Fannie Mae and Freddie Mac junior shareholders face an uphill battle in their lawsuits challenging the Treasury’s August 2012 “net worth sweep” that effectively allows Uncle Sam to confiscate all of the companies’ profits, warns a legal expert. Investors are challenging the amended agreements regarding the seniority of Fannie and Freddie preferred stock owned by the federal government over investors’ GSE preferred stocks. More than a dozen lawsuits filed against the government – led by hedge funds Perry Capital and Fairholme Capital Management – are pending in federal district court in Washington, DC, and in the Court of Federal Claims.
With housing finance reform unlikely to clear Congress in the near term even as Fannie Mae and Freddie Mac remain “highly leveraged” on a global scale, a pair of policy advocates are urging Treasury Secretary Jack Lew to trigger existing protective regulations under his discretion that would classify the two GSEs as systemic risks to the economy. American Enterprise Institute Fellow Alex Pollock and Thomas Stanton, author and former Financial Crisis Inquiry Commission staffer, petitioned Lew in a letter this week to act in his capacity as chairman of the Financial Stability Oversight Council and designate Fannie and Freddie as Systemically Important Financial Institutions.
Seniors Group Targets Johnson-Crapo Bill Supporters With Paid Media. A right-leaning seniors advocacy group has taken out television and radio ads in seven states to call out supporters of the Senate’s bipartisan proposal to overhaul Freddie Mac and Fannie Mae, labeling it “Obamacare for the mortgage industry.” The 60 Plus Association campaign targets seven senators for supporting a measure by Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID, arguing that the bill would wipe out GSE shareholders. Three Democrat and four Republican senators were named in the campaign.
Fannie Mae and Freddie Mac generated $129.2 billion in single-family mortgage-backed securities during the first three months of 2014, the lowest quarterly volume in 14 years, according to a new Inside The GSEs analysis. That was down 29.1 percent from the already weak production of the fourth quarter and off 63.7 percent from the same period of 2013. GSE production – and mortgage originations – have been tumbling since the beginning of 2013 as the last great refinance wave washed away.
The use of Federal Home Loan Bank advances by bank and thrift members at the end of 2013 rose on both quarterly and yearly bases, according to the Inside Mortgage Finance Bank Mortgage Database. The nation’s banks and thrifts used a combined $406.1 billion in advances as of Dec. 31, 2013, up 26.7 percent from the third quarter and a 21.6 percent increase from the same period a year earlier. Two of the top three members posted virtually no change on a percentage basis between the third and fourth quarters but all three posted significant increases on a year-over-year basis.
Commercial banks and savings institutions reported severe declines in secondary market mortgage sales during 2013, including a sharp 38.4 percent drop in the fourth quarter. Bank and thrift mortgage sales totaled $1.208 trillion last year, according to an Inside Mortgage Trends analysis of call-report data. That was down 16.5 percent from 2012. Banks and thrifts originated fewer loans as well, but loan sales declined more than total originations, indicating that many lenders retained new production for their portfolios. The industry reported $618.4 billion in retail originations through their mortgage-banking operations, along with $801.2 billion in wholesale production. Both figures were down from the previous year, and [includes a two-page chart]...
New single-family business volume at Fannie Mae and Freddie Mac continued to decline in early 2014, hitting the lowest quarterly total in 14 years during the first three months of the year, according to a new Inside Mortgage Finance analysis and ranking. The two government-sponsored enterprises issued a total of $129.2 billion of single-family mortgage-backed securities during the first quarter of 2014. That was down 29.1 percent from the already weak production of the fourth quarter and off 63.7 percent from the same period in 2013. The first-quarter 2014 total marked...[Includes two data charts]
The nonbank servicers under scrutiny from regulators have rankings at similar levels to banks, according to an analysis by Inside Mortgage Finance. And while there have been concerns about loss mitigation activity by nonbank servicers, they use loan modifications more than banks. Nationstar Mortgage, Ocwen Financial and Walter Investment Management’s Green Tree Servicing were among the 17 servicers that received a rating of at least three stars from Fannie Mae for their performance in 2013, the government-sponsored enterprise disclosed last week. Twelve unnamed servicers received ratings below three stars. Green Tree (four stars) and Nationstar (three) maintained...
Also, new single-family MBS production by Fannie Mae and Freddie Mac plummeted 15.6 percent from February to March as the GSEs posted their lowest quarterly production total in 14 years.
RSS