Fannie Mae and Freddie Mac should move more quickly and expand key initiatives that are laying the groundwork for mortgage-finance reform, according to a Treasury Department official. In remarks prepared for an industry conference this week, Michael Stegman suggested the government-sponsored enterprises should expand their risk-transfer activities and open up the development of the common securitization platform to non-agency participants. “The near-term CSP initiative would not succeed...
If Fannie and/or Freddie have a negative net worth, investors wouldn’t buy their MBS and if investors don’t buy their MBS we would have financial Armageddon…
Ginnie Mae will restate its FY 2014 and FY 2013 financial statements after federal auditors withheld their opinion for lack of sufficient information because of accounting anomalies and poor servicing oversight. An audit report issued by the Department of Housing and Urban Development Inspector General said the issues in the FY 2014 financial statement arose from servicing problems associated with a defaulted issuer’s portfolio, which Ginnie Mae is currently managing. The portfolio once belonged to the now-defunct Taylor, Bean & Whitaker, a Florida-based loan originator and a top Ginnie Mae issuer.The FHA suspended TBW in August 2009 due to its failure to submit a mandatory annual report and to disclose certain transactions that suggested fraud. Soon after, Ginnie Mae terminated TBW as an issuer/servicer and seized the company’s $25 billion Ginnie MBS portfolio. According to the IG report, ...
The FHA’s recent decision to reduce its annual mortgage insurance premium by 50 basis points pushes back the agency’s timeline for attaining the 2 percent capital reserve requirement by 2016 and limits private mortgage insurance companies’ ability to serve borrowers with higher loan-to-value ratios, warned MI industry representatives. Testifying before the House Financial Services Subcommittee on Housing and Insurance, Clifford Rossi, chief economist of Radian Group, said the FHA sought to justify the premium cut by saying it far exceeded the amounts necessary to cover new FHA-insured mortgages. “But this ignores the higher expected losses on earlier insured loans,” he said. Comparing lifetime premiums on current borrowers to their projected average lifetime losses is not a meaningful comparison for an insurance portfolio comprised of borrower risk profiles over book years subject to different economic scenarios, Rossi argued. Moreover, comparing premiums to average losses overlooks ...
The Federal Housing Finance Agency released requirements that will likely pave the way for increased sales of nonperforming mortgages by Fannie Mae and Freddie Mac. The FHFA said it has approved of sales of nonperforming loans by the government-sponsored enterprises to reduce the number of severely delinquent loans held in their inventories and to transfer risk to the private sector. Freddie has completed two sales of nonperforming ... [Includes one data chart]
Most mortgage lenders reported solid increases in refinance originations during the fourth quarter of 2014, but the faltering purchase-mortgage sector still accounted for most of their business. A new Inside Mortgage Finance ranking and analysis reveals that refinance originations increased by 16.9 percent from the third to the fourth quarter. Based on securitization figures from Fannie Mae, Freddie Mac and Ginnie Mae, refi activity rose by a more modest 14.0 percent, although these data trail the primary market by one or two months. Meanwhile, purchase-mortgage originations were...[Includes five data charts]
The Federal Housing Finance Agency this week directed Fannie Mae and Freddie Mac to provide a lot more transparency in the fledgling process of selling nonperforming loans, or NPLs, and to make sure borrowers are taken care of in the process. Freddie this week announced details on its second NPL sale; Fannie has not yet done such a transaction. But both government-sponsored enterprises are expected to emphasize selling their less-liquid assets, such as NPLs and non-agency mortgage securities, as they continue to downsize their retained portfolios. The new guidelines cover...
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