In the end, it's all about yield, which is why investors are going after "esoteric" ABS. Will non-prime MBS ever stage a comeback, even a mini-comeback?
Speculation continues to grow concerning which nonbanks have looked at buying PHH Mortgage. Our sources caution that “looking” doesn’t mean a deal is close. PHH is based in Cherry Hill, NJ, not too far from Philadelphia. One advisor suggested we look at who has been flying in from points south.
Among other things, the proposed Mortgage Securities Cooperative would be the only issuer of government-backed MBS. The MSC would be governed on a one-member, one-vote basis.
As former Fannie Mae executive William Maloni put it: “More money for Uncle Sam!” The Treasury Department ultimately will benefit since it gets to “sweep” almost of Fannie’s and Freddie’s earnings.
The scorecard was ushered in by former Acting Director Edward DeMarco who stepped down from his post in early January, to be replaced by former North Carolina Congressman Mel Watt.
The top three HEL lenders in the market – Wells Fargo, Bank of America and Chase – originated a combined $17.8 billion in home-equity loans last year, but they still saw a $32.1 billion decline in their total holdings of HELOCs and closed-end seconds.
In return, FHFA's pending lawsuits will be dismissed with prejudice and Bank of America and its affiliates will be released from all securities law and fraud claims, as well as certain other claims related to the non-agency RMBS in dispute.
Fannie and Freddie issued $44.6 billion of single-family MBS in February, a 5.1 percent decline from January and a stunning 62.0 percent drop for the first two months of 2014 when compared to the same period in 2013.
The government’s plan to wind down Fannie Mae and Freddie Mac is wrongheaded and would result in lower housing prices, economic harm and higher unemployment. So says well-regarded bank analyst Richard Bove of Rafferty Capital Markets.
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