BlackRock joined the chorus of GSE reform proposals by releasing its own last week. It aligns with the consensus view that reform should include an explicit government guarantee for mortgage-backed securities. An explicit government MBS guarantee is necessary to fully support a deep and liquid to-be-announced market, according to the asset manager. “Without this support, we believe credit would be more expensive and more difficult to obtain, which would negatively impact housing markets,” said BlackRock. Ginnie Mae MBS have an explicit guarantee, while Fannie and Freddie securities had an “implied” guarantee until they went into conservatorship. Although many proposals believe that’s the best...
Freddie’s Second RPL Sale. Freddie Mac announced an approximately $292 million structured sale of a pool of seasoned reperforming loans. The pool is comprised of loans with step-rate modifications using GSE proprietary modifications. The pool includes reperforming and moderately delinquent loans being serviced by Select Portfolio Servicing, Inc. The GSE’s first RPL sale was a pilot program that proved to be successful, according to Freddie. …
Real estate investment trusts that focus on the MBS market recorded a modest increase in their MBS holdings during the first quarter of 2017, according to an Inside MBS & ABS analysis. And observers say a pending change in how Fannie Mae and Freddie Mac structure their credit-risk transfer programs may boost REIT participation further. The 15 mortgage REITs tracked by Inside MBS & ABS reported a combined $230.82 billion of MBS investment at the end of March, including assets held in the to-be-announced market. That was up 1.6 percent from the end of 2016, though it was still off from year-ago levels. Some 91.8 percent of REIT MBS holdings are...[Includes one data table]
The average daily trading volume in agency MBS totaled $195.7 billion in April, the lowest reading of the year and third worst over the past 12 months, according to figures compiled by the Securities Industry and Financial Markets Association. The low trading volume is an indication that liquidity is drying up, but it also reflects a decline in new agency MBS being created. According to figures recently compiled by Inside MBS & ABS, lenders issued...
Officials at Fannie Mae and Freddie Mac say pilot deals that feature added primary mortgage insurance at the front end of the securitization process are a useful addition to their credit-risk transfer programs even if their future looks somewhat limited. Speaking at a CRT conference in New York City this week, Robert Schaefer, Fannie’s vice president for credit enhancement strategy and management, called the transactions “a good tool in the toolkit,” but said he doesn’t see them taking over the majority of CRTs. Gina Healy, Freddie’s vice president of credit risk transfers, agreed...
A unique disclosure Freddie Mac is providing in risk-sharing transactions can help provide MBS investors with forward-looking insight about mortgage performance, according to an analysis by Kroll Bond Rating Agency. Freddie started disclosing updated loan-to-value ratios for mortgages in its Structured Agency Credit Risk transactions in March 2016. On a quarterly basis, the government-sponsored enterprise discloses the estimated current LTVs based on Home Value Explorer (HVE), its proprietary automated valuation model. Connecticut Avenue Securities risk-sharing transactions from Fannie Mae don’t include a similar disclosure. KBRA noted...
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