Walter, the parent of Ditech Financial, said it expects to “acknowledge receipt” of the compliance violation and “notify the NYSE of its intention to seek to cure the deficiency…”
Fannie Mae and Freddie Mac issued $189.70 billion of single-family mortgage-backed securities during the second quarter of 2017, a 13.1 percent drop from the first three months of the year. A new ranking and analysis by Inside The GSEs reveals that much of the decline resulted from a slowdown among large banks and thrifts. The four banks with over $1 trillion in assets delivered just $43.23 billion of home loans into Fannie/Freddie MBS during the second quarter. That was down 29.1 percent from the previous period, knocking the group’s combined market share down from 27.9 percent in the first quarter to 22.8 percent.
With GSE reform moving up the priority list in the minds of lawmakers and industry executives, Federal Reserve Governor Jay Powell joined the conversation last week and said it’s time to act now before it’s too late. Following the Senate Banking, Housing and Urban Affairs Committee hearing on GSE reform, Powell spoke at the American Enterprise Institute and urged lawmakers to come up with a solution while the economy is healthy. He worries that if reform doesn’t happen soon, the status quo will become comfortable. Moreover, Powell said any change would be more challenging to enact during difficult economic times.
Industry groups lauded the GSEs’ efforts to increase funding for underserved markets but recommend they add more specific activities focused on increasing loan purchases and speeding up the process. In May, Fannie Mae and Freddie Mac released draft proposals on ways to grow financing for specific underserved markets under the Federal Housing Finance Agency’s duty-to-serve requirements. Those markets include manufactured housing, rural housing and preserving affordable housing for low- and moderate-income households. The National Low Income Housing Coalition said while the plans demonstrate the GSEs’ commitment to increase their impact in underserved markets, they focus largely on scoring and technical compliance.
Pricing disparity between the GSEs has almost disappeared since single-security efforts began, according to a new paper by the Urban Institute. The authors called the progress on the initiative an “unheralded success” in a paper released this week. In 2012 and 2013, Freddie’s 3, 3.5, and 4 percent coupons traded at more than a $0.30 discount to Fannie Mae’s. That number narrowed to about $0.15 in 2014 and 2015 and by early 2017 it had largely converged, said the UI. “Interestingly, the pricing disparity has all but disappeared since the single-security effort began,” said Laurie Goodman, Jim Parrott and Bing Bai, authors of the study.
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