Community mortgage lenders called for an investigation of pricing practices of private mortgage insurers regarding their use of volume discounts and other incentives to get more business from lenders selling loans to Fannie Mae and Freddie Mac. In a letter to Federal Housing Finance Agency Director Mel Watt, the Community Home Lenders Association raised concerns about “pricing disparities” in lender-paid mortgage insurance based on lender size and volume. Such practices may involve better pricing offers to larger lenders or bidding out loan pools based on the percentage of discounts larger lenders get from their customary private MI pricing, the CHLA said. In addition, some private MIs offer special pricing to lenders that agree to do business exclusively with them – a type of proxy for volume discount. The group asked the FHFA, as the regulator of Fannie and Freddie, to investigate whether ...
Issuance of the government-sponsored enterprises’ credit-risk transfers has been growing consistently over the last five years, according to Suzanne Mistretta, senior director at Fitch Ratings.
Fannie disclosed the single-security “may adversely affect our financial results and contribute to declines in the liquidity or market value of our MBS.”
Packaging the loans into a non-agency MBS suggests that Flagstar expects better execution in the non-agency market than from delivering the mortgages to Fannie Mae or Freddie Mac.
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