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...
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