The general fear is that higher-than-needed capital standards will cause mortgage insurers to hold unnecessary amounts of assets that will force the industry to raise premiums.
“Fannie and Freddie have made tremendous strides to provide clarity in the system and create innovations,” said Peter Carroll, executive vice president for mortgage policy and counter party relations at Quicken Loans.
Fannie Mae and Freddie Mac issued a robust $189.92 billion of single-family mortgage-backed securities during the first three months of 2015, according to a new Inside The GSEs analysis.Business in the GSEs’ core MBS guaranty program grew 5.9 percent from the fourth quarter of last year. The pace in early 2015 was up a hefty 47.0 percent from the same period last year, which was the weakest quarter in over a decade. Nonbank seller/servicers continued to gain market share. These companies accounted for 45.6 percent of GSE MBS issued in early 2015, and their total production was up 7.7 percent from the previous quarter. (Includes 2 exclusive charts).
Sen. Chuck Grassley, R-IA, chairman of the Judiciary Committee, sent letters on April 7 to the Department of Justice and the Treasury requesting documents and details regarding the government’s 2011 decision to take the bulk of Fannie Mae’s and Freddie Mac’s profits. This comes on the heels of reports suggesting President Obama has invoked executive privilege over some of the documents pertaining to the decision. While admitting that he’s unclear whether or not the president asserted executive privilege, Grassley emphasized the importance of transparency and said taxpayers have a right to know what transpired that resulted in billions of dollars going to the Treasury. “But instead of transparency, there appears to be an invocation of executive privilege,” he said. “If true, this is cause for concern.”
Fannie Mae and Freddie Mac released quality control measures to their customers last week that they said will increase transparency and help lenders reduce the amount of problematic loans. Both GSEs are more open to repurchase alternatives and have witnessed a decrease in the number of deficient loans.“Mortgages today are certainly of the highest quality as validated by our QC reviews,” Freddie noted in the letter. Since 2013, the defect rate of a random sampling of performing loans has been 1.4 percent, its lowest, even as the level of QC files increased. Fannie said that the quality of originations has improved, resulting in fewer loans being deemed ineligible by the GSE. As of the end of 2014, 0.33 percent of the single-family loans....
Fannie Mae’s maiden voyage in the nonperforming loan auction market began on April 8 when it announced that it will be auctioning a pool of approximately 3,200 loans totaling $786 million in unpaid principal balance. Joy Cianci, Fannie Mae’s senior vice president for credit portfolio management, said the transaction will help Fannie reduce the number of seriously delinquent loans it owns and offer additional foreclosure prevention opportunities. It’s being marketed in conjunction with Bank of America Merrill Lynch, Credit Suisse and The Williams Capital Group. Fannie’s first voyage into the sale of non-performing loans is expected to be a kick-off to future NPL sales. “We plan to build these sales into a programmatic offering...
The Federal Housing Finance Agency is expected to unveil its final rules on Private Mortgage Insurer Eligibility Requirements (PMIERs) early next week, according to industry officials who claim to have knowledge of the regulator’s thinking. After the MI industry views the regulations, the rest of the world likely will see them a week later. It’s anticipated that the FHFA will not make any surprising changes to what was proposed earlier in the year, though a new report from Compass Point Trading & Research predicts that the final regulatory language will be “modestly softened.” The research firm adds, “Our view remains that the forthcoming FHFA release will be positive for the PMI industry,” noting that the finalization will remove a “meaningful policy overhang” from the sector.
While creating the largest Federal Home Loan Bank in the system, both geographically and membership wise, about 75 percent of the Federal Home Loan Bank of Seattle workforce will be laid off due to a merger with the Federal Home Loan Bank of Des Moines. The merger, approved in December by the Federal Housing Finance Agency, officially goes into effect in June, trimming the Seattle bank’s workforce to just 35 employees in the regional office. About 109 employees will be laid off before 2015 ends. Both banks unanimously approved the merger and said it will result in a cooperative that is stronger than either bank on an individual basis. Once combined, the bank will be headquartered in Des Moines.
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