Freddie Mac has begun talking with the Internal Revenue Service and the Securities and Exchange Commission about issues that are likely to crop up as the two government-sponsored enterprises implement the new Single Security, according to a summary of the most recent meeting of the Industry Advisory Group in December. One issue is the tax treatment of compensation that MBS investors receive for converting legacy Freddie participation certificates for the new uniform MBS, which will have a longer payment delay. “Although it is not definitive, we believe the IRS will ultimately view the float compensation as well as any incentive payment that is paid as part of the exchanges as taxable income when received,” the meeting summary states. Freddie provided...
International Value Advisors recently cut its stake in Annaly Capital Management – the nation’s largest mortgage real estate investment trust – by roughly half, a development that could be repeated by other investors as rising rates cause new concerns about MBS prices. At year-end, International owned 4.55 percent of Annaly compared to 9.60 percent a year earlier. Annaly’s largest investment is in agency MBS, of which it owned $73.5 billion at Sept. 30. The publicly traded REIT is...
As a number of shareholder lawsuits against Fannie Mae and Freddie Mac hang in the balance, a new administration offers reasons for some to be optimistic on the cases coming to a close and the Treasury’s sweep of the government-sponsored enterprises’ profits coming to an end. During a Jan. 18 call hosted by Investors Unite, legal experts weighed in on the outlook for GSE shareholder cases just days before the inauguration. Plaintiffs have been arguing that a government bailout of the GSEs and the subsequent Treasury sweep was unnecessary and illegal. “As GSE shareholders, we are...
As one former GSE stock analyst told us: “There’s no way they can be privatized. To maintain an AAA rating they would need 25 percent (I’m guessing) capital to assets. Even at 5 percent there is not enough spread to earn a market return on capital.”
A significant number of borrowers with subprime mortgages originated in 2002 and beyond are prime targets for refinances, according to analysts at Black Knight Financial Services. More than 600,000 subprime mortgages are currently performing, according to Wesley Winter, a senior modeler at Black Knight. He said that while all of the borrowers aren’t necessarily attractive targets for refinances, there’s $10.0 billion to $25.0 billion in potential refi opportunities involving ...
NewLeaf Wholesale recently added four products to its “specialty” mortgage offerings with relatively lenient underwriting standards. The loans are aimed at borrowers who don’t qualify for conforming mortgages. The lender is now offering a jumbo mortgage that allows loan-to-value ratios up to 90.0 percent without private mortgage insurance, a residual-income product, an asset-depletion product and a product for foreign investors. The loans join NewLeaf’s other specialty products ...
Shared-equity mortgage arrangements from for-profit investors offer help for borrowers that otherwise might not qualify for a mortgage while also introducing risks, according to analysts at the Urban Institute’s Housing Finance Policy Center. In a shared-equity transaction, a third party helps a mortgage borrower purchase a home in exchange for some of the home-price appreciation. The HFPC noted that shared-equity transactions reduce the amount of money required from ...
Lenders interviewed by Inside Mortgage Finance were disappointed with the news that the MIP reduction would be scuttled, though some factions of the housing industry remain optimistic.
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