Wells Fargo and JPMorgan Chase continue to post strong residential finance profits, but there is a growing worry that the "mortgage party" may be drawing to a close.
The unrelenting campaign by liberal Democrats and progressive activists to depose the Federal Housing Finance Agency’s acting director could backfire by making him politically untouchable, while the badgering directed at the Obama administration threatens to alienate the very man they seek to convince to act in their favor, according to industry observers. According to a memo released late this week that was prepared by New York Attorney General Eric Schneiderman’s legal team, President Obama has the power to replace FHFA Acting Director Edward DeMarco without congressional approval. “We conclude that the president has the authority to remove the acting director at will, and there is a strong argument that he has the authority to designate a new acting director, although the answer to that question is less certain,” noted Schneiderman’s memo.
Decisions by federal regulators have combined to promote issuance of agency MBS over non-agency MBS, a trend that is expected to continue for years to come, according to industry analysts. Panelists at a talk this week sponsored by the American Enterprise Institute cited rules from the Consumer Financial Protection Bureau along with pending rules to set requirements for risk retention on MBS issuance and capital requirements for originations and securitization. “Until you know what the rules of the game are going to be...
Over the past five years, lender captives paid $706 million in losses. Most of these captives were domiciled in the U.S. and sponsored by mortgage lenders, receiving $2.92 billion in ceded premiums.
Primary market originators and due diligence providers say the elusive market in private placement MBS deals has been gaining strength this year. “We’re seeing three to five private deals a month,” said Jeff Taylor, managing partner of Digital Risk, a New York-based risk management and due diligence firm. As for the underlying product, it’s across the board, he added. “It can be jumbo, nonperforming, and re-performing.” But the deals are also much smaller than the rapidly growing public MBS deals. Digital Risk, which conducts due diligence reviews on the underlying collateral, said...
In recent months, the Securities and Exchange Commission has looked into Regulation AB compliance issues regarding non-agency MBS issuance from 2010 and 2011 by Redwood Trust. The SEC questioned Redwood and others involved in the issuance regarding disclosures of servicing practices. An official at Redwood said the issue largely relates to the complicated nature of Redwood’s deals. In particular, issuance from Redwood often involves multiple servicers, each of which can be subject to Reg AB disclosure requirements. According to correspondence published this week by Redwood, the SEC first queried...
Consumer advocates are calling on the Obama administration to extend the Home Affordable Modification Program beyond the end of this year. While HAMP is far from meeting performance goals set by the administration, consumer advocates claim the program is favorable to proprietary loan modifications completed by servicers. “Extending the HAMP program for several years – or, at a minimum, for one year – would greatly assist the housing market in general and neighborhoods most affected by high foreclosure rates in particular by helping more homeowners avoid foreclosure,” 36 consumer groups, including the Center for Responsible Lending and the National Consumer Law Center, said in a recent letter to Jacob Lew, secretary of the Treasury Department. In January 2012, the Obama administration announced...
The FHA may need to draw $943 million from the U.S. Treasury to reserve for further unexpected losses in the Mutual Mortgage Insurance Fund, according to estimates in the Obama administration’s fiscal 2014 budget proposal released this week. That is a bit of good news, despite Congress’ continuing concern about the FHA. Last year, an independent actuarial audit found a projected $16.3 billion shortfall in the MMIF as of the end of fiscal 2012. The audit also revealed that capital reserves for unexpected losses had fallen to negative 1.44 percent. Technically, the FHA has...
There’s a growing interest on the part of new investors in buying residential mortgage servicing rights, but observers say a major impediment for the market is a lack of confidence that Fannie Mae and Freddie Mac will acknowledge their ownership rights. “It’s a problem,” said Tom Piercy, managing member of Interactive Mortgage Advisors, a servicing brokerage and advisory firm. “Fannie and Freddie could learn a thing or two from Ginnie.” The phrase “new investors” generally applies...
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