A few big-ticket corporate shifts in mortgage strategy led to a surge in bulk transfers of agency mortgage servicing rights during the second quarter of 2017, according to an exclusive Inside Mortgage Trends analysis of agency mortgage-backed securities data. A total of $133.36 billion of servicing attached to single-family MBS issued by Fannie Mae, Freddie Mac and Ginnie Mae changed hands during the most recent quarter. That was up 21.5 percent from ... [Includes two data charts]
In a recent conference call, Fairholme Capital Management founder and Chief Investment Officer Bruce Berkowitz stood his ground regarding the firm’s investment in Fannie Mae and Freddie Mac junior preferred shares, believing that the bet will pay off in time. He made it clear that Fairholme, at this time, has no plans to sell its stake, which the firm has valued at roughly $115.7 million. But Berkowitz also made it clear he sees little chance of GSE reform passing any time soon, and he anticipates that Federal Housing Finance Agency Director Mel Watt will not permit the Fannie/Freddie capital position to fall to zero in early 2018.
Fannie Mae says it expects “a slight increase” in the share of its single-family business that has higher debt-to-income ratios as a result of a tweak to the company’s Desktop Underwriter system. The government-sponsored enterprise generally limits DTI ratios to 45 percent. Under the previous version of DU, applications with debt ratios up to 50 percent could be approved if there were compensating factors, such as a loan-to-value ratio below 80 percent or at least 12 months of ...
The common securitization platform, if expanded to allow other users, could become a centerpiece for housing finance reform. That’s the view of Jim Parrott, a fellow at the Urban Institute and former White House senior advisor at the National Economic Council under the Obama administration. Converting the CSP to a government or government-like utility open to issuance by other guarantors could help end the Fannie Mae and Freddie Mac duopoly by reducing barriers for new entrants. Parrott added that examining which functions the GSEs currently provide that could be moved to the CSP to help level the playing field for more competition would be ideal.
The Pacific Investment Management Company believes the private mortgage market should be revived before comprehensive GSE reform. In a paper published last week, the investment management firm weighed in on the debate to reform Fannie Mae and Freddie Mac. It noted that a few small legislative changes would make a huge difference in bringing private capital back to the housing-finance market. Growth in the housing market will come if policymakers are willing to modify existing laws and regulations governing the private mortgage market, according to PIMCO. The company said that would bring back responsible mortgage lending while boosting economic growth and providing more access to credit.
Low interest rates on mortgages continue to make home purchases attractive but many potential borrowers have been prevented from buying a home. Economists at Freddie Mac said a number of factors are making home purchases look unaffordable to potential buyers, even though affordability is at near-record levels. The Housing Affordability Index developed by the National Association of Realtors tracks the ratio of median family income required to qualify for a conventional mortgage ...
Mortgage origination volume was up sharply in the second quarter of 2017, but total production this year still trailed the pace set in 2016 because of slumping refinance activity. An estimated $455.0 billion of first-lien mortgages were originated in the second quarter, according to an exclusive new Inside Mortgage Finance ranking and analysis. That was up 18.2 percent from the January-March cycle, but production over the first six months of 2017 totaled just $840.0 billion, off 6.7 percent from the same period last year. Most other mortgage market indicators sent...[Includes two data tables]
While policymakers in Washington, DC, are paying renewed attention to housing-finance reform, some industry representatives took advantage of the opportunity provided by a related hearing on Capitol Hill to also urge changes be made to a number of the mortgage-related rules promulgated in recent years by the Consumer Financial Protection Bureau. Bond giant PIMCO issued a report that called for a handful of key revisions to the mortgage regulatory landscape before any reform of Fannie Mae and Freddie Mac is undertaken. “To bring capital back to the private mortgage market and ensure credit is extended...
Getting Fannie Mae and Freddie Mac out of limbo should not result in the creation of multiple guarantors, according to community lenders testifying at a housing-finance reform hearing in the Senate Banking, Housing and Urban Affairs Committee last week. “The worst outcome in … reform would be to allow a small number of mega-firms to assume the size and scale of Fannie and Freddie under the pretense of creating a private sector solution strong enough to assure the markets in all economic conditions,” said Jack Hopkins, president and CEO of CorTrust Bank, on behalf of the Independent Community Bankers Association. Any plan that promotes consolidation is...
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