Waiting several years to unify Fannie Mae and Freddie Mac securities into a single MBS could pose a huge risk to its successful completion, warned the mortgage banking industry, but Wall Street thinks it’s worth the wait to get market participants totally behind the move. The Federal Housing Finance Agency’s proposed single security for the government-sponsored enterprises met with conflicting views as the comment period ended this week. The proposal is aimed at eliminating Freddie’s pricing disadvantage and improving liquidity in the to-be-announced market. The Securities Industry and Financial Markets Association urged...
The liquidity coverage ratio rule recently finalized by federal regulators will hinder the revival of the non-agency MBS market, according to industry participants. Non-agency MBS are not counted as high-quality liquid assets (HQLA) under the rule, reducing incentives for banks to hold the securities. The Structured Finance Industry Group and others raised concerns about the lack of an HQLA designation for non-agency MBS at a time when the Obama administration is working to revive the non-agency MBS market. “There are...
The substantial increase in federal support of the single-family housing finance system, as well as weaknesses uncovered in the wake of the mortgage market meltdown, have led to a U.S. finance system that warrants reform, according to the Government Accountability Office. The GAO focused considerable attention on the much-reported fact that government programs have accounted for a huge share of the mortgage and MBS market since the financial crisis. The congressional watchdog views the federal role in housing finance as a “high-risk area.” “Developments in mortgage markets since 2000 have challenged...
Bill Dallas, who runs Skyline Lending, told us he believes the “new” non-agency movement is beginning right now. “Today, we‘re doing 90 percent agency,” he said. “In 2017 the ratio will be 60 percent agency.”
GSE shareholder advocates remain undeterred following a federal judge’s decision late this week to deny a former Fannie Mae executive access to confidential evidence unearthed as part of the discovery process in an investors’ lawsuit against the government. Earlier this year, Fairholme Funds hired former Fannie Chief Financial Officer Timothy Howard as a consultant to assist its law firm Coopers and Kirk. Lawyers for the government want to deny Howard access to some 800,000 pieces of discovery in investors’ litigation challenging Uncle Sam’s “net-worth sweep” of GSE profits.
In October of last year Pershing Square, the hedge fund controlled by uber investor Bill Ackman, began gobbling up huge blocks of common stock in Fannie Mae and Freddie Mac at prices ranging from $1.54 to $2.27 a share. Today, a small portion of those positions is underwater, but thanks to a recent rebound in the stocks, whatever “paper” losses Pershing Square incurred have just about been wiped out. In trading Thursday, Fannie common was selling for $2.14, Freddie a few pennies below that.
The Federal Housing Finance Agency’s proposed single security for the GSEs met with conflicting views as the comment period ended this week. In August, the FHFA proposed a single-security structure to allow Fannie Mae and Freddie Mac to issue a common MBS to serve the single-family market. The proposal is aimed at eliminating Freddie’s pricing disadvantage and improving liquidity in the to-be-announced market.
After a year of searching for a chief executive to lead Common Securitization Solutions, the Federal Housing Finance Agency is still looking, but it continues to hire staff. “The search continues,” said a government official close to the matter. “We even have a search firm.”Although the FHFA is keeping a tight lid on information regarding CSS, it’s now common knowledge that the search firm in question is the Washington-based Spencer Stuart, which bills itself as “one of the world’s leading global executive search and leadership consulting firms.”
A proposed Federal Housing Finance Agency rule would define a Federal Home Loan Bank “former member” as an institution whose membership has been terminated but which must still maintain FHLBank stock. Published in the Oct. 8 Federal Register, the proposal’s definition would apply to institutions whose membership has ended but which continue to hold stock in the FHLBank as required by the Bank’s capital plan. …
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