The price of agency MBS has been rising since early April, which can only mean good things for publicly-traded real estate investment trusts that own the asset class. However, REIT share prices haven’t improved much of late, with some companies such as Annaly Capital Management continuing to trade closer to their 52-week lows than their highs. Late this week, for instance, Annaly – one of the largest MBS investing REITs – was trading at $11.30 compared to a 52-week high of $15.98 and a low of $9.66. But better days may be...

With housing finance reform unlikely to clear Congress in the near term even as Fannie Mae and Freddie Mac remain “highly leveraged” on a global scale, a pair of policy advocates are urging Treasury Secretary Jack Lew to trigger existing protective regulations under his discretion that would classify the two GSEs as systemic risks to the economy. American Enterprise Institute Fellow Alex Pollock and Thomas Stanton, author and former Financial Crisis Inquiry Commission staffer, petitioned Lew in a letter this week to act in his capacity as chairman of the Financial Stability Oversight Council and designate Fannie and Freddie as Systemically Important Financial Institutions.

The Consumer Financial Protection Bureau is widely seen as the single most powerful, consumer-oriented regulatory agency in the nation’s history, yet it has only a fraction of the supervisory budget that the safety-and-soundness banking regulators have. So how does it prioritize its resources and activities so it can “punch above its weight class?” “The way we approach our prioritization is looking across the market, regardless of charter or type of entity, and breaking it up into different [sub]markets,” Peggy Twohig, assistant director in the CFPB’s Office of Supervision Policy, said Tuesday during a breakout session at the annual convention of the Consumer Bankers Association. “Bank, nonbank – it doesn’t matter to us. We look at where the risk to the consumer is and we try to execute our program against that.” The bureau reviews...

Loss-mitigation activity by major bank servicers has decreased significantly in the past year, coinciding with servicers’ completion of loss-mitigation requirements under the $25 billion national servicing settlement. Eight major banks and thrifts completed 72,466 loan modifications in the fourth quarter of 2013, a 49.5 percent decline from the fourth quarter of 2012, according to a new report from the Office of the Comptroller of the Currency. The servicers completed 60,765 foreclosures in the fourth quarter, down 42.6 percent from the fourth quarter of 2012. The declines in loan mods and foreclosures by banks have outpaced...

Leading secondary-market representatives told the Financial Industry Regulatory Authority they generally support its goal of mitigating the counterparty credit risk borne by participants in the “to be announced” market and reducing the potential for systemic risk. But they are opposed to FINRA’s proposal to require maintenance margin to attain that aim – something the Treasury Market Practices Group has already considered and rejected. Issued back in January, FINRA’s proposed amendments stipulated that for bilateral transactions in covered agency securities with non-exempt accounts, FINRA members must collect, in addition to variation margin, maintenance margin equal to 2 percent of the market value of the securities. If sufficient margin is not collected, the member would have to deduct the uncollected amount from the member’s net capital at the close of business following the business day on which the deficiency was created. Additionally, if the deficiency in margin is not resolved...

Allonhill LLC, a Denver-based due-diligence firm that served both Wall Street and primary market lenders, recently filed for bankruptcy protection, just days after losing a civil case where it was found liable for breach of contract and fraud, and ordered to pay its former client, Aurora Bank FSB, more than $25 million in damages. Last year, Allonhill’s owners – including principal Sue Allon – sold most of the firm’s assets to Stewart Title. From a legal standpoint, it was not a “franchise” deal, which means Stewart should not be on the hook for any actions of the corporate entity. However, the case may be...

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]