Some in the industry believe the GSE common shares are essentially worthless with the junior preferred falling into the category of being a speculative bet.
Industry observers like Tim Howard, a former Fannie CFO, said that while reducing the corporate tax rate would lower the taxes the GSEs pay in the long run, it would drain the value of their DTAs in the short term.
FHFA Testifies in Housing Finance Committee Hearing Next Week. On May 11, there will be a full U.S. Senate Committee on Banking, Housing, and Urban Affairs hearing with Mel Watt as witness, on “The Status of the Housing Finance System After Nine Years of Conservatorship” at 10 a.m. Freddie Prices Fifth Small Balance Loan Securitization. Late this week Freddie Mac announced the pricing of the SB30 offering, a multifamily mortgage-backed securitization backed by small balance loans underwritten by Freddie and issued by a third-party trust. The company expects to guarantee approximately $276.2 million in Multifamily SB Certificates (SB30 Certificates), which are anticipated to settle on or about May 15.
Fannie Mae introduced a few changes to its LoanSphere Invoicing system that went into effect at the end of April. Servicers use LoanSphere to submit qualified expenses associated with Fannie loans to be reimbursed. Among the updates are specific changes to the form’s line items that were designed to make submitting invoices easier. For instance, prior to the change, when creating a claim, servicers could select previously invoiced line items and add them to the claim if the line item is a Fannie-designated claim line item. However, the enhancement includes a new screen which enables servicer administrators to map invoice line items to a Fannie designated claim line item.
In the latest proposal for GSE reform, the Independent Community Bankers of America released a white paper last week that promotes letting the GSEs rebuild their capital buffers. The ICBA plan dovetails with the Community Home Lenders Association’s recent proposal that also recommends allowing the GSEs to build capital. The plan suggests ending the Treasury sweep, establishing capital-restoration plans, and delaying the launch of the uniform mortgage-backed security until the GSEs are recapitalized and released from conservatorship. Moreover, the ICBA wants Congress to create a catastrophic mortgage insurance fund for GSE securities and change Fannie Mae and Freddie Mac to regulated and shareholder-owned financial utilities.
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