New issuance of commercial mortgage securities increased substantially during the third quarter, with both the private and agency sectors posting solid gains, according to a new Inside MBS & ABS analysis. A total of $53.14 billion of income properties were securitized during the third quarter, a 33.4 percent increase from the previous period and the strongest three-month output since the second quarter of last year. That brought year-to-date issuance to $137.74 billion, off 12.4 percent from the pace set in the first nine months of 2015, and it would take a huge fourth-quarter surge for the market to reach last year’s total. Non-agency commercial MBS production rose...[Includes one data table]
Fannie Mae this week joined Freddie Mac in announcing a front-end credit-risk transfer pilot that will use additional levels of private mortgage insurance, but the so-called deep MI option looks like a long shot. “Credit-risk transfer is the next big thing, and though we’re already three years into it, it’s still very much a work in progress,” said Donald Layton, Freddie’s CEO, during the annual convention of the Mortgage Bankers Association in Boston this week. “About 50 percent of the credit risk that’s coming in is...
Bayview Financial is set to issue the first re-securitization backed by subordinate tranches from risk-sharing deals issued by Fannie Mae and Freddie Mac. Fitch Ratings placed an A-minus rating on the planned $159.60 million Bayview Opportunity Master Fund IVb Trust 2016-CRT1. The transaction is backed by 12 securities from Fannie’s Connecticut Avenue Securities transactions and Freddie’s Structured Agency Credit Risk transactions issued in 2014 and 2015. The securities in the re-securitization are CAS M2 and STACR M3 tranches. All but one of the underlying securities rely...
Thanks to increasing market demand and two expansions of their scorecard caps courtesy of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could do more than $100 billion in combined issuance of multifamily MBS by the end of 2016 – if they have a strong December, that is. According to Inside MBS & ABS figures, Fannie’s new multifamily MBS issuance in the first nine months of 2016 was up 18.4 percent from the same period last year. Josh Seiff, vice president of multifamily capital markets and trading at Fannie, was...
This week, Fannie Mae launched an initiative that guarantees to alleviate buyback fears on certain loan components for lenders using its underwriting and appraisal tools. Fannie will also automate key processes of verifying loans, including income, through Desktop Underwriter’s new validation service.Under Day 1 Certainty, Fannie said lenders would be relieved from most representations-and-warranty risk related to verifying a borrower’s income, assets and employment using DU. “Those are the big ones,” a Fannie spokesman told Inside The GSEs. He said, “It validates right there and they are good to go,” adding that this is the kind of innovation that helps makes possible programs like Quicken’s Rocket Mortgage.
Lenders will be able to use technology to verify a borrower’s income, assets and credit worthiness in 2017 in Freddie Mac’s Loan Advisor Suite. The announcement was made this week on the heels of Fannie Mae announcing changes to its Desktop Underwriter. With the cost of originating a mortgage more than doubling since pre-crisis times, the GSE said the enhancements were designed to help lenders validate the quality of the loans they originate and help keep costs at a minimum. David Lowman, Freddie’s executive vice president of single-family business, said, “We’re collaborating with lenders to create innovative tools that reduce the costs of producing and selling high-quality loans to us.”
The Congressional Budget Office said allowing the GSEs to retain a portion of their earnings could help stabilize the mortgage market and the federal budget.In a recent report studying the effects of recapitalizing Fannie Mae and Freddie Mac, the CBO concluded that while it may limit competition in the market, the benefits outweigh any potential concerns. With GSE capital levels scheduled to be depleted by 2018, there have been several legislative proposals over the past year advocating a recap. The CBO published a report in response to the proposals but put a different spin on it. The CBO created an “illustrative policy option” in which Fannie and Freddie would retain an average of $5 billion of their profits annually.
The GSEs said treating items like payoffs, holdbacks and principal curtailments as closing costs in the Consumer Financial Protection Bureau’s disclosures would just confuse borrowers. Fannie Mae and Freddie Mac submitted comments to the CFPB last week in response to the bureau’s proposed amendments to the integrated disclosure requirements under the Truth in Lending Act and Real Estate Settlement Procedures Act. The comments focused primarily on aspects of the proposed rule that may potentially affect the Uniform Closing Dataset developed by the GSEs. The GSEs disagreed with the proposed rule’s plan to lump non-closing cost fees under...
The Cato Institute recently filed an amicus brief challenging the Federal Housing Finance Agency’s denial of compensation benefits to a former Freddie Mac CFO at the start of the conservatorship. The FHFA terminated Anthony Piszel two weeks after the government took over the GSEs in September 2008. The primary issue was whether a government prohibition on making golden parachute (severance) payments to terminated Freddie employees was illegal or not. Piszel appealed a judgment from the U.S. Court of Federal Claims dismissing his complaint that Freddie breached its contract and owed him payment for his golden parachute compensation.
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