With interest rates rising again, the future looks somewhat cloudy for real estate investment trusts that invest in MBS, a situation that investors have grown accustomed to the past few years. According to figures compiled by Keefe, Bruyette & Woods, the 28 mortgage investing REITs tracked by the firm had a combined market capitalization rate of $47.8 billion at the end of May, a slight drop from a year ago when the tally was $49.0 billion. Then again, not all of the 28 are...
The loan limit more than doubled for the Mortgage Partnership Finance program through which members of certain Federal Home Loan Banks can deliver jumbos to Redwood Trust. Officials at both the Federal Home Loan Bank of Chicago and Redwood are optimistic about the MPF Direct product, though it’s unclear how much volume the new offering will generate. Beginning in the third quarter, the loan limit for MPF Direct will increase from $729,750 to $1.5 million. Previously, the MPF Direct product targeted loans with balances between $625,500, which is the current conforming loan limit for certain high-cost areas, and $729,750, which was the high-cost loan limit during a time when the FHLBank of Chicago was working to launch MPF Direct. Outside of MPF Direct, Redwood purchases...
Fitch Ratings this week put out a new report detailing the latest updates to its criteria for monitoring U.S. residential MBS for possible ratings changes and to analyze re-securitizations of real estate mortgage investment conduit deals. Among the most significant revisions is a loss severity adjustment for newly-issued re-REMIC transactions. Fitch will adjust the model-projected loss severity assumption for pools backing newly issued re-REMIC transactions by as much as 10 percent to account for differences between model projections and recently observed loss severity trends, according to the report. Fitch’s RMBS loan loss model “assumes...
The U.S. Department of Housing and Urban Development Secretary Julian Castro and Rep. Ed Royce, R-CA, agree that housing reform needs to happen, but while Royce emphasized the need to get private capital back in the system, Castro focused on the issue of credit access. Royce and Castro were speakers during a June 3 housing finance forum in Washington sponsored by the National Journal. Castro said part of the challenge for Democrats and Republicans in both Houses is the issue of access to credit. “How do you ensure that in the system there’s a good amount of access of credit to people of moderate means just like people of strong means,” said Castro.
For the first time, individual shareholders have brought a suit against the Federal Housing Finance Agency alleging that the Treasury profit sweep was illegal and accused the agency of violating the Housing and Economic Recovery Act. The May lawsuit was filed in the U.S. District Court for Northern Iowa by three individual shareholders who owned stock in Fannie Mae and Freddie Mac prior to the Third Amendment.Thomas Saxton owns shares in the Z series of Freddie preferred stock and he owns shares of Freddie common stock with Ida Saxton.The pair own common stock both jointly and individually and acquired their shares in 2008. The third plaintiff is Bradely Payner, who owns shares of Fannie common stock.
With just six months lefts to meet the new private mortgage insurer eligibility requirements, Genworth U.S. Mortgage Insurance is making moves to ensure it will be in compliance by the end of the year. “We did disclose a gap of $500 to $700 million, but at the same time we said we will fulfill that gap with a combination of reinsurance and cash. We are working at a very aggressive pace to make sure that we meet that standard sooner than later,” said Rohit Gupta, Genworth’s president and CEO. In addition to reinsurance and working on payment plans, Rohit said last month the company sold 14 percent of its Australian mortgage insurance business on the Australian...
As mortgage insurers rally around the call for expanded risk sharing, the Federal Housing Finance Agency confirmed this week that it’s exploring the possibility of pilot testing risk-sharing through deeper mortgage insurance coverage. The U.S. Mortgage Insurers trade group said that deeper MI coverage would reduce risks to taxpayers while allowing the GSEs to lower their fees. “And with lower GSE fees, this approach would reduce costs to borrowers. In addition, MI can be used to provide front-end risk sharing on loans with down payments greater than 20 percent,” it said. A prudently underwritten 5 percent down payment loan with MI actually reduces taxpayer exposure below a comparable 20 percent down payment loan without MI, according...
Nevada Addresses ‘Super Lien’ Concerns. Nevada’s governor signed legislation last week addressing concerns raised by the FHFA regarding homeowners’ association liens. In September, the Nevada Supreme Court determined that an HOA super lien has priority lien status, which can trump the GSEs’ first lien status during foreclosure. Senate Bill 306 in Nevada aimed to address some of those issues by establishing a new limited right of redemption for lien holders after an HOA foreclosure sale, among other provisions. The FHFA has repeatedly noted it has an obligation to protect the GSEs’ rights, and will aggressively do so by bringing or supporting actions to contest HOA foreclosures that purport to extinguish GSE property interests in a manner
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