The Federal Housing Finance Agency has directed the two GSEs to accelerate their portfolio trimming by focusing on “less-liquid” assets other than their own MBS.
A Miami-based investment management firm, one of the largest junior preferred shareholders of Fannie Mae and Freddie Mac, this week offered to buy and operate the MBS guaranty businesses of the two government-sponsored enterprises with $52 billion of private capital and “a business plan that is sustainable with or without a federal reinsurance plan.” In a four-page letter to Federal Housing Finance Agency Acting Director Edward DeMarco, Bruce Berkowitz, chief investment officer of Fairholme Capital Management, proposed to form two new state-regulated insurance companies to own and operate the assets of Fannie and Freddie “that are relevant to the continuing insurance business.” Under the Fairholme plan, the new MBS guarantors would be capitalized...
The Center for American Progress called on FHFA to keep g-fees at current levels “until there is reliable evidence” to suggest that the government needs more revenue to cover the cost of the guaranty.
The weak market for jumbo mortgage-backed securities has prompted Redwood Trust to look into other activities beyond a focus on jumbo mortgages. The real estate investment trust started aggregating agency mortgages in October. Martin Hughes, Redwood’s CEO, said the conforming-mortgage activity allows Redwood to create mortgage-servicing rights to hold as investments and potentially participate in risk-sharing activities with the GSEs at the originator level. “This market opportunity is many times ...
One last thought on Berkowitz and Fairholme: To get Congress to listen to your ideas you have to donate money. Berkowitz can check that box off his to-do list. He has been a generous donor to Republicans and Democrats alike over the past two election cycles.
The FHA’s effort to reduce its presence in the mortgage market to make room for private capital would be derailed if Fannie Mae and Freddie Mac raised their guaranty fees, warned an agency official. Responding to a question during the Mortgage Bankers Association’s annual convention, Charles Coulter, deputy assistant secretary for single-family housing at the Department of Housing and Urban Development, said the FHA is currently “priced appropriately” and sees no need to further increase mortgage insurance premiums. The FHA has lost about 20 percent of its share of originations after five MIP increases in ...
Recapitalization of RMIC Will Pave the Way for a Return to MI Market. Old Republic International (ORI) is planning to recapitalize its mortgage guaranty subsidiary, RMIC Companies, Inc., which could resume underwriting in early 2014. Old Republic plans to contribute up to $50 million of new capital and raise additional funds, which would allow RMIC and its subsidiaries to fully support existing policies, pay off deferred claim obligations, exit state supervision, and resume underwriting new business early next year. The cash infusion would require ...
Will the banks that bought “junior” preferred stock in Fannie Mae and Freddie Mac prior to the housing bust ever be made whole? Will investors that purchased the preferred after that time eventually be rewarded for the gamble they took on such a highly speculative investment? Those two questions look a lot more interesting these days thanks to continued strong earnings from the two government-sponsored enterprises. According to filings with the Securities and Exchange Commission, Fannie and Freddie say...
The average guaranty fees charged by Fannie Mae and Freddie Mac on new business continued to climb during the third quarter, with a sizable slice going straight into the U.S. Treasury. Fannie reported that the average guaranty fee on new business was 58.7 basis points during the third quarter of 2013, up from 56.9 bps during the second quarter. Freddie continued to charge lower fees than its rival, 53.2 bps during the third quarter, up from 50.7 bps in the previous period. A year ago, Fannie’s average fee on new business was...
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