The great unwinding of the Federal Reserve’s massive intervention in the MBS market post-financial crisis is set to begin soon. This week, surprising no one, the U.S. central bank’s Federal Open Market Committee announced it will start to normalize its huge balance sheet next month along the parameters it first outlined in June. From October through December, the decline in the Fed’s securities holdings will be capped at $6 billion per month for Treasuries and $4 billion per month for agency MBS. Next year, the declines will gradually increase to $30 billion a month for Treasuries and $20 billion a month for MBS. Fed Chair Janet Yellen reiterated...
Ginnie Mae and the Department of Veterans Affairs have created a joint task force to deal with improper early refinancing of VA loans – a practice the agencies thought they had eliminated but which has reemerged in the last couple of weeks. The task force will be monitoring closely monthly VA refinancing data and will develop additional policies to augment the current policy, which Ginnie, in consultation with the VA, issued last year to curb churning of VA loans in its MBS. Responding to concerns raised by Sen. Elizabeth Warren, D-MA, acting Ginnie President and Chief Operations Officer Michael Bright acknowledged...
The average daily trading volume in agency MBS totaled a tepid $199.8 billion in August, the lowest reading since May, according to figures compiled by the Securities Industry and Financial Markets Association. Then again, volume wasn’t too far off trading activity in the prior two months, which came in at $200.5 billion and $200.9 billion. It appears that investors haven’t had...
A former Deutsche Bank employee is at the center of a lawsuit brought by the government over the sale of more than $1 billion of non-agency MBS. It’s rare when the government focuses on an individual for mortgage fraud, but the Department of Justice said the bank’s former head of subprime trading allegedly defrauded investors out of hundreds of millions of dollars. The civil complaint was filed in Brooklyn’s federal court against Paul Mangione for knowingly selling bad subprime mortgages financed during the crisis and misleading investors about loan quality. The complaint alleges that he engaged in fraudulent schemes involving the origination practices of Deutsche Bank’s subsidiary, DB Home Lending LLC, which originated the bulk of the loans. The securities were sold...
In a research note published Friday, Cowen & Co. notes the letter is an indication these groups believe allowing the GSEs to retain capital will prolong the conservatorships.
The signors add: “We … believe the debate over recapitalizing a broken system distracts from the critical structural issues that Congress must address to ensure that the federally supported secondary market serves key, bipartisan objectives.”
“Liquidity is strong across the spectrum and probably the best we’ve ever seen for structured products,” said Scott Levy, a senior managing director at Guggenheim Securities…
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