New documents were recently unsealed in Fairholme Funds vs. United States that give GSE shareholders more hope in proving the Treasury sweep was designed with an ulterior motive in mind.“The release of these documents is a very positive development in the case against Fannie [Mae] and Freddie [Mac]. These documents fatally undermine the government’s claim,” said Pete Patterson, a partner with the Cooper & Kirk law firm representing the plaintiffs. Officials from Treasury have repeatedly said that the sweep was designed to prevent the two mortgage giants from collapsing. But the latest batch of 33 confidential emails and memos released under court order appears to illustrate otherwise.
Fannie Mae’s announcement in May that it will raise the debt-to-income cap from 45 to 50 percent is a win for expanding access to credit, especially for minority families, says a recent report by the Urban Institute.UI anticipates that as many as 95,000 new mortgages could be approved annually. With African-American and Latino families more likely to have DTI ratios above 45 percent, the authors of the paper note that a large share of the new loans will likely be to those families. Prior to the change, Fannie allowed for flexibility up to 50 percent DTI in certain cases.
Participants in the low-income housing tax credit program said the re-entry of Fannie Mae and Freddie Mac into the market should not be limited to rural communities. The two GSEs were directed to stop investing in the tax credits in 2008 when they were placed under conservatorship. But a final rule issued by the Federal Housing Finance Agency in December, under its duty-to-serve requirement, determined that if the GSEs re-enter the LIHTC market, they should only be able do so in targeted areas. In May, the GSEs released draft proposals on ways to grow financing for specific underserved markets under DTS, which include rural housing, along with manufactured housing and preserving affordable housing for low- and moderate-income, households.
Fannie Prices $1.4B CAS Deal. In the GSE’s fifth credit risk-sharing transaction of the year under its popular Connecticut Avenue Securities program, Fannie Mae announced a $1.351 billion offering last week. The CAS program, launched in 2013, has been steadily growing, according to Laurel Davis, Fannie’s vice president of credit risk transfers. She noted that buyers are attracted to the program’s liquidity and transparency. This latest reference pool includes more than 174,000 single-family mortgage loans with an outstanding principal balance of about $43.8 billion.Original loan-to-value ratios are between 60 and 80 percent with the loans having been acquired between...
New issuance of MBS backed by income-property mortgages during the second quarter rebounded from a lull in early 2017, according to a new analysis by Inside MBS & ABS. A total of $51.03 billion of commercial mortgages were securitized in the second quarter, a gain of 12.1 percent from the first three months of 2017. That brought year-to-date commercial MBS issuance to $96.54 billion, 12.4 percent ahead of the pace set in 2016. But CMBS production was...[Includes one data table]
Fannie Mae and Freddie Mac shareholders claimed that recently unsealed government documents support their contention that the main goal of the Treasury Department’s quarterly sweep of the government-sponsored enterprises’ earnings was to keep the two GSEs in conservatorship. Officials from Treasury have consistently said that the sweep was designed to prevent the two mortgage giants from collapsing. But the latest batch of 33 confidential emails and memos released under court order in the case of Fairholme Funds vs. United States seems to illustrate otherwise. The documents were unsealed...
Loans collateralized by multifamily properties experienced the biggest increase in the delinquency rate among commercial property types during the month of June, rising 133 basis points to 4.10 percent, according to a new CMBS report from Moody’s Investors Service. But it may not be as bad, sector-wise, as it appears at first glance. “The difference was due mainly to two newly delinquent loans, both multifamily portfolios in the MLMT 2007-C1 transaction,” explained Kevin Fagan, a vice president and senior analyst with the ratings service. “Assuming these loans were current, the multifamily delinquency rate for June would be 2.57 percent.” Delinquency rates increased...
JPMorgan launched a new index this week aimed at connecting with clients looking to invest in Fannie Mae, Freddie Mac and Ginnie Mae MBS. The company said it is the first institutional agency mortgage index built on individual security valuations. The index, referred to as MAX, is billed as a “contemporary and comprehensive” benchmark of the agency MBS market. It combines 30-year, 15-year and 20-year MBS in an index that the bank says contains more than 400 aggregates that cover almost 85 percent of the agency market. And because it updates from the sixth business day of the month instead of the 15th, as most other indices do, JPMorgan said the MAX reduces a number of tracking errors. “Agency MBS is...
Wells Fargo remained the top producer of first-lien mortgages with a hefty 27.1 percent increase from the first quarter, gaining ground on all of its nearest competitors.
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