Citadel Servicing has raised $200 million in capital to originate residential subprime mortgages. Does this mean subprime lending is "back"? Answer: yes and no.
This week’s effort by a quartet of former Washington heavyweights to “jump start” the debate over the future of Fannie Mae and Freddie Mac in the form of a new, but familiar, mortgage reform proposal put GSE overhaul back in the headlines. Industry observers say that’s a plus, but it remains to be seen whether it will ultimately affect policy change. The Bipartisan Policy Center, comprised of former Republican and Democrat lawmakers and cabinet officials, issued a plan calling for the phasing out of the GSEs in favor of a new federal entity that explicitly acts as a backstop of last resort after the private sector.
Freddie Mac ended 2012 with its single best quarterly showing since the company was placed into government conservatorship by the Federal Housing Finance Agency at the height of mortgage market implosion 4½ years ago. The GSE late this week posted fourth quarter net income of $4.5 billion. Compared to the third quarter’s earnings of $2.9 billion, profits grew by 55 percent, the company noted in its Securities and Exchange Commission filing.
Over the next 10 months upwards of $15 billion in nonperforming residential loans could hit the auction market – and some of that product will come from Fannie Mae and Freddie Mac. Investment bankers and loan sale advisors familiar with the matter told Inside The GSEs that Fannie could come to market with a multi-million dollar package of residential NPLs before the end of March. One trader told IGSEs that Fannie’s announcement was imminent, but at press time no such proclamation had been made.
The Federal Housing Finance Agency hasn’t totally abandoned the idea of restructuring how mortgage servicers make a living and may take a second look at its “fee for service” proposal, according to industry executives close to the issue. A year ago, the FHFA shelved its fee for service (FFS) proposal, which would have replaced the current 25 basis point minimum fee with a flat payment of $10 per month for performing loans. This was just…
California continued to be the leading source of new single-family Fannie Mae and Freddie Mac mortgages during 2012, according to a new Inside The GSEs analysis. A total of $296.1 billion of home loans in the Golden State were securitized by the two GSEs during the 12 months ending on Dec. 31, 2012, accounting for 23.1 percent of their total business for the year. That was up 51.9 percent from total California Fannie/Freddie production back in 2011, while the overall GSE market rose 50.1 percent from a year ago. Although fixed-rate mortgages continued to dominate the GSE market throughout 2012, California produced $11.0 billion in adjustable-rate mortgages – 26.5 percent of the national total. ARMs accounted for just 3.2 percent of total GSE volume.
The advance business for the 12 Federal Home Loan Banks increased by fits and starts throughout 2012 but ended the year ahead on both a quarterly and annual basis, according to preliminary figures released by the Federal Home Loan Bank Office of Finance. Advances increased 3.3 percent to $425.8 billion during the fourth quarter of 2012 while posting a smaller 1.8 percent increase from $418.2 billion a year earlier. “The demand for advances has shown some signs of regional stabilization and certain FHLBank members increased their use of advances,” said the OF.
Although the GSEs ended 2012 with $20.11 billion of pending and disputed buybacks on their books, the halcyon days of loan repurchase disputes may be behind the two, causing both Fannie Mae and Freddie Mac to reconsider their employment of outside due diligence vendors. According to executives who work for these vendors and serve as consultants to the GSEs, over the past several months Fannie Mae has slashed contracts with at least two outside firms…
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