The ongoing growth of New Residential Mortgage resulted in an increase in concentration among the top servicers of single-family Fannie Mae and Freddie Mac loans in the fourth quarter.New Residential, a real estate investment trust that invests in mortgage servicing rights and related assets, has rocketed up the ranks of GSE servicers. After picking up its seller-servicer approvals in the third quarter of 2016, the company had amassed a $229.57 billion MSR portfolio by the end of last year.The REIT so far hasn’t invested in Ginnie Mae servicing. Its Fannie/Freddie holdings grew by 13.5 percent during the fourth quarter, enough to vault over Bank of America to become the third-largest investor in GSE MSR. New Residential pays subservicers to handle loan administration duties.
After years of being mum on what he thinks a reformed secondary mortgage market should look like, Federal Housing Finance Agency Director Mel Watt revealed FHFA’s goals for a post-conservatorship housing-finance system. Prompted by what Watt called “the growing perception that reform could be achievable this year,” he wrote to the Senate Committee on Banking, Housing and Urban Affairs on Jan. 16 outlining FHFA’s views on reform, which include an explicit government guarantee for mortgage-backed securities comprised of conventional home loans. According to the document, a copy of which was provided to Inside The GSEs, Watt and his staff reiterated that an ongoing conservatorship is not sustainable.
Craig Phillips, counselor to the secretary at the U.S. Department of Treasury, advocated for a legislative solution to the ongoing conservatorships of Fannie Mae and Freddie Mac. He said the decision to allow the GSEs to retain a small capital buffer was a litmus test on housing reform. Although he said Treasury didn’t feel that Fannie and Freddie have an immediate capital problem because they have lines of credit, Phillips said there was somewhat of an “optical issue,” which led to the Treasury’s decision to allow the GSEs to retain up to $3 billion in capital in December. Speaking at a Women in Housing and Finance public policy luncheon in Washington, he said, “We think that decreases tension over this point. There was...
The stars are aligning for housing-finance reform, according to an analysis by K&L Gates. The law firm said it believes that reform may finally be addressed in the first half of this year. Sens. Bob Corker, R-TN, and Mark Warner, D-VA, have been circulating a draft proposal to other senators and the Trump administration. The firm noted that the Corker-Warner proposal contains features such as a federal government guarantee for mortgage-backed securities in the event of catastrophic losses, and it has the GSEs continuing to exist under government conservatorship until competitors enter into the securitization market for mortgage loans.
Fannie Mae and Freddie Mac issued new GSE rescission relief principles to mortgage insurers this week that are designed to align better with the current representation-and-warranty framework.Early last year, the Federal Housing Finance Agency suggested that private MIs work on aligning their buyback and rescission guidelines with the mortgage giants. The new principles will add clarity, incorporate new features and allow for more rescission relief without increasing risk to the GSEs’ most significant counterparties, according to the announcement by the Federal Housing Finance Agency. This year, the mortgage insurers will revise their master policies to reflect the new principles and obtain the required approvals...
Issues related to mortgage servicing, including the rising costs to service mortgages today, should be included in talk of housing-finance reform, according to a new paper by the Urban Institute. Since the housing downturn, mortgage servicing costs have risen dramatically, which has reduced access to credit and forced some depository institutions to leave the market. The UI said that the foreclosure crisis in 2007 upended the pre-crisis servicing model. And despite its importance, the report said, mortgage servicing is frequently overlooked in major policy conversations. “That is a mistake. The servicing industry has changed dramatically since the 2008 mortgage default and foreclosure crisis and subsequent Great Recession,” said the paper.
Freddie Mac set a new company record for multifamily lending last year by financing $73.2 billion in loan purchase and guarantee volume. That’s a noteworthy 30 percent increase from the $56.8 billion financed in the previous year and translates to 820,000 units. Freddie attributes the growth to a host of new offerings and executions. The GSE set records in small-balance loans, targeted affordable housing and its Green Advantage businesses. “The strength of our innovative products, underwriting and world-class securities brings liquidity to every corner of the multifamily market,” said David Brickman, Freddie’s executive vice president and head of multifamily.
The GSEs have been purchasing more adjustable-rate mortgages in the past year and the Federal Housing Finance Agency Office of Inspector General said that warrants monitoring. Since November 2016, the GSEs’ purchase of ARMs has grown. The numbers are far lower than the volume of ARMs purchased during the housing bubble in the early 2000’s, a new IG white paper noted. The ARM share of single-family mortgage purchases by the GSEs dropped from around 20 percent in 2006 to 12 percent in 2007. And by 2009, ARM purchases by Fannie and Freddie tumbled to just 2.3 percent of their single-family business. From 2007 to 2010, the GSEs tightened restrictions on their purchase of ARMs, including those with nontraditional features and layered risk.
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