Fannie Mae and Freddie Mac are expected to continue issuing more risk-transfer deals even though both GSEs have effectively reached their 2014 targets. But some of the potential upside for investors has dissipated, according to separate analyses by Fitch Ratings and Wells Fargo Securities. Tight pricing on mortgage risk transfer securities issued by Fannie and Freddie indicates a “growing appetite for this relatively new and unique form of mortgage risk,” noted Fitch.
A recently issued advisory by Fannie Mae’s and Freddie Mac’s conservator noting that the two GSEs should only approve mortgage servicing sales where the transactions “are consistent” sound business practices comes as part of a renewed federal and state focus on servicing, officials note. Although Fannie and Freddie have, for years, had minimum capital requirements for mortgage companies that want to become seller/servicers, the Federal Housing Finance Agency and state regulators are now exploring codifying a capital minimum for nonbanks, according to industry officials and state regulators.
Any action that the Federal Housing Finance Agency takes in setting GSE guaranty fees should take into account the agency’s conservatorship duty to direct economic stakeholders, including shareholders, noted a coalition of Fannie Mae and Freddie Mac investors. In a letter to FHFA Director Mel Watt Wednesday, Investors Unite Executive Director Tim Pagliara urged the agency head to take into account “the critical purpose of setting appropriate guaranty fees,” noting that the Finance Agency does not have a mandate as conservator to run Fannie and Freddie as not-for-profit entities.
DC Circuit Latest Court to Reject GSE Tax Collection Effort by Municipalities. A three-judge panel of the DC Circuit Court recently upheld a lower court ruling against Kay County in Oklahoma, which has been trying to collect real estate transfer taxes from Fannie Mae and Freddie Mac. In rejecting Kay County’s bid to get the GSEs to pay a 1 percent “documentary stamp tax,” the DC court’s finding became the latest in a growing number of
Fannie Mae and Freddie Mac in May resumed a more than year-long streak of declines with monthly decreases in the volume of single-family mortgages securitized by the two GSEs, according to a new Inside The GSEs analysis. Fannie and Freddie issued $44.8 billion in single-family mortgage-backed securities in May, a 1.3 percent decrease from the previous month. April’s $45.4 billion issuance proved to be just a brief reversal to the longer trend.
The OCC believes that HAMP loans perform better than proprietary mods because the program places an emphasis on reduced monthly payments, debt-to-income ratios and income verification. Servicers also receive incentive payments.
The supply of mortgage debt outstanding declined again during the first quarter of 2014, slipping to its lowest level in eight years, according to new Federal Reserve data. There was a total of $9.851 trillion of home mortgages outstanding as of the end of March, down 0.4 percent from the previous quarter. The mortgage servicing market has been in almost constant decline since midway through 2008, with a modest bump higher in the third quarter of last year after a relatively strong rally in housing activity. Even the agency mortgage servicing market lost...[Includes two data charts]