Big banks in recent years likely focused their refinance efforts on loans in agency MBS that had been purchased by the Federal Reserve, according to a working paper by economists at the Fed. John Kandrac and Bernd Schlusche noted that agency MBS held by the Fed exhibit faster prepayment rates than MBS held by the rest of the market. While some analysts have pinned the prepayments on refi activities by nonbanks, the Fed economists said they found that Bank of America, Citigroup, JPMorgan Chase and Wells Fargo played a large role in the high prepayment rates for agency MBS purchased by the Fed. The economists noted...
Fannie Mae and Freddie Mac continued to follow orders and prune their retained investment portfolios – and potential future income – during the first quarter of 2015. But the government-sponsored enterprises ended the period holding more of their own MBS than when it started. The combined Fannie/Freddie mortgage investment portfolio fell 0.5 percent during the first quarter of 2015. Under their conservatorship agreement, each GSE is required to reduce its mortgage portfolio to $250 billion by the end of 2018. They each have a little over $150 billion more to go and, as of the end of March, 15 quarters to do it. The Federal Housing Finance Agency has directed...[Includes one data chart]
The stock market hasn’t been treating real estate investment trusts that buy MBS very well of late, but there could be better news on the horizon: prepayment rates on the securities they own are coming down. As Barclays noted in a recent report: “Prepays fell for most cohorts, led by recent vintage 3.5s and 4s.” The investment banking firm added: “Next month, we expect speeds to remain mostly stable as seasonal factors and a 12 basis point rally in driving rates (3.83 percent vs 3.95 percent) helps offset another one-day drop in day count (20 days vs 21 days).” Several mREITs tracked...
Despite the Federal Housing Finance Agency’s misgivings about Property Assessed Clean Energy programs, ABS issuers are finding investors for deals backed by these loans. Since March 2014, three rated residential ABS transactions and one private unrated commercial deal backed by PACE assessments have been issued for a combined total of $503.65 million. All three residential ABS deals were rated “AA,” with average assessments totaling $59,628. The PACE program was launched in 2008 by the city of Berkeley, CA, as a pilot to promote energy efficiency in residential, commercial, agricultural and industrial properties...
For mortgage originators, going through a Consumer Financial Protection Bureau mortgage examination can be a daunting experience, but not if you walk in thoroughly prepared, according to compliance experts at GrantThornton. A CFPB lending exam can take up to six months to complete, can be quite expensive over time as well as delay business. At most banks and mortgage firms, the staff could work full time on just the CFPB audit, which could result in high overtime costs and ...
New life-of-loan representation and warranty- exclusion guidelines issued by the GSEs in November, appeared to have little impact on banks’ lending policies so far, according to a recent Federal Reserve Board survey.The rep-and-warrant changes were intended to reduce uncertainty and increase transparency in addressing lenders’ concerns about when they might be asked to repurchase a loan. The concerns were based on repurchase risk and other market factors that can cause an increase in credit overlays. “Addressing these concerns by providing tighter definitions and clarity should encourage sellers to serve a broader range of qualified borrowers,” said Dave Lowman, Freddie’s executive vice president of single -family business, when the changes were announced in November.
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