Today’s reduced liquidity is here to stay because of increased regulation and the unprecedented dominance of the Federal Reserve in the agency MBS market, said the Urban Institute. The top five dealers were responsible for about 55 percent of agency-MBS transactions in 2006, but today’s top five account for approximately 80 percent, Urban Institute analysts said. According to Inside MBS & ABS estimates, the Fed held 27.3 percent of outstanding agency single-family MBS ...
A New York state court dismissed two mortgage repurchase actions filed by the government against Morgan Stanley, while Bank of America agreed to another settlement related to non-agency MBS issued by Countrywide Financial. Last month, Justice Marcy Friedman of the New York Supreme Court dismissed two residential MBS lawsuits filed by the Federal Housing Finance Agency against Morgan Stanley ABS Capital I Inc. and Morgan Stanley Mortgage Capital ...
Fannie Mae and Freddie Mac loan sellers pushed hard to increase originations of purchase-money mortgages during the first quarter of 2016, according to a new Inside Mortgage Trends analysis. The biggest beneficiaries were loan applicants with lower credit scores. In the first quarter of this year, 21.4 percent of purchase mortgages sold to the two government-sponsored enterprises had credit scores in the 620 to 699 range. That was up from just 14.4 percent in ... [Includes two data charts]
Fannie Mae and Freddie Mac issued a combined $68.91 billion of single-family mortgage-backed securities in April, a 3.8 percent increase over their production in March, according to a new Inside The GSEs ranking and analysis. So far, however, the 2016 market is still lagging by 10.6 percent the production volume during the first four months of last year. While year-to-date purchase-mortgage business was up 12.2 percent for the two GSEs, the refinance market through April was down 24.3 percent from the same period in 2015. Fannie issuance was up 9.9 percent from March, including a 15.4 percent spike in refi activity.
Freddie Mac posted a net loss and Fannie’s profits sagged in the first quarter of the year, prompting some industry groups to renew their calls for the GSEs to rebuild capital. A surprise interest rate decline in the first quarter of 2016 resulted in sharply lower net income at Fannie and Freddie. The GSEs booked a combined $7.37 billion in net derivative losses for the first quarter that compromised most of their income from their core businesses. Since 2012, when the two GSEs became profitable again, they have booked $23.46 billion in hedging losses. Both GSE CEOs pointed to volatility in the market as having affected earnings this quarter.
The Federal Housing Finance Agency recently raised the caps of multifamily purchases by Fannie Mae and Freddie Mac, by $4 billion. The cap was increased from $31 billion to $35 billion. With the GSEs already having a huge market share in multifamily finance, 78.3 percent according to recent figures by affiliated publication Inside MBS & ABS, the FHFA said an increase in the caps is warranted due to the larger-than-expected market this year. Recent projections by the mortgage giants show that they are issuing multifamily mortgage-backed securities in 2016 at a rate that may exceed $100 billion by the end of the year.
Less than 1 percent of borrowers will be able to take advantage of the Federal Housing Finance Agency’s new principal reduction program, according to recent estimates from RealtyTrac data, which reinforces the concerns of some who believe the progress is too little, too late. The California-based firm that specializes in data on foreclosed and underwater properties said that out of the 6.7 million seriously delinquent underwater properties in the US at the end of the first quarter of 2016, about 0.50 percent, or 33,622, would potentially qualify for the principal reduction program. When the program was announced in April, the FHFA ackowledged that only a select group of troubled borrowers will be eligible.
The GSEs are preparing big updates to their loan origination tools and one of the most noticeable changes will be Fannie Mae’s use of trended credit data to help more consumers qualify for a mortgage. Fannie will be rolling out Desktop Underwriter 10.0 during the weekend of June 25. Trended credit data relies on expanded information on borrowers’ credit history that shows the balance, minimum payment due and amount that is generally paid to determine if the consumer regularly pays off debt or carries a revolving balance. By using trended credit data in the risk assessment, Fannie said it allows for a more thorough analysis of the borrower’s credit history and is a “powerful predictor” of risk.
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