Freddie Mac has begun talking with the Internal Revenue Service and the Securities and Exchange Commission about issues that are likely to crop up as the two government-sponsored enterprises implement the new Single Security, according to a summary of the most recent meeting of the Industry Advisory Group in December. One issue is the tax treatment of compensation that MBS investors receive for converting legacy Freddie participation certificates for the new uniform MBS, which will have a longer payment delay. “Although it is not definitive, we believe the IRS will ultimately view the float compensation as well as any incentive payment that is paid as part of the exchanges as taxable income when received,” the meeting summary states. Freddie provided...
As a number of shareholder lawsuits against Fannie Mae and Freddie Mac hang in the balance, a new administration offers reasons for some to be optimistic on the cases coming to a close and the Treasury’s sweep of the government-sponsored enterprises’ profits coming to an end. During a Jan. 18 call hosted by Investors Unite, legal experts weighed in on the outlook for GSE shareholder cases just days before the inauguration. Plaintiffs have been arguing that a government bailout of the GSEs and the subsequent Treasury sweep was unnecessary and illegal. “As GSE shareholders, we are...
As one former GSE stock analyst told us: “There’s no way they can be privatized. To maintain an AAA rating they would need 25 percent (I’m guessing) capital to assets. Even at 5 percent there is not enough spread to earn a market return on capital.”
The 25-basis-point decrease in the FHA’s annual insurance premiums translates not only to annual savings for homeowners but also boosts the competitiveness of housing finance agency loan products, according to a new report from Moody’s Investors Service. The report regards the latest FHA pricing adjustment as credit positive for housing finance agencies (HFAs) because it would make FHA loans more affordable to borrowers and increase HFA loan originations. The announcement to reduce the annual mortgage insurance premium to its lowest allowable level took stakeholders by surprise. In November, FHA had no plans to lower premiums despite an uplifting actuarial report on the condition of the Mutual Mortgage Insurance Fund. This week, however, there is uncertainty as to whether the Trump administration will allow the reduced premiums to take effect for new loans closing on or after ...
A former FHA commissioner is calling for a common national housing policy and regulations, as well as aligned capital standards for FHA and the government-sponsored enterprises in lieu of the current regulatory regime – an idea first put forth by the Mortgage Bankers Association. Brian Montgomery, former assistant secretary for housing and FHA commissioner in the second Bush administration, said the nation’s homebuyers are at a disadvantage due to the lack of a unified, detailed plan for the housing finance system. Montgomery, a current contender for a top executive position at the Department of Housing and Urban Development, urged President Trump to create a new Office of National Housing Policy to develop a “unified and collaborative approach to our nation’s housing policy, including homeownership and subsidized rental housing.” “The prevailing view within the ...
Antonio Weiss, counselor to the secretary of the Treasury Department, cautioned that any reduction to the corporate tax rate could prompt a draw from Treasury funds by the GSEs.
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