Fannie Mae’s and Freddie Mac’s multifamily businesses hold “little inherent value” and would be less viable absent the government guarantees the two government-sponsored enterprises currently enjoy, according to the Federal Housing Finance Agency. In a new report, the agency also noted that the sale of the GSEs’ multifamily businesses would yield “little or no value” to the U.S. Treasury or to taxpayers, while at the same time it could be a huge disruption to the commercial real estate markets. “The new ‘stand-alone’ businesses would primarily depend...

The retained mortgage portfolios of Fannie Mae and Freddie Mac continued to decline through natural attrition during the first quarter of 2013, falling by 4.9 percent from the previous quarter, according to an Inside MBS & ABS analysis of earnings reports released by the two government-sponsored enterprises this week. Fannie and Freddie held $1.13 trillion in mortgage assets as of the end of March. With heavy refinance activity, the rate of decline in early 2013 was faster than it had been; GSE holdings were down 13.6 percent from year-ago levels. There was...[Included one data chart]

As default rates on vintage non-agency MBS have improved, performance and investor proceeds this year will largely be based on servicers’ actions, according to Standard & Poor’s. Loss mitigation, work-out timelines and other servicer behaviors are of particular concern for investors. S&P said its outlook for performance of vintage non-agency MBS is stable. Feedback from servicers indicates that the number of new loan modifications on mortgages in non-agency MBS this year will be near levels seen last year and well below activity in 2010. Instead of quantity, S&P said, servicers have focused on quality. “It appears...

Ginnie Mae officials have moved beyond whether they should consolidate the agency’s two MBS programs to how they should do it, but it remains much less certain that similar proposals to restructure the Fannie/Freddie market will take root. The newer Ginnie II MBS program has become significantly more popular than the original Ginnie I security, both in terms of new issuance and the outstanding supply of securities. Speaking at the Mortgage Bankers Association secondary market conference in New York this week, Ginnie President Ted Tozer said...

Private mortgage insurers lost a little collective market share to the FHA and VA during the first quarter, although that may have been simply a timing distortion, according to a new market analysis and ranking by Inside Mortgage Finance. The more groundbreaking news is that the surviving private MIs, as a group, probably turned a profit during the first quarter of 2013. The four publicly traded companies reported a combined loss on their domestic MI business of just $14.6 million during the first quarter of 2013. Essent Guaranty, the fifth-largest MI in terms of new business, is...

Lenders, already facing the legal risks due to the Consumer Financial Protection Bureau’s ability-to-repay rule, may face further problems trying to make sure loans originated for sale to Fannie Mae and Freddie Mac can actually be delivered to the government-sponsored enterprises. The Federal Housing Finance Agency this week said the GSEs will be prohibited from buying anything other than qualified mortgages, as that term is defined by the ATR rule. The directive rules out interest-only loans – Fannie has purchased a smattering of these loans but Freddie shut down its IO program a while ago – and mortgages with terms exceeding 30 years, a product neither GSE buys. The troublemaker in the policy is...

Expanding Fannie Mae’s and Freddie Mac’s loan modification policy to include principal forgiveness under the Home Affordable Modification Program would generate fewer than 60,000 additional modifications and avoid up to 100,000 defaults, according to the Congressional Budget Office. The Congressional numbers-cruncher concluded that reaching additional borrowers “would require a significant departure” from HAMP’s current eligibility rules. In 2010, the Treasury Department expanded...

Fannie Mae and Freddie Mac this week reported a combined $63.3 billion in net income during the first quarter of 2013, which represents a huge dividend to taxpayers on the total $189.4 billion capital infusion they received since going into conservatorship. Together, the two government-sponsored enterprises will have paid $131.6 billion to the Treasury by the end of the second quarter, when the government “sweep” of excess net worth takes place. Under the terms of their bailout, the GSEs never pay down their Treasury draws, regardless of how much they pay in preferred stock dividends or net-worth sweeps. But Fannie and Freddie are...

New York Attorney General Eric Schneiderman announced this week that he plans to file lawsuits against Bank of America and Wells Fargo for failing to comply with servicing standards included in the $25 billion national servicing settlement. Other states appear likely to join the action, though the litigation might not have much of an impact on the servicers, according to industry analysts. “My office has received a significant number of complaints regarding the flagrant violations by Bank of America and Wells Fargo of the loan modification timeline requirements contained in [the settlement],” Schneiderman said in a letter to the committee monitoring the settlement. BofA and Wells, along with Ally Financial, Citigroup and JPMorgan Chase, have had to comply...

The three percent points-and-fees cap for qualified mortgages under the Consumer Financial Protection Bureau’s ability-to-repay rule is likely to push the private mortgage insurance industry away from products that emphasize upfront premiums and towards products built on monthly premiums. As the rule stands now, borrower-paid, non-refundable upfront MI premiums would be included in the points-and-fee calculation, but borrower-paid monthly MI premiums would not. There are two caveats: lenders may also exclude...