debt ratios up to 50 percent could be approved if there were compensating factors, such as a loan-to-value ratio below 80 percent or at least 12 months of ...
The common securitization platform, if expanded to allow other users, could become a centerpiece for housing finance reform. That’s the view of Jim Parrott, a fellow at the Urban Institute and former White House senior advisor at the National Economic Council under the Obama administration. Converting the CSP to a government or government-like utility open to issuance by other guarantors could help end the Fannie Mae and Freddie Mac duopoly by reducing barriers for new entrants. Parrott added that examining which functions the GSEs currently provide that could be moved to the CSP to help level the playing field for more competition would be ideal.
Smaller banks are outpacing bigger institutions in terms of on-balance sheet growth in mortgage originations, according to an analysis by an economist at the Federal Reserve. The trend appears to be driven by lingering issues associated with the financial crisis along with regulations that increased capital requirements for large banks. Cindy Vojtech, a senior economist at the Fed, measured the volume of mortgages and other loan types being held in portfolio by 372 banks, including ...
The Pacific Investment Management Company believes the private mortgage market should be revived before comprehensive GSE reform. In a paper published last week, the investment management firm weighed in on the debate to reform Fannie Mae and Freddie Mac. It noted that a few small legislative changes would make a huge difference in bringing private capital back to the housing-finance market. Growth in the housing market will come if policymakers are willing to modify existing laws and regulations governing the private mortgage market, according to PIMCO. The company said that would bring back responsible mortgage lending while boosting economic growth and providing more access to credit.
Consumer demand for credit to refinance appears to be in decline, and some of that may be due to borrowers sensing they cannot qualify, findings from the latest survey of consumer expectations by the New York Federal Reserve Bank suggest. The survey was based on data from the mid-year 2016 mark through June of 2017, and it was benchmarked to a previous survey conducted in February. When it comes to consumer behavior, the data show that demand for credit ...
Low interest rates on mortgages continue to make home purchases attractive but many potential borrowers have been prevented from buying a home. Economists at Freddie Mac said a number of factors are making home purchases look unaffordable to potential buyers, even though affordability is at near-record levels. The Housing Affordability Index developed by the National Association of Realtors tracks the ratio of median family income required to qualify for a conventional mortgage ...
Mortgage principal reductions that left short-term payments unchanged had no effect on default or consumption for underwater borrowers, according to a new study from the Harvard Joint Center for Housing. Authors Peter Ganong and Pascal Noel believe the findings are significant in the design of loan modification programs – a key question for policymakers in their attempt to help struggling borrowers remain in their homes. The policy debate hinged on the effect of long-term debt ...
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