The government-sponsored enterprises are working several different risk-transfer pilots and will soon issue the securities, according to officials at the Federal Housing Finance Agency, Fannie Mae and Freddie Mac. Non-agency MBS investors appear eager for the securities, though a number of regulatory concerns remain, including complications with the Commodity Futures Trading Commission. Patrick Lawler, chief economist at the FHFA, said a risk-sharing transaction will hopefully be issued in the “not too distant future.” Speaking at the American Securitization Forum’s ASF 2013 conference this week in Las Vegas, Lawler and other officials with the FHFA and GSEs said risk-sharing transactions are a high priority this year. “The commitment is...
Relatively new players to the world of Fannie Mae approvals are starting to gripe a little more about the “volume curbs” that the GSE is placing on its “newbie” customers. One mortgage banker, who spoke under the condition his name not be used, told Inside Mortgage Finance ...
Federal regulators faced with finalizing controversial rules on risk retention in non-agency MBS, ABS and commercial MBS transactions of the future are considering a “fair-value” approach instead of the controversial premium capture cash reserve account. Although no details on the proposal are available, the American Securitization Forum recently provided general views on how fair value calculations of an issuer’s risk-retention requirement could replace the PCCRA. The group said the change could be “a significant improvement” over the PCCRA, which could have wreaked havoc on the securitization market. The PCCRA, which would have required issuers to hold in reserve any premium they earned in selling assets to a securitization trust, was...
Secondary market investors interested in branching out beyond plain vanilla mortgage products are not going to have much to get excited about once the Consumer Financial Protection Bureau’s new ability-to-repay rule kicks in next year, top legal experts suggested this week. “Will lenders make rebuttable presumption qualified mortgages? Remember, [lenders] are free to make loans that generally satisfy the ATR standard. We don’t think those are going to be very common. We don’t think they are going to be saleable in the secondary market at this point in time from what we know today,” Donald Lampe, leader of the financial services regulatory and compliance practice with the Dykema law firm, told participants in a webinar hosted by Inside Mortgage Finance, an affiliated newsletter. As he sees it, the real issue boils down...
With state and local lawsuits against Fannie Mae and Freddie Mac seeking payment for real estate transfer taxes from which the GSEs assert they are exempt, an industry attorney says the endgame for enterprise and municipality alike won’t come from the courts but from the other two branches of government at the highest level. Last month, Spokane, WA, and Montgomery County, MD, joined a growing list of local governments to file suit against the two GSEs for unpaid taxes, challenging Fannie’s and Freddie’s claim that the firms are exempt under their federal charter from transfer taxes in connection with the recording of deeds upon transfer of property by sale or foreclosure.
The Federal Housing Finance Agency has settled the first mortgage-backed securities lawsuit with the smallest player in the FHFA’s massive litigation against non-agency MBS issuers and underwriters it says sold toxic MBS to Fannie Mae and Freddie Mac. In papers filed with the U.S. District Court, Southern District of New York, the FHFA “voluntarily dismisses with prejudice” its lawsuit against General Electric Co., ending the legal action in which the Finance Agency had claimed the firm had misled Freddie into purchasing some $549 million of toxic MBS. The terms of the settlement were not disclosed by the FHFA but the agreement also dismissed claims against Morgan Stanley and Credit Suisse as underwriters for the securities. “This settlement resolves the dispute between FHFA, and GE consistent with FHFA’s responsibilities as conservator of Freddie Mac,” said FHFA General Counsel Alfred Pollard in a statement. “FHFA is pleased this lawsuit has been resolved and appreciates the work of Freddie Mac on this matter.” The FHFA filed suit during the summer of 2011 against 18 financial institutions, including GE, alleging violations of the federal Securities Act of 1933. The Finance Agency seeks tens of billions of dollars in damages incurred by the GSEs on purchases of approximately $200 billion in non-agency MBS sold between 2005 and 2007. GE had the smallest legal exposure among the major firms named in the FHFA’s lawsuits as GE’s one-time subsidiary, WMC Mortgage, sold MBS only to Freddie.
The Federal Housing Finance Agency and other government regulators could “permanently enshrine” Fannie Mae, Freddie Mac and other government housing entities “as the only large-scale source of mortgage credit in our country” if they fail to design a new mortgage rule with care, says one senior Republican senator. Sen. Bob Corker, R-TN, a member of the Senate Banking, Housing and Urban Affairs Committee, in a letter last week urged federal regulators to “simplify and synchronize underwriting standards for new mortgage lending rules to avoid permanently regulating the private sector out of the housing finance business.” Corker, in his letter to the FHFA, Federal Reserve, Department of Housing and Urban Development, and the Securities and Exchange Commission, among other agencies, noted that the proposed, but yet to be finalized, “qualified residential mortgage” rule exempts loans sold to Fannie, Freddie and the Federal Housing Administration.
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