Freddie Mac recently changed the circumstances in which borrowers can use gifts and grants from a lender toward a downpayment in its Home Possible mortgage products. Currently, a lender can provide a gift or grant for a portion of or the entire downpayment, according to a spokesperson for Freddie, but that’s about to change. Last week, sellers were notified that gifts or grants from the lender would only be allowed after the borrower contributes at least 3 percent of the appraised value or purchase price. This contribution must be made from the borrower’s personal funds and/or other permitted sources of funds.

Making credit-risk transfers more attractive to real estate investment trusts by rebranding some of them as real estate mortgage investment conduits may be just what the market needs, according to a new report by Morningstar. The rating service said the change likely won’t have a negative impact on the credit risk and quality of those deals and could help the GSEs broaden their investor base. The proposed changes to Fannie Mae’s Connecticut Avenue Securities and Freddie Mac’s Structured Agency Credit Risk programs would allow REITs and some overseas investors to participate more broadly in the programs.

GSE shareholders are continuing to argue that the structure of the Federal Housing Finance Agency is unconstitutional. The topic has come up ever since a 2016 ruling found that the similarly structured Consumer Financial Protection Bureau is not constitutional. Two new cases filed within the past month in Michigan and Minnesota are asking the courts to vacate the Treasury sweep of GSE profits altogether. In late June, three GSE shareholders filed a fresh lawsuit in the U.S. District Court for the District of Minnesota. The three plaintiffs, Atif Bhatti, Tyler Whitney and Michael Carmody, also want the court to strike the...

NV Supreme Court Favors GSEs in HOA Litigation. In Nationstar Mortgage, LLC v. SFR Investments Pool, the court found that mortgage servicers have standing to assert, on behalf of the GSE investor, that the Housing and Economic Recovery Act preempts state law and prevents extinguishment of the GSE loan at a Homeowners Association foreclosure sale. Freddie Prices $1.1 Billion Multifamily K-Deal. This week, Freddie Mac announced that it recently priced a new offering of Structured Pass-Through Certificates (K Certificates). The company expects to issue approximately $1.1 billion in K Certificates, which are expected to settle on or about July 24, 2017. Fannie Updates DU with New HomeReady Income Limits. As of July...

The non-agency MBS market is off to what looks like one of its best years in terms of new issuance since the financial crisis, according to a new analysis by Inside MBS & ABS. A total of $15.30 billion of non-agency MBS were issued in the second quarter, representing a gain of 13.4 percent from the first three months of 2017. That brought year-to-date production to $28.80 billion, a 32.0 percent increase over the first half of 2016. As has been the case since 2009, most of the new production has been...[Includes three data tables]

Federal Housing Finance Agency lawsuits over pre-crisis non-agency MBS are winding down with one of the last holdouts, Royal Bank of Scotland, reaching a settlement this week for $5.5 billion. In 2011, the agency filed charges against 18 issuers and underwriters alleging securities law violations and fraud regarding non-agency MBS sold to Fannie Mae and Freddie Mac. JP Morgan Chase settled for $4.0 billion, Deutsche Bank for $1.9 billion and Goldman Sachs for $1.2 billion. Most of the cases were settled in 2013 and 2014. The two government-sponsored enterprises purchased...

The average daily trading volume of agency MBS reached $209.9 billion in June, the second highest reading of the year and a sign that liquidity is picking up, according to figures compiled by the Securities Industry and Financial Markets Association. The increase in trading comes despite the fact that Fannie Mae, Freddie Mac and Ginnie Mae issued a total of $317.7 billion of new MBS in the second quarter, a 6.1 percent decline from the first quarter. For the six-month period, 2017 holds the edge with volume up 3.5 percent. But it hasn’t been...

As talks intensify on how to get Fannie Mae and Freddie Mac out of limbo, smaller lenders are clamoring to make sure they have a say in how housing-finance reform plays out. Nearly all sides agree that small lenders should continue to have access to the secondary market; how that’s accomplished is a different matter. The Main Street GSE Reform Coalition – an umbrella group made up of small-lender and community-advocacy groups – wants the government-sponsored enterprises to begin rebuilding capital buffers by suspending their dividend payments to the Treasury Department. It also wants...

The proposal to restructure the credit-risk transfer debt-note programs at Fannie Mae and Freddie Mac to make them more attractive to real estate investment trusts likely won’t have a negative impact on the credit risk and quality of those deals, Morningstar said in a new report. The proposed changes to Fannie’s Connecticut Avenue Securities and Freddie’s Structured Agency Credit Risk programs would characterize them as real estate mortgage investment conduits. This would allow REITs and some overseas investors to participate more broadly in the programs. Currently, the structure of the government-sponsored enterprises’ popular CRT programs doesn’t meet...

According to Fairholme’s math, the GSEs earn over $15 billion a year, and taxpayers own 80 percent of the companies (via the senior preferred). Berkowitz values the senior stock at $100 billion…