New jumbo MBS from Redwood Trust are coming fast and furious after a lull in the fourth quarter of 2017. The real estate investment trust has multiple execution options for the jumbos it aggregates and MBS issuance now looks to be providing better returns than whole-loan sales.
The consumer credit cycle seems to be weakening, given current credit trends in consumer ABS, analysts at Wells Fargo Securities said in a new report. They see the solution as being broad economic growth.
Fannie Mae and Freddie Mac this week reported a combined loss of $9.4 billion for the fourth quarter of 2017, a direct result of the Tax Cuts and Jobs Act and its impact on their deferred tax assets. The two government-sponsored enterprises had to reduce the value of the DTA by $10.2 billion.
All totaled, the new tax law will result in Treasury – which owns the senior preferred stock of the GSEs – forking over $4.01 billion to aid Fannie and Freddie...
Prior to release of 4Q17 results, the GSEs had an “account balance” of $103.0 billion with Uncle Sam: $291.4 billion of dividends paid to Treasury versus $188.4 billion of assistance received.
The DTA hit Fannie took and the resulting net loss was fully expected and likely won’t cause an uproar on Capitol Hill. However, one lobbyist quipped: "Ah, the first taxpayer bailout of a large financial institution since the Great Recession."
Under this arrangement, the FHLBanks would be “jointly and severally liable” for the obligations of any single-family guarantor formed under the new system…
As National Association of Realtors Vice President Joe Ventrone put it: “It’s an unintended consequence of the tax bill rather than falling into the bailout narrative.”
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