The agency share of total jumbo production reached its highest level in 2009 and 2010, immediately after “emergency” high-cost loan limits were put in place…
Cowen notes: “…this latest flare up reinforces our view that Treasury is unlikely in 2017 to unilaterally change the profit sweep at Fannie and Freddie…”
Late last month, Fairholme Capital chief Bruce Berkowitz sent out a press release reassuring his shareholders that the hedge fund’s bet on owning the junior preferred stock of Fannie Mae and Freddie Mac will prevail, eventually. Among other things, the veteran equity-fund manager extolled the government-sponsored enterprises’ massive fourth quarter profits of almost $10 billion, called them “indispensable” to the mortgage insurance industry and reminded readers they continue to fulfill “their historic role of insuring adequate levels of liquidity to lenders of all sizes.” He also mentioned...
Fannie Mae announced its second deal using credit insurance risk transfer on the front end of the transaction. Most of the government-sponsored enerprise’s CIRT transactions have involved insurance contracts on pools of loans that have already been securitized. The new front-end CIRT deal will shift a portion of the credit risk on about $15 billion worth of single-family loans, significantly larger than Fannie’s first test of the structure back in October, which involved about $3.7 billion of single-family loans. This CIRT, like the first one, will be...
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