The agency MBS market in April had its strongest month of new issuance in 20 months thanks to the combination of strong refinance volume and a surge in purchase-mortgage lending. A new Inside MBS & ABS analysis and ranking reveals that Fannie Mae, Freddie Mac and Ginnie Mae issued a total of $121.10 billion of new single-family MBS last month, an increase of 22.1 percent from March. It marked the strongest output since August 2013, when new agency MBS was tapering off from a huge influx of refinance business. Refinance loans continued...[Includes two data charts]
Fannie Mae and Freddie Mac continued to follow orders and prune their retained investment portfolios – and potential future income – during the first quarter of 2015. But the government-sponsored enterprises ended the period holding more of their own MBS than when it started. The combined Fannie/Freddie mortgage investment portfolio fell 0.5 percent during the first quarter of 2015. Under their conservatorship agreement, each GSE is required to reduce its mortgage portfolio to $250 billion by the end of 2018. They each have a little over $150 billion more to go and, as of the end of March, 15 quarters to do it. The Federal Housing Finance Agency has directed...[Includes one data chart]
While refinance activity grew and accounted for 63 percent of all conventional-conforming originations in the first quarter, the number of borrowers cashing out equity or consolidating loans dipped slightly from 29 percent in the previous quarter to 27 percent. That was still up from 17 percent cash-out share of refinances in the first quarter of 2014, according to Freddie Mac’s quarterly analysis. But Freddie said the net dollars of home equity converted to cash as part of a refinance remained low ...
New life-of-loan representation and warranty- exclusion guidelines issued by the GSEs in November, appeared to have little impact on banks’ lending policies so far, according to a recent Federal Reserve Board survey.The rep-and-warrant changes were intended to reduce uncertainty and increase transparency in addressing lenders’ concerns about when they might be asked to repurchase a loan. The concerns were based on repurchase risk and other market factors that can cause an increase in credit overlays. “Addressing these concerns by providing tighter definitions and clarity should encourage sellers to serve a broader range of qualified borrowers,” said Dave Lowman, Freddie’s executive vice president of single -family business, when the changes were announced in November.
Having been in conservatorship for what is approaching close to seven years now, industry insiders are offering up their opinion on what’s next for Fannie Mae and Freddie Mac as the GSEs remain uncertain about their future. A recent editorial piece that ran in The Hill suggests a seven-step plan that will lead them out of conservatorship. “Making a Fannie and Freddie We Could Live With” is the title of the article authored by Mark Calabria, director of financial regulation at the Cato Institute, and Alex Pollock, a fellow at the American Enterprise Institute. The authors said that “nobody wants the old Fannie and Freddie back; nobody wants them to stay on indefinitely in conservatorship.”
A 2011 document from the Treasury Department that was leaked last week has raised questions over whether or not all required documents pertaining to a dismissed suit against the Treasury were turned in.The suit stems from GSE shareholders suing over the Third Amendment profit sweep, which requires Fannie Mae and Freddie Mac to turn over the bulk of their profits to the Treasury. The Jan. 4, 2011, memo, leaked to Insider Sources, is from Undersecretary for Domestic Finance Jeffrey Goldstein and has the subject line “Housing Refinance Reform Plan.” The memo to former Treasury Secretary Timothy Geithner outlined a number of issues to reform the two, including privatization and proposals to wind down the GSEs.
A bill to redirect all 2016 funds from the Housing and Urban Development’s National Housing Trust Fund, which currently receives money from Fannie Mae and Freddie Mac to HUD’s HOME Investment Partnerships Program, was approved by a House subcommittee last week. Affordable housing advocates question the bill approved by the House Appropriations Subcommittee on Transportation, Housing and Urban Development and Related Agencies. In essence, the bill was designed to cover a shortfall in the HOME program funding. Sheila Crowley, president of the National Low Income Housing Coalition, said the bill “expresses a callous disregard for the plight of millions of Americans who labor in the low wage workforce and still cannot find modest housing they can afford to rent.”
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