The CFPB and five other federal financial regulators issued a proposed rule last week that would implement minimum requirements for state registration and supervision of appraisal management companies. The minimum requirements would apply to states that voluntarily elect to establish an appraiser certifying and licensing agency with the authority to register and supervise AMCs. Under the proposed rule, participating states would require that an AMC register in the state and be subject to its supervision, and use only state-certified or licensed appraisers for federally related transactions, such as real estate-related financial transactions overseen by a federal financial institution regulatory agency that require appraiser services.

Expect a long and winding legal road to resolution of investor lawsuits challenging the Treasury Department’s “net worth sweep” of Fannie Mae and Freddie Mac earnings, warn legal experts. More than a dozen lawsuits filed against the government – including hedge funds Perry Capital and Fairholme Capital Management – are pending in federal district court in Washington, DC, and in the Court of Federal Claims. The shareholder plaintiffs allege that the Treasury’s change in the dividend structure of its preferred stock leaves the government-sponsored enterprises with no funds to pay dividends to junior shareholders. The complaints raise...

The Federal Open Market Committee this week voted to scale back the central bank’s purchases of agency MBS again, dropping the monthly growth target to $25 billion, but the deceleration is barely keeping even with the rapid slowdown in new MBS issuance. At its December meeting, the FOMC decided to drop its MBS purchases to a pace that would add $35 billion per month, and lowered that by another $5 billion at its January meeting. The program began in late 2012 at $40 billion a month. The central bank will continue to reinvest principal and interest payments on its holdings in the agency MBS market. The most recent available data show...[Includes two data charts]

New Federal Reserve Chair Janet Yellen said this week that the U.S. central bank’s bond purchase program will likely end this fall as the Fed Open Market Committee announced, as expected, a further pullback in its agency MBS purchases. Beginning in April, the FOMC said it will add to its agency MBS holdings at a pace of $25 billion per month rather than $30 billion per month. If the slowdown continues at its current pace, the Fed will stop growing its MBS holdings late this summer. The FOMC also updated...

Fannie Mae and Freddie Mac have a liquidation value – excluding what they’ve already paid to the federal government – potentially well north of $200 billion, according to an independent evaluation conducted on the two GSEs.The report, conducted by Alvarez & Marsal, concluded that if the two GSEs are eventually liquidated, the federal government could reap $170 billion to $234 billion in net proceeds. Fannie Mae and Freddie Mac have a liquidation value – excluding what they’ve already paid to the federal government – potentially well north of $200 billion, according to an independent evaluation conducted on the two GSEs. The report, conducted by Alvarez & Marsal, concluded that if the two GSEs are eventually liquidated, the federal government could reap $170 billion to $234 billion in net proceeds.

If Fannie Mae and Freddie Mac are eventually liquidated, the federal government could reap between $170 billion and $234 billion in net proceeds, according to a new audit of the firms, but that doesn’t mean the junior preferred stockholders in the two will see a dime of that money. The newly released Johnson-Crapo mortgage finance reform bill provides no relief to investors in the junior preferred or owners of common stock in the two government-sponsored enterprises, leaving all liquidation proceeds to the U.S. Treasury, which owns the senior preferred shares. Over the past 18 months, several high-profile private-equity firms – Fairholme Capital, Pershing Square and Perry Capital, to name a few – have invested...

The economic feasibility and perhaps the successful winding down of Fannie Mae and Freddie Mac may come down to how the government accounts for the federal budget impact of shuttering the two government-sponsored enterprises, noted experts this week at a Bipartisan Policy Center forum. In light of Fannie’s and Freddie’s federal conservatorship status and the resulting control by the Treasury Department, the two GSEs are “effectively part of the government” and their operations should be reflected in the federal budget, according to the Congressional Budget Office. The CBO has concluded...

Publicly traded real estate investment trusts reported a 13.5 percent decline in their holdings of residential MBS during the fourth quarter, according to a new Inside MBS & ABS analysis. The industry reported $264.8 billion of residential MBS at the end of 2013, a 26.4 percent drop from the fourth quarter of 2012. The five largest REIT MBS investors all reported double-digit drops during the final three months of 2013, while the mid-range companies generally had smaller declines and three smaller firms actually grew their portfolios. At the top of the table, Annaly Capital Management reported...[Includes one data chart]

Members of the Treasury Markets Practice Group are supportive of the Financial Industry Regulatory Authority’s recent proposal to establish margin requirements for transactions in the “to be announced” market, seeing them as compatible with what the TMPG itself is trying to accomplish with the same products. According to the minutes of a recent meeting, TMPG members noted that FINRA’s proposed rule amendments would be binding across FINRA’s membership, which would further the objectives of the TMPG’s agency MBS margining recommendation and encourage wider adoption of margining practices over time. “While recognizing that the TMPG’s margining best practices go...