As Fannie Mae prepares to emulate the risk-sharing bond recently issued by Freddie Mac, concerns are arising that the government-sponsored enterprises are giving away a bit too much yield. Former GSE officials who have looked at Freddie Mac’s recent $500 million Structured Agency Credit Risk bond say the debt offering is a good investment for investors who are taking little risk while garnering a nice yield. According to Freddie Mac’s July offering circular on its STACR deal, the notes are divided...
Freddie Mac’s multifamily K-Deals are “a model for the future of mortgage securitization,” according to David Brickman, a senior vice president overseeing multifamily activities at the government-sponsored enterprise. However, the risk-sharing deals face regulatory hurdles and differ in a number of ways from practices in the residential mortgage securitization market. While Brickman pushed K-Deals as a model, it wasn’t the design used in the Structured Agency Credit Risk risk-sharing transaction Freddie issued in July. K-Deals include subordinate bonds that are not guaranteed by the GSE, while the STACR transaction was unsecured corporate debt based on a reference pool of mortgages with Freddie taking a small first-loss position followed by two non-guaranteed tranches. When Freddie issued the STACR transaction, the GSE stressed...
As leaders of the Senate Banking, Housing and Urban Affairs Committee double down on their efforts to craft a bipartisan mortgage finance reform bill, experts told lawmakers during a hearing this week that any reform effort must preserve the “smooth functioning” of the to-be-announced market. Given that it is reliant on MBS guaranteed by the government, the TBA market is “extremely sensitive” to any changes to the role that the government will have in the future housing finance system, according to Richard Johns, executive director of the Structured Finance Industry Group. “SFIG believes...
The Federal Home Loan Bank of Chicago will issue Ginnie Mae MBS backed by mortgages originated by member financial institutions, the two entities announced jointly this week. The new conduit product, called the MPF Government MBS, is an offshoot of the Chicago FHLBank’s Mortgage Partnership Finance program. The new product is intended to provide smaller mortgage lenders that lack direct access to the secondary mortgage market another option for their customers. Lenders will be...
Wells Fargo, JPMorgan Chase and Flagstar are all working on large servicing deals, but as sellers. Meanwhile, HUD is worried about lower GSE loan limits.
After a long period of inertia, Senate leadership from both sides of the aisle have seized the initiative in the effort to reform mortgage finance with the first of a series of hearings this week aimed at crafting a comprehensive, bipartisan bill by year’s end. Meanwhile, a largely partisan House Republican bill that would seal the fate of Fannie Mae and Freddie Mac has been shut out of the floor vote schedule this fall amid significant opposition from industry trade groups.Last month, at the direction of Senate Banking, Housing and Urban Affairs Committee Chairman Tim Johnson, D-SD, and Ranking Member Mike Crapo, R-ID, senior staffers met with various industry “stakeholders” to get field reform input in advance of the hearings.
Vacant foreclosed properties with mortgages backed by Fannie Mae and Freddie Mac are not subject to the City of Chicago’s registration ordinance, according to a recent ruling from the U.S. District Court for the Northern District of Illinois. The ordinance, which took effect in November 2011, requires mortgage lenders to register vacant properties with the city and pay a $500 registration fee. The ordinance also directs lenders to secure and maintain vacant buildings in accordance with city requirements.
Fannie Mae is starting to market a risk-sharing mortgage-backed security that would require investors to bear some of the financial risk if mortgages default. The company, which is reportedly getting ready to launch a “road show” to debut its new risk-sharing mortgage bond within the next two weeks, is following up on Freddie Mac’s $500 million Structured Agency Credit Risk bond, which the GSE priced in July. The Federal Housing Finance Agency’s Strategic Plan calls for both Freddie and Fannie to establish loss-sharing arrangements, in which private investors bear some or all of the credit risk.
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