Fannie Mae last week priced its second capital markets risk-sharing transaction, with about 50 investors buying into the $750 million deal. The more senior of the two tranches offered by Fannie priced at one-month LIBOR plus a spread of 160 basis points, while the lower tranche priced at one-month LIBOR plus a spread of 440 basis points.
Investors hoping to get in on the Fannie Mae/Freddie Mac preferred stock speculation game may want to bring their wallets. The price of the “junior” preferred is now trading at roughly 40 percent of par compared to 20 percent a few months ago, according to investors in the market.
The Treasury Department’s surprise move during the summer of 2012 to revise the GSE Senior Preferred Stock Purchase Agreement was prompted by fears that Fannie Mae’s and Freddie Mac’s previous dividend payment obligations “would lead to the exhaustion of the Treasury [financial] commitment,” according to a senior Federal Housing Finance Agency official. …
Three House Democrats have added their own proposal to the growing list of legislative housing finance reforms that, in time, could pave the way for the government to sell off Fannie Mae and Freddie Mac while giving new purpose to the Federal Housing Finance Agency. The reform proposal by Reps. John Delaney (MD), John Carney (DE) and Jim Himes (CT) would establish a system of government reinsurance for eligible mortgage-backed securities. The idea is to leverage the government’s capacity and the market’s ability to price risk, they said.
Who at the GSEs (or at the Federal Housing Finance Agency) was responsible for telling Fannie and Freddie to set aside so much money for loan losses and were those assumptions way off base?
The Treasury Department’s point man on housing declared this week that the government has no appetite to expand the Home Affordable Refinance Program, and he reiterated past Obama administration pledges to cashier Fannie Mae and Freddie Mac. Michael Stegman, counselor to the Treasury on housing finance policy, outlined for attendees of the ABS Vegas conference the administration’s housing goals, including its opposition to any HARP eligibility tweaking and its continued support for housing finance reform.
Fannie Mae and Freddie Mac are likely to find the multifamily MBS space to be noticeably more competitive this year as increasing levels of private capital respond to improving market conditions, one top government-sponsored enterprise official suggests. One of the most influential factors that will determine how much volume the GSEs do in multifamily will be “more competition in the market in 2014 than we saw in 2013,” thanks to increasing levels of private capital, according to Manny Menendez, senior vice president of multifamily capital markets and pricing for Fannie. Besides Freddie and FHA, the three other main competitors for Fannie in the sector are...
The consensus among speakers at the ABS Vegas conference this week appeared to be that the MBS market is unlikely to change significantly this year. “The status quo is comfortable,” said Larry White, an economics professor at New York University’s business school. Issuers of non-agency MBS are working on reducing the government-sponsored enterprises’ dominance of the secondary market for mortgages, but the chicken-and-egg problem persists. New non-agency issuance has ground to a standstill, and Congress has been slow to move housing-finance reform legislation. In the meantime, industry observers expect...
The market produced $4.94 billion of new non-agency MBS during the fourth quarter, according to a new Inside MBS & ABS analysis and ranking, the weakest output of the year.
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