Candidate Clinton Wants to Defend the CFPB. Former Secretary of State Hillary Clinton, in a neck-and-neck race for the Democratic Party’s nomination for the White House with independent Vermont Sen. Bernie Sanders, vowed recently to defend the CFPB. In a package of proposals dubbed “Breaking Every Barrier Agenda: Revitalizing the Economy in Communities Left Behind,” the candidate said she believes “we must never again allow borrowers to be taken advantage of in the rush for corporate profits.” Clinton also pointed out that prior to the financial crisis, she pledged to create a Financial Product Safety Commission, as a counterpart to the CFPB, to crack down on abusive and predatory lenders and to protect consumers. ...
The False Claims Act could potentially apply to Fannie Mae and Freddie Mac loans in the future, thanks to increased GSE cases and a broadened claim definition. The risk of the Department of Justice applying the FCA to GSE loans may seem remote, said Andrew Schilling, partner with BuckleySander LLP, but he isn’t counting it out. …
Commercial banks and savings institutions continued their buying spree in the MBS market during the fourth quarter of 2015, according to a new ranking and analysis by Inside MBS & ABS. Banks and thrifts held a record $1.644 trillion of residential MBS in their available-for-sale and held-to-maturity portfolios as of the end of last year. That was up 2.2 percent from the third quarter and represented a 6.8 percent gain over 12 months. All of the increase came...[Includes two data tables]
Mortgage originators selling loans into MBS last week likely were hit with “pair-off” fees from secondary-market investors who were expecting delivery of higher-yielding mortgages, a proposition complicated by the sudden downdraft in rates. As one secondary market executive noted: “A forward sale into an MBS is not a perfect hedge. Then again, nothing is a perfect hedge.” Originators that fund billions of dollars each quarter use...
Late last week, Moody’s Investors Service published an analysis detailing risks from mortgage warehouse securitizations. The warning was published days after a $225.0 million deal from Jefferies Funding was issued with a Aaa rating from Moody’s. Analysts at Moody’s stressed that securitized mortgage warehouse facilities face risks that differ from traditional residential MBS. The analysts said Station Place Securitization Trust 2016-1 from Jefferies addressed the risks, prompting the Aaa rating. Station Place was backed...
Morningstar Credit Ratings changed the way it rates residential MBS to allow credit for mortgage insurance. After getting a number of inquiries about the use of mortgage insurance in new MBS, the firm said it decided to enhance its methodology to provide a clearer framework for how the ratings agency approaches mortgage insurance. While mortgage insurance does not necessarily affect a borrower’s probability of default, it may decrease loss severities, according to Morningstar. “Our methodology now gives credit to mortgage insurance in some cases up to the AAA ratings level,” said Brian Grow, managing director of RMBS for Morningstar. “MI’s potential impact on default is...
Fannie Mae earned $2.47 billion in the fourth quarter, according to its earnings statement released this week, a 25.9 percent increase from the previous quarter. The GSE attributes that rise to an increase in longer-term interest rates. For the full year 2015, Fannie’s income declined to $11.0 billion from $14.2 billion in 2014. The GSE said the decline was partially the result of a reduction in income from settlement agreements and increased expenses relating to its single-family foreclosed properties. Fannie plans to send $2.9 billion in dividend payments to the U.S. Treasury by the end of March. When that dividend payment is made, the GSE will have returned $147.6 billion to the government versus draws of...
Freddie Mac reported earning $2.16 billion in its fourth quarter earnings statement announced this week and a $6.38 billion profit for all of 2015, slightly less than the $7.69 billion earned the previous year. But its net interest income, which includes guaranty fee income, rose 4.8 percent to $14.95 billion.Unlike in the third quarter, when the GSE announced a $475 million loss due to hedging activities, this time around hedging losses were a non-event. Overall, Freddie booked $744 million in gains on its derivatives in the fourth quarter. Freddie noted that the shift was primarily due to an increase in long-term interest rates during the period as opposed to a decrease as witnessed in the third quarter.
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