With the Federal Housing Finance Agency working on a common securitization platform for Fannie Mae and Freddie Mac, market participants are beginning to ask whether the residential finance sector really needs two government-sponsored enterprises. This week, at a policy forum in Washington, MBS co-inventor Lewis Ranieri and former GSE regulator James Lockhart suggested that the industry doesn’t need both Fannie and Freddie. The thinking is that a common securitization platform will facilitate the transition to a standardized GSE MBS, with slight variations, that would eliminate the current pricing differentials between Fannie and Freddie MBS. Speaking at the Bipartisan Policy Center, Lockhart noted...
Freddie Mac's "low activity fee" will be mostly eliminated. However, it will still apply to originators that have not sold a loan to the GSE in 36 months.
A new “pragmatic” secondary market reform plan released by four housing experts closely resembles the bipartisan legislation being drafted by key members of the Senate, including an ambitious implementation timeline that says the overhaul could be accomplished in about three years. Sponsored by the Milken Institute, the Urban Institute and Moody’s Analytics, the “Pragmatic Plan for Housing Finance Reform” features a new government MBS guaranty that would cover catastrophic losses after private credit enhancement is exhausted. Like the legislation being drafted by Senators Bob Corker, R-TN, and Mark Warner, D-VA, it would create a new Federal Mortgage Insurance Corp. to manage the new government MBS guaranty. Under the proposal, MBS insurers would be...
Ambac Assurance Corp. may proceed with its fraud claims against JPMorgan Chase in connection with residential MBS that Ambac insured, a New York state judge ruled last week. In March 2012, Ambac filed suit against JPMorgan Chase, alleging fraudulent marketing of residential MBS by Bear Stearns and Co., which was acquired and renamed JPMorgan Securities. The suit claims that Ambac had to pay more than $200 million in insurance claims to investors from seven Bear Stearns securitization transactions that lost $1.8 billion. Ambac contends...
When rates spiked this week, margin calls to MBS investors increased. Lenders are nervous but next will will be the real test, mortgage executives told Inside Mortgage Finance.
Fannie Mae and Freddie Mac were improperly prevented from increasing their guaranty fees for years during the GSEs’ conservatorship after the federal government unconstitutionally seized control of the two companies during the 2008 financial crisis and the lower fees cost investors billions of dollars, according to a federal lawsuit filed by GSE shareholders last week. The plaintiffs – including the City of Austin (Texas) Police Retirement System and Washington Federal, a Seattle-based bank – filed a class-action suit in the U.S. Court of Federal Claims in Washington, DC. The GSE shareholders seek some $41 billion in damages for what they claim was the government’s violation of their 5th Amendment rights that prohibit taking of private property for public use “without just compensation.”
It’s no secret that speculators wide and far are betting the common and preferred shares of Fannie Mae and Freddie Mac could rise significantly as their profits continue to stay robust. But according to James Lockhart, who once headed the Federal Housing Finance Agency, these speculators are likely throwing their money away. Speaking at a recent housing forum sponsored by the Bipartisan Policy Center, he noted that the Treasury Department owns the senior preferred of the GSEs and the senior stock “sits above” the junior shares. Lockhart said the government preferred will never be paid back, which means the junior holders are out of luck. Lockhart, who now serves as vice chairman of WL Ross & Co., said he does not own any stock in the two nor does he plan on buying any.
Banks and thrifts continued to push a high volume of home mortgages into the secondary market during the first three months of 2013, but the pace was slowing, according to a new Inside Mortgage Trends analysis of call report data. The industry reported $395.8 billion in single-family mortgage sales during the first quarter, down 5.1 percent from the previous period. It was a stronger sales volume than during the first quarter of 2012, however, and ranked as the fourth largest ... [Includes one data chart]
The amount of home mortgage debt outstanding continued its post-crisis downward spiral in the early months of 2013, although the agency servicing market grew slightly, according to a new analysis and ranking by Inside Mortgage Finance. The Federal Reserve reported total home mortgage debt outstanding of $9.868 trillion as of the end of March, down 0.6 percent from the previous quarter. Under pressure from falling house prices and the collapse of the non-agency market, the supply of MDO has been in steady decline since peaking at its all-time high of $11.195 trillion at the end of 2007. Single-family servicing associated...[Includes two data charts]
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