A senior Obama administration official this week flatly rejected the notion of private investors purchasing the mortgage-backed securities business of Fannie Mae and Freddie Mac. White House Economic Advisor Gene Sperling noted while speaking at a Washington, DC, conference that the White House won’t get behind a $52 billion proposal by Fairholme Capital Management to purchase and spin off the GSEs’ insurance business.

JPMorgan Chase twice in as many weeks announced multi-billion dollar deals to settle legal disputes with numerous parties – including Fannie Mae, Freddie Mac and their regulator, the Federal Housing Finance Agency – involving residential mortgage-backed securities. This week, the Department of Justice, along with other federal and state agencies – including the Federal Housing Finance Agency – reached a $13 billion settlement with JPMorgan, which acknowledged making misrepresentations about billions of dollars in MBS sold…

Current homeowners have increasingly purchased homes with cash in lieu of a mortgage in recent months, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. Analysts suggest that the trend is driven by frustrations with the mortgage process and seasonal factors. Some 28.6 percent of home purchases completed in October relied solely on cash for financing, based on the three-month moving average. That was the second consecutive monthly increase in the cash-financing share, after it fell to 26.8 percent in August. While investors predominantly use cash to purchase homes, homeowners tend...

With refinance volume falling and minimum net-worth requirements heading north, advisors in the mergers-and-acquisitions market say undercapitalized firms should sell now, while they still can. Larry Charbonneau, a principal of Charbonneau & Associates of Texas, said he is currently working on four deals but noted that, “There a lot of shops out there with less than $5 million in capital that need to do something but haven’t realized it yet.” Although Fannie Mae and Freddie Mac have net-worth minimums in the $3 million range, there is...

Although non-agency MBS issuance has been a dicey proposition since rates spiked in late spring, residential lenders continue to eye the sector, liking the long-term outlook for jumbo securities. Two nonbanks taking a close look at the jumbo MBS market include Freedom Mortgage and W.J. Bradley Mortgage Capital, both established names in the agency MBS arena. In an interview with Inside MBS & ABS, Freedom Mortgage CEO and founder Stanley Middleman said...

Federal Reserve Vice Chair Janet Yellen, President Obama’s nominee to replace Fed Chairman Ben Bernanke, did not deviate in the slightest from Bernanke’s support for a policy that has resulted in the Fed buying two thirds of new agency MBS production, during her nomination hearing before the Senate Banking, Housing and Urban Affairs Committee this week. “The Federal Reserve is using its monetary policy tools to promote a more robust recovery,” Yellen said. “A strong recovery will ultimately enable the Fed to reduce its monetary accommodation and reliance on unconventional policy tools such as asset purchases. I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy.” Sen. Mike Crapo, R-ID, ranking member of the committee, took issue...

A Miami-based investment management firm, one of the largest junior preferred shareholders of Fannie Mae and Freddie Mac, this week offered to buy and operate the MBS guaranty businesses of the two government-sponsored enterprises with $52 billion of private capital and “a business plan that is sustainable with or without a federal reinsurance plan.” In a four-page letter to Federal Housing Finance Agency Acting Director Edward DeMarco, Bruce Berkowitz, chief investment officer of Fairholme Capital Management, proposed to form two new state-regulated insurance companies to own and operate the assets of Fannie and Freddie “that are relevant to the continuing insurance business.” Under the Fairholme plan, the new MBS guarantors would be capitalized...

A reformed housing finance system should first and foremost put the risk and rewards of mortgage lending in the hands of “private actors,” with the government playing a key role to reduce the impact of the inevitable financial-market failures, “especially when their failures are exacerbated in a cyclical downturn,” an Obama administration official noted this week. Speaking at an Urban Institute event, James Stock, a member of the Council of Economic Advisers, outlined the administration’s central theme of “cyclical resilience” or the need for the mortgage finance system to provide liquidity at “reasonable rates” during both good and bad times. “A cyclically resilient housing finance system provides...

Fitch Ratings released its “initial perspective” this week on how the Consumer Financial Protection Bureau’s ability-to-repay rule and requirements for qualified mortgages will impact ratings for new non-agency MBS. That makes Fitch the first rating service to provide formal insight on how the CFPB rule, which takes effect Jan. 10, will impact jumbo mortgage securitization. Fitch is considering requiring issuers to state the QM status of any mortgage to be included in an MBS, putting a greater emphasis on lender compliance and due diligence, and a focus on representations and warranties for compliance with the ATR rule and QM standards. “The rating approach will likely focus...

Six months back, CoreLogic was bullish on the outlook for due-diligence work tied to jumbo securitizations. But earlier this month, the publicly-traded mortgage vendor shuttered its due-diligence unit, giving layoff notices to almost 70 workers. Another 40 or so full-timers will likely lose their positions in the next few months as the division winds down. Although the firm declined to discuss the reasons behind the pullout, competitors say the anticipated boom in jumbo securitizations hit a brick wall in the spring when rates spiked and investors began to shy away from the AAA pieces of those securities. In other words, the sour short-term outlook for due-diligence firms scouring for work on non-agency loans is resulting...