Despite the best efforts of supporters, including a renewed public showing of support from the White House, a new push to enhance the Home Affordable Refinance Program through legislation will go nowhere fast, say industry observers. Introduced by Sen. Jeff Merkley, D-OR, the Rebuilding Equity Act, S. 1373, would modify HARP to cover $1,000 in closing costs for underwater borrowers who choose loan terms of 20 years or less to rebuild equity in their homes. “Both [the Congressional Budget Office] and Fannie Mae have estimated that this bill would have no net cost, because it would reduce the severity of financial loss when defaults do occur,” said Merkley. The bill would require...
Securitization of income-property mortgages declined by 7.9 percent during the second quarter of 2013, with the biggest drop coming in non-agency commercial MBS issuance, according to a new market analysis by Inside MBS & ABS. A total of $43.92 billion of commercial mortgage securities were issued during the second quarter, which still ranked as the second strongest quarter since the third quarter of 2007. For the first six months of 2013, total commercial mortgage securitization was up 78.5 percent from the same period, and the market appears likely to set another post-crash record by the time the year is over. The non-agency CMBS market has seen...[Includes one data chart]
Industry analysts predict that Freddie Mac’s recently announced deal to shed some of the credit risk of the mortgages it guarantees to the private sector could provide the template for a broader risk-sharing program for both GSEs and opens the door for potentially promising policy implications. The $500 million offering of Structured Agency Credit Risk securities, which Freddie priced last week, aims to diminish taxpayer risk while introducing more private capital into the market. Due to investor demand, the size of the offering was increased from $400 million to $500 million, and about 50 broadly-diversified investors participated in the offering, including mutual funds, hedge funds, REITs, pension funds, banks, insurance companies and credit unions, according to Freddie CEO Donald Layton.
Fannie Mae has selected National Mortgage Insurance Corp. to insure a pool of approximately $5.0 billion of mortgages as the GSE looks to expand its risk sharing with private firms, the mortgage insurer announced this week.The Emeryville, CA-based unit of NMI Holdings explained that the transaction was offered through a formal bid process to private mortgage insurers.“Fannie Mae selected National MI as the insurer based on its favorable terms and conditions, and beneficial risk-share attributes,” said National MI.
More than a year after it was issued under court-ordered duress, the Federal Housing Finance Agency has withdrawn its proposed rule concerning Fannie Mae and Freddie Mac underwriting standards related to mortgages affected by Property Assessed Clean Energy programs. Local governments use the PACE Program, which is part of the American Recovery and Reinvestment Act of 2008, to provide financing secured by a priority lien on the property to homeowners for the purchase of energy-related home improvements. While 27 states and the District of Columbia have legislation in place to permit PACE financing for “green” homes, in July 2010 Fannie and Freddie stopped purchasing PACE-related mortgages that had automatic first-lien priority over previously recorded mortgages.
House Financial Services Committee Chairman Jeb Hensarling, R-TX, last week pushed through committee his bill to replace Fannie Mae and Freddie Mac with a new securitization “utility” without any government backing, but opponents of the bill warn that the measure will have a much tougher time getting votes on the House floor. The Protecting American Taxpayers and Homeowners Act, H.R. 2767, was approved by a 30-27 margin with all the committee’s Democrats and even two Republicans voting against it. Before last week’s 10-hour bill markup, House Democrats released their principles for housing finance reform. In addition to preserving the 30-year fixed-rate mortgage, Dems aim to establish a system with an explicit government guaranty paid for by the private sector and maintain regulations that the House GOP wants to eliminate.
A pair of newly filed bills by a lone Senate Democrat would see the Home Affordable Refinance Program further expanded as a means to provide underwater homeowners with new refi options. The Rebuilding American Homeownership Act, S. 1375, would modify HARP to allow loans “that lack a government guaranty” to be refinanced through HARP. The bill would also direct Fannie Mae and Freddie Mac to price for the risk that the GSEs would be assuming, so that the program has no net costs, as well as establish an automatic sunset for the program after 24 or 36 months.
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