Fannie Mae, Freddie Mac and Ginnie Mae produced a combined $88.96 billion of single-family MBS in January, a modest 1.4 percent decline from December, according to a new ranking and analysis by Inside MBS & ABS. Ginnie production was actually up 7.2 percent from the previous month, while both the government-sponsored enterprises posted declines in new issuance. January’s agency MBS production included...[Includes two data tables]
The outlook for publicly traded real estate investment trusts that invest in agency MBS and related products is starting to improve, in part, because competing investments are looking ugly. That might seem like a small consolation prize for REITs, but several are posting decent earnings, even though the book value of their common stock is relatively weak. Meanwhile, while certain investors shun their stocks, many companies have engaged...
Cash-out refinances are staging a quiet comeback as rising home-price appreciation makes such deals feasible for more homeowners. The number of cash-out refinances continued to reach new recent highs in the third quarter of 2015, rivaling numbers not seen since 2008. Black Knight Financial said close to 300,000 cash-out refinances were originated in the third quarter of last year, and about one-million over the past 12 months. During that same time period, 42 percent of all first-lien refinances had a cash-out component, the highest share since 2008. In addition, the average cash-out amount was the most it’s been since 2007 at more than $60,000. In all, these homeowners tapped...
Fannie Mae and Freddie Mac issued $56.56 billion of single-family mortgage-backed securities in January, a modest 5.6 percent decline from the previous month, according to a new Inside The GSEs ranking and analysis. December, however, may have been an anomaly. Many mortgage originators reported delays in loan closings in October as the primary market adopted a significant change in mortgage disclosures and closing requirements under the so-called TRID rule. Those delays, ranging from a few days to a week or more, pushed some October closings into November. Given the normal lag between primary market origination and securitization – especially for correspondent originations – the TRID traffic jam may have accounted for the sharp...
The Federal Housing Finance Agency’s long-awaited final piece to the representation-and- warranties framework is complete with the addition of an independent dispute-resolution process that serves as a last resort for disputed loans. A neutral third-party arbitrator will determine whether there was a violation in loan eligibility in the loans sold to Fannie Mae and Freddie Mac. Talks of an alternative to solving the most difficult repurchase demands, outside of the standard procedures, began in 2014. The FHFA reiterated its point that the IDR process only comes into play after the appeal and escalation processes have been exhausted. The GSEs have said most lenders should be able to work with them to resolve buyback requests.
The case of Fairholme Fund v. The United States will continue to linger in the courts as the battle for getting the government to release the bulk of the documents pertaining to the preferred stock purchase agreements between the Federal Housing Finance Agency and the Treasury plays out with a motion filed this week. “We are now in a struggle with the defendants, both the Department of Treasury and FHFA, over claims of the deliberative process privilege they sought to keep from having to produce thousands and thousands of documents, even in redacted form,” Charles Cooper, attorney with Cooper & Kirk, the law firm representing the shareholder plaintiffs, told Inside The GSEs.
There were nationwide protests this week to stop Fannie Mae and Freddie Mac from selling the bulk of its nonperforming loans to private-equity firms and hedge funds. Politicians and community groups continue to argue that the GSEs should level the playing field so more nonprofit groups have a chance to buy the loans. “Struggling mortgages should go to non-profits that fight foreclosures and create affordable housing, not Wall Street speculators ready to evict struggling families. Our neighborhoods are not for sale,” tweeted one of the protest’s organizers, the American Alliance for Californians Empowerment. The protestors argued that Fannie and Freddie continue to announce sales this year where Wall Street firms are the primary benefactors.
Fannie Mae said its new mortgage product that allows borrowers to have higher debt-to-income ratios because it includes income from non-borrowers is not risky. HomeReady was rolled out in August as a revised affordable lending product to replace the MyCommunityMortgage program focused on helping low- and moderate-income borrowers. A key component of HomeReady is that it counts income from relatives or friends who will also live in the home, which helps allow for a DTI ratio of up to 50 percent. Fannie said the reality of today’s market shows that homeowners are sharing homes and in many cases a significant amount of the income is being earned by the co-resident in these “extended-income households.”
Republicans said they are “extremely concerned” about the amount of risk the GSEs pose to taxpayers during this week’s House Financial Services Committee meeting offering up their version of fiscal year 2017 budget views and estimates. While it’s been seven years since the financial crisis, Republicans on the committee said the GSEs’ expanded activities and further consolidation of their dominant market share continue to be a cause for concern, according to the GOP print version of the FY17 BVE. They want to wind down the GSEs as quickly as possible. “Despite recent improvements to their corporate balance sheets, the GSEs’ model is inherently flawed and unsustainable without taxpayer support,” said the majority.
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