Investors are beginning to show renewed interest in buying servicing rights collateralized by Fannie Mae and Freddie Mac loans, in particular “flow” transactions where the product is delivered in the future on a monthly basis. Moreover, there is even talk in the market that some of the megabanks may return as active buyers now that they’ve figured out their capital exposure under the Basel III capital rules. Basel caps mortgage servicing rights at 10 percent of Tier I capital, but some large “flow” buyers of yesteryear – including Wells Fargo – are under the limit and could have room to grow. Phase in of the Basel rule began last year. “We see a day when banks are active buyers again,” said Mark ...
Despite heavy volume in new single-family business in recent years, there has been little growth in the outstanding volume of Fannie Mae and Freddie Mac servicing. GSE single-family servicing peaked at $4.794 trillion back in 2009. Up until 2014, refinance activity accounted for over 70 percent of Fannie/Freddie new business; there was a lot of churning in GSE servicing rights but a net decline in outstanding volume. The rebound in purchase-mortgage lending last year began to turn that around. A new Inside The GSEs analysis of Fannie and Freddie mortgage-backed securities disclosures shows total single-family servicing grew modestly in both the third and fourth quarters of 2014. The analysis shows a total of $3.956 trillion of single-family servicing at the ...
Three pools of seriously delinquent mortgages with a total unpaid principal balance of $410 million will be auctioned off by Freddie Mac. The delinquent pools, with unpaid principal balances of $160 million, $141 million and $109 million, will be offered through Mission Capital Advisors, the broker in the deal, according to a Bloomberg report. Competitive bidding will end on Feb. 4. A large chunk of the loans are two years past due, the report noted. Freddie spokesman Tom Fitzgerald declined to provide further details, saying information at this stage of the deal is provided solely to prospective bidders. He said details on the results will be provided after auction. The transaction is the second of such sales for Freddie in ...
Two other servicing packages hit the market the past few days, including a seasoned $276 million Ginnie Mae portfolio from Interactive Mortgage Advisors.
The recent dip in interest rates has sellers of mortgage servicing rights questioning whether they should sell into a market of weakening prices or hang on until values firm up. As always, the answer depends on what type of servicing rights a seller is looking to unload in a market where the yield on the benchmark 10-year Treasury is once again nearing its low for the year. With rates low on current production, prices are...
Sales of mortgage servicing rights by big banks will continue to be driven by the desire to reduce the handling of delinquent mortgages – not by Basel III capital requirements, according to analysts at Moody’s Investors Service. Nonbank servicers that have grown in recent years often cite Basel capital requirements as a significant factor in bank sales of MSRs. Warren Kornfeld, a senior vice president at Moody’s, noted that Bank of America, Citigroup and JPMorgan Chase were active sellers of MSRs in recent years. “We believe the sales were primarily motivated by their desire to reduce credit-impaired servicing volume,” he said. Under Basel III, banks face...
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