American International Group is reportedly bringing to market $300 million in securitized notes backed by mortgage insurance written by its private MI subsidiary United Guaranty Corp., but the global insurance company is playing it close to the vest. AIG and United Guaranty are keeping details of the risk-transfer transaction under wraps and a spokesperson for UG declined to comment. Credit Suisse is the seller of the notes. Citing company marketing documents, Bloomberg reported...
Housing finance and housing policy should be clearly separated, said Rep. Randy Neugebauer, R-TX, speaking on a Bipartisan Policy Center GSE reform panel with Rep. John Delaney, D-MD, in Washington, DC, on July 16. “We should detach the financial piece away from the political process,” he said, adding that the market should determine how many houses and apartments to build, not the government. Neugebauer and Delaney agreed that reform needs to happen and that today’s housing finance system is largely controlled by the federal government. “The government’s role is to provide liquidity to the market and be more predicable like the banking system, which I’m a big supporter of,” said Delaney. “Then there’s the role of pricing risks, which I’m not a supporter of. The government has its roles mixed up.”
Fannie Mae completed its second credit risk- sharing transaction with the reinsurance industry this week and last week Freddie Mac introduced two new Agency Credit Insurance Structure transactions that gives it coverage based on both first loss and actual losses realized in a reference pool of residential mortgages. Under the two ACIS transactions, Freddie took insurance policies that move most of the remaining credit risk associated with the two Structured Agency Credit Risk debt notes executed in early 2015 to insurers and reinsurers. The two policies cover up to a combined maximum of approximately $223 million of losses that Freddie incurs when homeowners default. This is the 9th ACIS transaction since 2013.
Fannie Mae unveiled its second auction of nonperforming mortgages this week, $777 million of delinquent notes offered in two pools and a smaller $11 million pool that falls under its “Community Impact” program. The $11 million package includes just 75 loans. The collateral is located in Tampa, FL. The two larger pools include 3,900 mortgages. The GSE said it hopes to “inspire” nonprofits, small investors, minority- and women-owned businesses (MWOBs) and community groups to bid and then help borrowers avoid foreclosure. “We recently held a training forum to bring diverse stakeholders together to explore ways to participate in upcoming NPL sales,” said Joy Cianci, Fannie’s senior vice president for credit portfolio management.
First-time homebuyer mortgages acquired by the GSEs performed worse than repeat homebuyer mortgages, said the Federal Housing Finance Agency in a new working paper. But that doesn’t necessarily mean they are riskier. Although the study found first-time homebuyers likely to face more mortgage-related challenges, the FHFA said the difference is based on demographics. “They are younger, and have lower credit scores, lower home equity, and less income and therefore are less likely to withstand financial stress or take advantage of financial innovations available in the market than repeat homebuyers,” said Saty Patrabansh, senior economist and author of the white paper. However, once these differences are taken into account he said there appears to be no difference between first-timer and repeat homebuyers in their probability of default.
The average daily trading volume in agency MBS fell to $183.7 billion in June, the lowest reading of the year and another sign that all is not well for anyone who makes their living off of actual trading as opposed to being involved in new issuance. “There are a lot of people out there buying on credit and keeping MBS,” said Christopher Whalen, a senior managing director in the Financial Institutions Ratings Group at Kroll Bond Rating Agency. Whalen added...
Activity in the non-agency MBS market involving nonperforming loans and re-performing loans is expected to continue to flourish through at least the end of this year, according to industry analysts. Vintage mortgages in scratch-and-dent deals accounted for 42.0 percent of the non-agency MBS issued in the first half of 2015, according to the Inside Mortgage Finance MBS Database. The $15.60 billion in scratch-and-dent volume included a mix of nonperforming loans and re-performing loans. Issuance of non-agency MBS backed by NPLs and RPLs through two quarters this year equaled...
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