In preparation for the launch of the uniform-mortgage backed security in 2019, Freddie Mac will release new single-security-related disclosures for investors beginning on Aug. 28. The UMBS was originally scheduled to launch next year but was delayed to allow more time for development, testing and validation of controls. The disclosures are in conjunction with the single-security initiative, designed to increase liquidity and fungibility in the $3.5 trillion to-be-announced MBS market. Mark Hanson, Freddie’s senior vice president of securitization, called the launch a “successful joint effort among several parties that will enhance the U.S. mortgage industry by modernizing the TBA market for both Freddie Mac and Fannie Mae.”
The Federal Housing Finance Agency Office of Inspector General said the FHFA’s suspended counterparty program needs better oversight. In a recent audit of counterparty risk, the IG found deficiencies in the FHFA’s Office of General Counsel review of suspended counterparties. Suspended counterparties are businesses that have engaged in misconduct. The suspended counterparty risk management programs were designed to manage counterparty risk through various means that include maintaining eligibility standards, evaluating counterparties’ financial conditions, monitoring exposure to potential losses, and working with counterparties to limit realized losses. Fannie Mae, Freddie Mac and the Federal Home Loan Banks can also chose to cease doing business with counterparties that appear to have unacceptable risks.
Real estate investment trusts that focus on the residential MBS market reported a modest increase in their portfolios during the second quarter of 2017. The 15 mortgage REITs tracked by Inside MBS & ABS held a combined $233.34 billion of residential MBS at the end of June. That was up 1.4 percent from the end of the first quarter, though down 2.9 percent from the midway point in 2016. Ten of the REITs reported...[Includes one data table]
Fannie Mae and Freddie Mac continued to lean heavily on their structured debt programs to meet credit-risk transfer goals originally set by their regulator that have become key features in their business strategies. The two government-sponsored enterprises issued $4.48 billion of credit-risk transfer debt during the second quarter, a modest 5.8 percent increase from the first three months of the year. Overall MBS issuance by the two GSEs was down during that period, but their CRT debt issuances are typically linked to MBS issued six months prior. Fannie’s Connecticut Avenue Securities program produced...[Includes one data table]
The clock is ticking on the phrase-out of the London Interbank Offered Rate, or LIBOR, a benchmark the mortgage market has relied on for the past few decades. Now comes the debate: is it something to worry about or no big deal? A new report from Bank of America Merrill Lynch suggests that when it comes to MBS at least, the changes will be felt, depending on the sector. “Certain agency MBS cash flows will be impacted directly,” BAML notes. “For example, underlying cash flows on LIBOR-indexed hybrid ARMs may change if an alternate index is chosen.” The researchers noted...
The transition from a market hot with refinances to a more traditional purchase market has made the industry ripe for new and old mortgage fraud schemes, according to CoreLogic. The company’s National Fraud Risk Index reached 133 in the second quarter, a slight uptick from the first quarter, but it represents the highest it’s been since the index was introduced in 2010. That number was 122 in the fourth quarter of last year. With all of the moving parts and players involved in a purchase transaction versus a refinance, CoreLogic said, there are...
Investors in certain residential MBS transactions backed by defaulted mortgages in the run-up to the financial crisis are a step closer to being made whole, more than four years after the Securities and Exchange Commission announced a settlement with JPMorgan Securities, Bear Stearns and some affiliates over allegations they misled investors and mishandled bulk settlement proceeds. The case involved is Securities and Exchange Commission v. J. P. Morgan Securities LLC, EMC Mortgage, LLC, Bear Stearns Asset Backed Securities I, LLC, Structured Asset Mortgage Investments II, Inc., SACO I, Inc., and J. P. Morgan Acceptance Corporation I, Case No. 12-CV-1862 (RLW). In November 2012, the SEC filed...
This year, nonprime production across the U.S. might top $3 billion to $4 billion at best. At its peak last decade, it was a $1 trillion a year business. That’s not a misprint…
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