Freddie Mac ended 2012 with its single best quarterly showing since the company was placed into government conservatorship by the Federal Housing Finance Agency at the height of mortgage market implosion 4½ years ago. The GSE late this week posted fourth quarter net income of $4.5 billion. Compared to the third quarters earnings of $2.9 billion, profits grew by 55 percent, the company noted in its Securities and Exchange Commission filing.
With the Federal Reserves MBS portfolio quietly passing the $1 trillion mark in mid-February for the first time since late 2010, Fed Chairman Ben Bernanke this week continued to toe the party line on the historic level of support the central bank has provided to the MBS and Treasury markets. But there is more skepticism from Republicans on Capitol Hill and some Fed board members, and industry analysts are trying to dope out when the Fed buying spree will wind down. After quadrupling its balance sheet engaging in unprecedented MBS asset purchases and creating an extended negative real interest rate environment, there is...
Despite softening involvement during the last quarter of 2012, most of the top real estate investment trust MBS investors had healthy increases in their portfolios over the last year, including six that showed triple-digit increases, mostly on the strength of an active first half of the year. According to a new analysis by Inside MBS & ABS, REIT MBS investors as a group increased their MBS holdings by 47.4 percent in 2012, to a total $357.45 billion, despite a collective shrinkage of 4.1 percent during the fourth quarter of the year. All but $7.49 billion were in agency MBS. The biggest year-over-year portfolio gains were seen...[Includes one data chart]
Two months back Macquaire Equities Research issued a report declaring that investing in agency MBS is like playing a game of chicken. The analytics firm was speaking mainly about REITs, advising its clients to take the dividends and run. Its chief concern was that MBS investing REITs arent diversified. We spoke with agency REIT management teams and found that while the current environment is challenging, for the most part they remain committed to the agency MBS asset class, wrote Macquarie analyst Jasper Burch. Earlier this month, hedge fund giant Cerberus Capital filed...
The Treasury Department approved $10.0 million in federal funds this month for a limited pilot of a program to allow non-agency borrowers with negative equity to refinance. The program in Oregons Multnomah County includes characteristics of a proposal from Sen. Jeff Merkley, D-OR, who said the pilot could create a national model. The Oregon Housing and Community Services Department will use money from the Hardest Hit Fund to help non-agency mortgages with loan balances up to $250,000 and ... [Includes one brief]
House Republicans may be able to pass tough FHA reform and solvency legislation out of committee but they may not have enough votes on the House floor or in the Senate to sustain such a bill, according to industry sources. Even after two successive hearings in the House Financial Services Committee this month, there has been no clear indication from Chairman Jeb Hensarling, R-TX, as to which proposals might go into a legislative package of FHA reforms. Hensarling is said to be operating with a very strong hand, and if it were up to him entirely, he would draft legislation that would contain some ...
The Consumer Financial Protection Bureau may run into budget pressures as it transitions from its start-up and rulemaking period to supervision and enforcement, all while policymakers struggle with spending restraints and Congressional Republicans continue to sharpen their CFPB axes in light of the Noel Canning v. National Labor Relations Board ruling, according to an industry consultant. If the bureau does need more funding, it might find its influence unexpectedly limited. The D.C. Circuit Court of Appeals Jan. 25 decision in Canning raises...
Securitization of nonperforming loans has increased significantly since 2009, with ever greater issuance expected this year. However, industry participants warn that requirements in the Securities and Exchange Commissions proposed revision Reg AB will effectively extinguish the market for NPL securitization. Ryan Stark, a director at Deutsche Bank Securities, noted that since the collapse of the non-agency market, issuance involving nonperforming loans has far outpaced issuance of new non-agency MBS. He said about 30 nonperforming loan deals were completed from 2010 through the end of 2012, most without ratings. Issuance of NPL securities started...
The Consumer Financial Protection Bureau announced this week that it will closely scrutinize servicing transfers due to complaints from borrowers tied to a recent increase in servicing sales. The federal regulator published CFPB Bulletin 2013-01 this week detailing the new oversight standards, with an emphasis on loss mitigation issues. The CFPB has particular concerns related to servicing transfers that arise from consumer complaints and supervisory work related to servicing transfers, the federal regulator said. Among other complaints, consumers have complained about service interruptions when their loans are transferred during the loss mitigation process. The problems are related...
A new final rule from the Department of Housing and Urban Development may make it harder for lenders to defend against allegations of racially discriminatory policies and even more difficult to structure an effective compliance program under the Fair Housing Act, according to legal experts. Issued last week, the rule provides that HUD or a private plaintiff can establish a so-called disparate-impact liability under the FHAct, even if there is no intent to discriminate. The agency said the rule establishes no new law since HUD and appellate courts have upheld the disparate impact theory in fair housing cases for decades and aims to standardize the minor variations for determining liability under the statute. The rule establishes...