The Federal Housing Finance Agency proposed minor revisions to its single-family and multifamily housing goals for 2018 through 2020 to push Fannie Mae and Freddie Mac to continue helping low-income borrowers. The FHFA acknowledged that Fannie and Freddie are challenged when it comes to making credit available for the low-income market. Both government-sponsored enterprises have fallen short of the market in the low-income and very low-income purchase goal almost every year since 2013, the regulator noted. Most of the single-family goals would remain...[Includes one data table]
An expert in the commercial real estate debt market is calling on industry participants to “reset the business to where it used to be” to stop the commercial MBS market from shrinking any further. In a recent blog, Rick Jones, partner and co-chair of Dechert’s finance and real estate practice, noted CRE securitization, or at least the conduit part of the business, continues to dwindle. It has fallen from $800 billion in outstanding principal balance in 2007 to approximately $400 billion currently, with a run rate of about $50 billion annually. The downward trend is...
The U.S. House of Representatives was a relatively busy place last week, with a handful of measures related to flood insurance passing the House Financial Services Committee, and a few other, small-scale, individual mortgage reforms being introduced. Among the bills passed by the committee was H.R. 2875, the “National Flood Insurance Program Administrative Reform Act of 2017,” introduced by Rep. Nydia Velazquez, D-NY. It would make certain administrative reforms to the NFIP to increase fairness and accuracy and to protect the taxpayer from program fraud and abuse. The legislation passed on a 58-0 vote. Also favorably voted on was...
Mark Filler, who departed “fix and flip” lender Finance of America Commercial early this spring, said he has amassed $1 billion of commitments from private equity investors and plans to enter the market once again, but this time as a buyer of properties. He also expects to launch a new business to provide advances to real estate agents based on their commissions, and then – if successful – roll out a similar program to fund mortgage brokers. He anticipates paying referral fees to mortgage companies that send business his way. “My goal is...
Issuers of commercial MBS are facing significant problems with risk-retention requirements five months after the rule took effect, according to an industry attorney. Industry participants continue to push for guidance from federal regulators, but the response so far has been limited. “The rule is woefully inadequate as a guidebook for compliance, with massive white space, periodically interrupted by obscure bubbles of facial clarity,” according to Rick Jones, a partner at the Dechert law firm. “Unclear rules and potentially existential liability are not the stuff of a deal easily made.” In a recent commentary, Jones said...
Real estate investment trusts that focus on the MBS market recorded a modest increase in their MBS holdings during the first quarter of 2017, according to an Inside MBS & ABS analysis. And observers say a pending change in how Fannie Mae and Freddie Mac structure their credit-risk transfer programs may boost REIT participation further. The 15 mortgage REITs tracked by Inside MBS & ABS reported a combined $230.82 billion of MBS investment at the end of March, including assets held in the to-be-announced market. That was up 1.6 percent from the end of 2016, though it was still off from year-ago levels. Some 91.8 percent of REIT MBS holdings are...[Includes one data table]
President Trump’s tax plan would raise the federal debt, but could benefit residential MBS, consumer ABS and asset-backed commercial paper, depending mostly on the effect on the underlying obligors’ after-tax income, according to a recent research report from Moody’s Investors Service. “The administration’s blueprint proposes a reduction in the corporate tax rate to 15 percent from 35 percent, which would also apply to partnerships and other ‘pass-through’ businesses that are currently taxed through their principals’ individual returns,” analysts explained. The White House plan also features...
The Securities and Exchange Commission this week charged two former head traders who ran the commercial MBS desk at Nomura Securities International with lying intentionally to customers to boost the profits of the firm as well as their commissions. The SEC complaint alleged that traders James Im and Kee Chan inflated the price on CMBS they bought and sold for customers on the secondary market. In certain instances, the two traders allegedly pretended they were negotiating bond purchases with a third-party seller at a higher price when Nomura had already purchased the bonds at a lower price. According to the SEC, the fraud generated...
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