Inspector General recently released a paper about the need for continued oversight of activity in the growing GSE multifamily market. Combined, Fannie Mae and Freddie Mac purchased $112 billion in multifamily mortgages last year. The paper noted that while much of the reform discussion has focused on single-family housing, the GSEs’ role in the multifamily market is a critical aspect of the housing finance system. Market-wide multifamily originations, along with Fannie and Freddie purchases of multifamily mortgages, have grown to record levels in recent years, said the OIG. But multifamily mortgages are more complex to underwrite than single-family loans. “Underwriters of multifamily loans must understand the business and...
Credit-risk transfer transactions can be multifunctional in that they do more than just help take the risk off the GSEs. They’re also a good indicator for setting guarantee fees. Freddie Mac said CRTs are often indicative of what the private market would charge for the risk taken on by a GSE. And the appropriate level of g-fees has been an important issue in housing finance.
Fannie Mae and Freddie Mac recently released more details on requirements for participating in their new refinance option for loans originated after Oct. 1. This option allows borrowers with high loan-to-value ratios to refinance. While the official start date is next month, the GSEs said that a minimum of 15 months must have passed between the note date of the existing loan and the start of the new loan. For example, if the mortgage is originated in October 2017, the note date of the new loan can be no earlier than February 2019. To participate, the loans must be owned or securitized by Fannie or Freddie and can include loans that are part of its risk-sharing structure.
GSEs. Congress should be the one that makes the ultimate decision on deciding the future of Fannie Mae and Freddie Mac, according to a just-completed poll from Inside Mortgage Finance. Roughly, 28 percent of industry professionals picked Congress as the ultimate decider with the Federal Housing Finance Agency coming in a close second at 25 percent. Treasury finished third in the poll at 18 percent. Then again, the fourth choice – “I wish we had another option, but we don’t” actually garnered the highest response at 29 percent.Wells Fargo Analysis of GSEs’ Portfolio. Wells Fargo said that the GSEs’ portfolio needs to be able to buy out seriously delinquent loans from mortgage-backed securities and provide
The supply of outstanding residential MBS in the market continued to grow at a measured pace during the second quarter of 2017, thanks to the robust single-family MBS machines at Fannie Mae, Freddie Mac and Ginnie Mae. A total of $6.675 trillion of single-family MBS was outstanding as of the end of June, according to a new Inside MBS & ABS analysis. That was up 0.8 percent from the end of March, and it represented a record 64.0 percent of outstanding single-family mortgage debt. The Federal Reserve this week reported that home loan debt outstanding rose 0.7 percent to $10.430 trillion during the second quarter. All the MBS growth was...[Includes three data tables]
Issuance of non-agency MBS backed by newly originated home loans remains well below levels seen before the financial crisis. While new regulations have stopped some pre-crisis loan types from being originated, industry participants suggest that other major factors are also limiting the supply of loans available for MBS. Chris Helwig, a managing director at Amherst Pierpont, noted that banks are competing for prime jumbos and holding them in portfolio, and many borrowers who previously might have received subprime mortgages opt for FHA loans. “All that is left for non-agency MBS is...
The great unwinding of the Federal Reserve’s massive intervention in the MBS market post-financial crisis is set to begin soon. This week, surprising no one, the U.S. central bank’s Federal Open Market Committee announced it will start to normalize its huge balance sheet next month along the parameters it first outlined in June. From October through December, the decline in the Fed’s securities holdings will be capped at $6 billion per month for Treasuries and $4 billion per month for agency MBS. Next year, the declines will gradually increase to $30 billion a month for Treasuries and $20 billion a month for MBS. Fed Chair Janet Yellen reiterated...
The average daily trading volume in agency MBS totaled a tepid $199.8 billion in August, the lowest reading since May, according to figures compiled by the Securities Industry and Financial Markets Association. Then again, volume wasn’t too far off trading activity in the prior two months, which came in at $200.5 billion and $200.9 billion. It appears that investors haven’t had...
In a research note published Friday, Cowen & Co. notes the letter is an indication these groups believe allowing the GSEs to retain capital will prolong the conservatorships.
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