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Inside Mortgage Finance

October 16, 2008

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Fannie and Freddie Tossed as Life Preservers To Floundering Non-Agency MBS Market

Fannie Mae and Freddie Mac may be heading back into a market they have resolutely avoided so far in 2008 as government-appointed hazardous waste cleanup specialists for “toxic” mortgage securities backed by subprime, Alt A and other nonconforming loans. The two government conservatorships will reportedly buy up to $40 billion a month in non-agency mortgage-backed securities as... Read More

More Mortgage Legislation Likely in 2009 as Lawmakers Eye Direct Support for Borrowers

The $700 billion rescue fund for distressed financial markets now being hurriedly put into effect likely represents a huge downpayment on future legislation to overhaul the business of originating, servicing and funding home mortgages. The House Financial Services Committee this week will convene a hearing on the future of financial services regulation that has already sparked fierce... Read More

Fannie Drops Trust Account Requirement for Servicers in Wake of New FDIC Interim Rule

Fannie Mae this week was scrambling to unwind hundreds of trust accounts it required mortgages servicers to establish in recent months to address company concerns about the deteriorating financial condition of many banks. The move came as the Federal Deposit Insurance Corp. late last week issued an interim rule that safeguards principal and interest funds held by FDIC-insured... Read More

FHLBank Advances May Be Less Desirable Under New FDIC Deposit Insurance Assessment Rates

The Federal Deposit Insurance Corp. is planning to charge higher deposit insurance premiums for banks and thrifts that rely heavily on Federal Home Loan Bank advances, which have seen a boom in volume since the secondary mortgage market turmoil began a year ago. Under the FDIC’s proposed restoration plan, institutions with a significant reliance on secured liabilities would have to pay... Read More

Wells Fargo Gets Wachovia as Federal Reserve Signs Off; Lender Launches Pre-Emptive Litigation to Fend Off Damages

All that’s left for Wells Fargo to begin the integration of its acquisition of Wachovia is for its own shareholders to sign off on the deal – and face off with Citigroup in an expected lawsuit – after the Federal Reserve gave its approval over the weekend. The Fed moved quickly in its consideration of the deal, “in light of the unusual and exigent circumstances affecting... Read More

Citi Shrinks Mortgage Broker Business As Wholesale Landscape Quickly Evolves

CitiMortgage quietly sliced its mortgage broker business by almost 90 percent this month, the latest shift in a rapidly-changing wholesale mortgage environment pummeled by falling volume, ongoing consolidation and persistent credit woes. Citi is reportedly reducing its broker network from 9,500 to only 1,000 in an effort to sharply curtail third-party originations in... Read More

Further Downgrades Handicap Private MIs, Increased Counterparty Risk Looms for GSEs

With the private mortgage insurance industry going through another round of ratings downgrades, Fannie Mae and Freddie Mac are facing increased counterparty risk and may have to resort to tougher measures to ensure that their MI counterparties will be able to pay loss claims. This week, Standard & Poor’s lowered United Guaranty’s counterparty and financial strength ratings... Read More

Industry Shrinkage Hits Mortgage Trade Associations; Dues Going Higher in 2009

Both the Mortgage Bankers Association and the National Association of Mortgage Brokers are raising dues in the face of declining membership. NAMB is raising its membership dues from $120 to $250, putting a strain on its remaining members. The group has a dual membership structure in which mortgage broker companies join both their state association and the national... Read More

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