Fannie Mae and Freddie Mac are encouraging MBS market participants to begin planning how they will adapt to the new uniform MBS when it goes online in early 2019. The “Single Security Initiative Market Adoption Playbook” provides a detailed look at the many changes involved in the new security, which will take the place of the separate to-be-announced MBS that the two government-sponsored enterprises now issue. The project includes...
Originations of adjustable-rate mortgages increased by 40.5 percent from the first quarter of 2017 to the second, according to a new ranking and analysis by Inside Nonconforming Markets. An estimated $59.0 billion of ARMs were originated in the April-June cycle, with a number of major banks and nonbanks posting solid gains. Chase was...[Includes one data table]
Lenders in the non-agency market are loosening underwriting standards to some extent as refinance activity is expected to decline. Some 22 percent of the lenders surveyed by Fannie Mae said they loosened underwriting standards for non-agency mortgages during the third quarter. And 13 percent said they plan to loosen credit standards in the fourth quarter. Only 3 percent of the non-agency lenders surveyed by Fannie said...
A Ginnie Mae crackdown on abusive VA refinancing could be positive for housing finance reform, according to a Washington research organization. In a recent analysis, the Cowen Washington Research Group said Ginnie’s effort to rein in lenders that are engaging in churning might benefit those who are trying to revamp Fannie Mae and Freddie Mac. “We expect Ginnie Mae will succeed in curbing prepayment speed on VA mortgages,” wrote Jaret Seiberg, a financial services and housing policy analyst with the Cowen Group. “The crackdown is positive for government-sponsored enterprise reform as it should restore the spread between Ginnie and Fannie/Freddie MBS.” According to Seiberg, GSE reform advocates could potentially use the spread to pay for a housing finance bill that includes a government guarantee on the resulting MBS. Acting Ginnie Mae President Michael Bright has pledged to ...
The Congressional Budget Office has put forth a white paper with several options to minimize taxpayer risk in the FHA program. Although FHA delinquencies are at historical lows, the CBO would like less government exposure to FHA risk, fearing that the growing popularity of private sector programs will leave the government stuck with bad loans. CBO estimates that “the share of FHA-insured mortgages going to such borrowers is likely to keep shrinking as credit standards in the private market continue to ease. That change would leave FHA with a riskier pool of borrowers, creating risk-management challenges similar to the ones that contributed to the agency’s high levels of insurance claims and losses during the recession.” According to Inside Mortgage Finance’s database, FHA lending accounted for approximately $70.6 billion, or 15.4 percent, of all first-lien lending in the second quarter. CBO’s white ...
The Mortgage Bankers Association has asked the Department of Housing and Urban Development to tweak its current re-inspection policy, which may be interfering with certain home-sale transactions. In a recent letter, the MBA asked HUD to realign its re-inspection policy with those of the government-sponsored enterprises and the VA to prevent it from hindering sales that were in progress prior to hurricanes Harvey and Irma but had not closed when the storms hit. The MBA said the current policy requires that the inspection be completed after the Federal Emergency Management Agency’s “incident period.” HUD interprets this to mean the end date of the incident period. Because such periods can run anywhere from a few weeks to a couple of months and could be reopened or extended, many borrowers face needless delay from completing a home sale, even where there is no ...
After a couple of slow weeks, there appears to be renewed interest among investors looking to buy mortgage servicing rights, but in certain markets caution is being expressed regarding properties where hurricane damage might be an issue. In mid-September, Fannie Mae issued a bulletin temporarily suspending servicing transfers involving properties located within designated disaster areas. A week after the Sept. 13 bulletin was issued, Fannie clarified to market participants that the bulletin was meant as guidance and not a firm directive or prohibition on MSR transfers. According to Incenter Mortgage Advisors, Denver, some sellers of Fannie receivables “elected...
Anecdotal and empirical evidence confirm that mortgage lenders are continuing to lighten up on their underwriting criteria. The loosening may not be as pronounced as it was in the run-up to the financial crisis, but there are concerns that it will intensify as the Federal Reserve raises interest rates. Fannie Mae’s latest mortgage lender sentiment survey found that more lenders said they have eased credit standards than tightened them, something the government-sponsored enterprise attributed to limited demand for residential finance and a negative outlook on profit margins. “The net share of lenders reporting easing of credit standards over the prior three months has continued...
Resolving the long-running conservatorships of Fannie Mae and Freddie Mac is drawing a lot of attention, but policymakers and industry groups don’t seem any closer to a consensus. For the most part, the executive branch and many groups representing large financial institutions want Congress to tackle the problem through legislation. Investors and some groups representing smaller lenders say the Federal Housing Finance Agency and Treasury could do more to pave the way. Motivating the debate is...
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