Falling interest rates are sometimes a bad thing — case in point is Mr. Cooper and negative MSR marks. Also, it’s been somewhat quiet on the M&A front but perhaps a change is in the wind.
Declining interest rates helped fuel a securitization boom at Fannie and Freddie in the second quarter. However, falling rates will force writedowns tied to derivatives.
The next step might be to create a limited liability regulated entity (LLRE) which would succeed the GSE. After that, the LLRE (once capital is raised) becomes a new company and the charter is sold to new owners. From what we understand, the FHFA has the legal power to sell the charter...
As Wedbush and other research firms have pointed out: Mr. Cooper does not hedge its MSR positions, resulting in large non-cash marks when rates decline from quarter to quarter, and write-ups when interest rates increase.
The company filed for bankruptcy protection this week, a maneuver that could lead to a merger with Finance of America. What the two nonbanks have in common: both are owned by The Blackstone Group. But it’s hardly a done deal.
Reverse mortgage lender Live Well Financial is headed into liquidation, causing financial damage along the way to warehouse providers Flagstar Bank and Customers Bank. What killed the company? Answer: IO securities that were decimated by falling interest rates.
As of January 2019, Fannie employed 7,400 people compared with 7,200 a year earlier, according to 10-K filings with the Securities and Exchange Commission. There was no mention of the word “buyout” or “buyouts” in the SEC filing.
The Chapter 11 bankruptcy petition provides a way for Stearns to eliminate the debt while selling the balance of the firm to Blackstone. But there’s a catch: the bankruptcy plan allows for third-party investors to make a bid for Stearns.