Fed Chairman Ben Bernanke indicated that the central bank is leaning toward scaling down its MBS purchases later this year, and that rapidly rising mortgage interest rates don’t pose a major threat to the fledgling housing recovery.
The Mortgage Bankers Association called for the Federal Housing Finance Agency to update standards for representations and warranties provided to the government-sponsored enterprises and asked for more transparent underwriting standards. “Confusion and uncertainty around representations and warranties standards continue to cause lenders to add their own overlays to the existing GSE credit standards,” said Bill Cosgrove, the MBA’s vice chairman. “As a result, lenders are only offering mortgages to those with the most pristine credit for fear that any borrower default will trigger costly repurchase requests.” The MBA detailed...
With the Federal Housing Finance Agency working on a common securitization platform for Fannie Mae and Freddie Mac, market participants are beginning to ask whether the residential finance sector really needs two government-sponsored enterprises. This week, at a policy forum in Washington, MBS co-inventor Lewis Ranieri and former GSE regulator James Lockhart suggested that the industry doesn’t need both Fannie and Freddie. The thinking is that a common securitization platform will facilitate the transition to a standardized GSE MBS, with slight variations, that would eliminate the current pricing differentials between Fannie and Freddie MBS. Speaking at the Bipartisan Policy Center, Lockhart noted...
Freddie Mac's "low activity fee" will be mostly eliminated. However, it will still apply to originators that have not sold a loan to the GSE in 36 months.
A new “pragmatic” secondary market reform plan released by four housing experts closely resembles the bipartisan legislation being drafted by key members of the Senate, including an ambitious implementation timeline that says the overhaul could be accomplished in about three years. Sponsored by the Milken Institute, the Urban Institute and Moody’s Analytics, the “Pragmatic Plan for Housing Finance Reform” features a new government MBS guaranty that would cover catastrophic losses after private credit enhancement is exhausted. Like the legislation being drafted by Senators Bob Corker, R-TN, and Mark Warner, D-VA, it would create a new Federal Mortgage Insurance Corp. to manage the new government MBS guaranty. Under the proposal, MBS insurers would be...
Ambac Assurance Corp. may proceed with its fraud claims against JPMorgan Chase in connection with residential MBS that Ambac insured, a New York state judge ruled last week. In March 2012, Ambac filed suit against JPMorgan Chase, alleging fraudulent marketing of residential MBS by Bear Stearns and Co., which was acquired and renamed JPMorgan Securities. The suit claims that Ambac had to pay more than $200 million in insurance claims to investors from seven Bear Stearns securitization transactions that lost $1.8 billion. Ambac contends...
Fannie Mae and Freddie Mac would cease to exist while the Federal Housing Finance Agency would be repurposed into a new incarnation as a “capable and empowered” regulator of a “pragmatic” housing finance system as envisioned in a new blueprint released this week by four industry experts. Spearheaded by Moody’s Analytics Chief Economist Mark Zandi – most recently on the White House’s short list to head the FHFA – the group’s white paper calls for the federal government to play an “explicit and transparent” role in the new housing finance system and to act as an insurer that covers catastrophic losses. The blueprint calls for an emphasis on mortgage funding diversity.
Freddie Mac is telling trade groups that it will kill a $7,500 “low-activity fee” after hearing numerous complaints from banks, thrifts and credit unions. According to sources who have been briefed on the about-face, the fee – set to go into effect next year – will be mostly eliminated, but it will still apply to originators that have not sold a loan to the GSE in 36 months and do not service any Freddie loans. A Freddie spokesman declined comment but noted, “We always listen to the concerns of our customers.”
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