Non-agency MBS execution for certain high-quality mortgages is competitive with agency MBS execution, according to industry analysts. A slight increase in the guaranty fees charged by the government-sponsored enterprises would make non-agency securitization even more attractive, though the incentive for banks to hold non-agency originations in portfolio remains strong. Non-agency MBS execution is currently competitive with agency MBS execution for purchase mortgages with loan-to-value ratios below 70 percent and credit scores above 740, according to analysts at Barclays Capital. “For the cleanest collateral, non-agency execution could be...
Home prices are improving at a rapid pace throughout the nation, sparking bidding wars in certain markets, according to several different indices. But this rise in “home equity” is also spurring talk that the two largest players in residential finance – Fannie Mae and Freddie Mac – could be sitting on large unrealized gains in both their MBS and whole loan portfolios. One veteran MBS investor told Inside MBS & ABS that home values have improved so much over the past 120 days that the government-sponsored enterprises may be looking at “monster” increases in the value of their holdings. “Keep in mind that these two are sitting on loans where a year ago the loan-to-value ratio was 115 percent,” said this investor. “But most of this stuff isn’t underwater anymore. If [the GSEs] re-calculate their reserves, they will see some huge gains.” In its 10-Q filing for the first quarter, Fannie reported...
A Senate bill filed last week by a Georgia Republican would wind down Fannie Mae and Freddie Mac and create a transitional mortgage program that would be sold to the private sector within a decade of the proposed legislation’s enactment. The Mortgage Finance Act of 2013, S. 1048, by Sen. Johnny Isakson, R-GA, reprises his proposed legislation of the same name from 2011. The bill would replace the two government-sponsored enterprises with a single Mortgage Finance Agency. The MFA created under S. 1048 would be...
Ally Financial, the former parent of bankrupt Residential Capital, announced last week it will pay $2.10 billion to settle legal claims with ResCap and its creditors as part of ResCap’s comprehensive settlement agreement and Chapter 11 plan. Under the settlement, Ally will contribute $1.95 billion in cash to the ResCap bankruptcy estate, plus $150 million in insurance proceeds. The agreement also requires that Ally receive full repayment on its secured claims, including $1.13 billion that is owed under existing credit facilities. Announced earlier this month, the agreement gets...
The amount of non-agency MBS held by the 12 Federal Home Loan Banks continued its steady decline during the first quarter of 2013. Non-agency MBS investments by the FHLBanks came to $24.69 billion as of March 31, 2013, down 2.9 percent from the fourth quarter of 2012 and off 13.5 percent from $28.52 billion in the same period a year ago. Non-agency MBS made up...[Includes one data chart]
An increase of 10 basis points in the guaranty fees charged by the government-sponsored enterprises would make pricing for agency execution comparable to pricing for non-agency mortgage-backed security issuance, according to industry analysts. Agency g-fees averaged about 50 bps at the end of 2012, with plans for further increases this year. “The economics of non-agency securitization are much closer to GSE securitizations today than they were two years ago,” according to analysts at Barclays Capital ...
Legislation to reform the government-sponsored enterprises is starting to appear in the Senate. Last week, Sen. Johnny Isakson, R-GA, introduced S. 1048, similar to the “Mortgage Finance Act” he introduced in 2011. The bill would revoke the charters of Fannie Mae and Freddie Mac upon resolution of their obligations and create a new Mortgage Finance Agency for securitization. Sens. Bob Corker, R-TN, and Mark Warner, D-VA, are also working on a bill that would replace Fannie and ... [Includes two briefs]
A recent Federal Reserve survey of bank lending practices further confirmed a continuing trend among FHA lenders of refusing to lend to borrowers with FICO scores below 620 even though they qualify for the loan and could afford the required minimum 3.5 percent cash investment. About a third of senior loan officers who responded to the April 2013 survey indicated they were less likely to approve FHA home-purchase loan applications within the 580-620 FICO range this year compared to last year. They prefer lending to borrowers with a 720 FICO and who are making a 10 to 20 percent downpayment, the survey showed. An estimated 75 percent of banks cited the ...
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