After the Federal Housing Finance Agency filed a motion in November to dismiss a case introduced by two GSE shareholders over the summer, the shareholders have opposed the motion to dismiss and are demanding a jury trial. The original complaint stated that with Fannie chartered under Delaware law and Freddie under Virginia’s jurisdiction, the preferred stock of a corporation cannot be given a cumulative dividend right equal to all the net worth of the corporation “in perpetuity.” In a nutshell, shareholders David Jacobs and Gary Hindes argue that the net worth sweep in which Treasury takes the bulk of the GSEs’ profits is illegal under state law.
Democrats and Republicans in Congress want to know what it will take to expand real estate investment trust participation in GSE credit risk transfers. They wrote the Securities and Exchange Commission last week asking it to help alleviate the regulatory challenges REITs face when it comes to participating in credit risk transfers. “Specifically, we are requesting your expertise in unlocking a meaningful amount of capital in the form of mortgage real estate investment trusts to participate in these transactions,” said the letter from the 13 congressman.They cited the FHFA’s goal to grow the credit risk-sharing program with an expanded investor base and said that mortgage REITs would be a likely candidate if the obstacles were removed.
In JPM’s case, the extended cycle times caused by TRID did not affect the company’s financial results due to how the bank recognizes revenue. Most mortgage firms recognize revenue upon rate lock...
The servicing auction market experienced a flurry of deals at yearend 2015, but investors for the most part have been more cautious about what they’re willing to pay for mortgage servicing rights, given some of the large markdowns that damaged second- and third-quarter earnings. “A lot of investors got hurt by buying during the first half of last year,” said one MSR investor who spoke under the condition his name not be used. “A few of them aren’t bidding anymore.” During the first half of 2015, MSR buyers were willing...
There’s mounting evidence that the Consumer Financial Protection Bureau’s disclosure rule is having an impact on home sales and purchase mortgages, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. In December, closing times on mortgage-financed home purchases continued to stretch out and fewer sales closed on time. Tom Popik, research director of Campbell Surveys, said the CFPB’s Truth in Lending/Real Estate Settlement Procedures Act disclosure rule appears to have caused slight increases in closing times and the share of missed closings for the second month in a row. “Closing time metrics are still showing...
Earnings season has begun, and among the biggest financial institutions and mortgage lenders that have reported thus far, there’s been little evidence of damage to the bottom line as a result of the Consumer Financial Protection Bureau’s integrated disclosure rule known as TRID. At top-ranked Wells Fargo, total loan production for the fourth quarter was $47 billion, versus $55 billion in the third quarter, and $44 billion in the fourth quarter of 2014, something Chairman and CEO John Stumpf attributed to seasonality as well as TRID. During an earnings-related conference call with investors last week, Stumpf was asked...
Part of the $5.1 billion settlement amount Goldman Sachs agreed to in principle with the federal government last week will be used to provide relief for homeowners who owe more than the current appraised value of their homes. The agreement would resolve an ongoing investigation by the Residential Mortgage-Backed Securities Working Group of the U.S. Financial Fraud Enforcement Task Force, which President Obama established in 2009 to pursue those who played a role in causing the financial crisis. The tentative agreement would resolve...
The number of foreclosed properties and length of time it takes to foreclose is trending downward, but average time to foreclose is taking nearly three years or more in some states. RealtyTrac recently released its 2015 foreclosure report and noted that it took more than 1,000 days to foreclose in six states in the fourth quarter, with New Jersey leading the way at 1,180 days. That number is...
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