Two different groups holding Fannie Mae and Freddie Mac stock filed suit against the government this week claiming that the Treasury Department and the Federal Housing Finance Agency are illegally poaching the profits from Fannie Mae and Freddie Mac that should go to shareholders. The FHFA and Treasury illegally implemented the so-called sweep amendment last summer that altered Fannies and Freddies preferred stock purchase agreements, according to the suits. The amended agreement allows the government to seize nearly all the profits of the two government-sponsored enterprises. This is a direct violation of the 2008 conservatorship legislation, according to the lawsuit filed by hedge fund Perry Capital in the U.S. District Court for the District of Columbia. Less than two days later, Fairholme Capital Management filed...
More sales of mortgage servicing rights are expected as a result of final Basel III capital rules approved by U.S. bank regulators over the past week. As anticipated, the Federal Reserve and other agencies declared that mortgage servicing rights cannot exceed 10 percent of Tier 1 capital or 15 percent when deferred tax assets are factored into the equation. As was originally proposed, any MSR amounts above 15 percent must be deducted from Tier 1 capital, and any amounts included in capital will carry a risk weight of 250 percent. Mortgage servicing rights were not given...
Private mortgage insurers may be gaining momentum as the mortgage market steers toward a greater focus on purchase-mortgage lending, according to a new Inside Mortgage Finance analysis of Fannie Mae and Freddie Mac data. The two government-sponsored enterprises securitized a total of $56.11 billion of home loans that included private MI coverage during the second quarter of 2013. That was up 12.1 percent from the first three months of the year, compared to a 5.1 percent decline in total GSE business over that period. Private MI activity is...[Includes one data chart]
Fannie Mae and Freddie Mac announced this that week that they will rely on mortgage sellers to make sure all the loans sold to the government-sponsored enterprises starting next year will be qualified mortgages that meet the controversial limit on points and fees. Some aspects of the QM standard will be easy to quantify and meet, such as maximum loan terms of 30 years and no interest-only payment plans. The 43 percent cap on debt-to-income ratio thats part of the ability-to-repay rule issued by the Consumer Financial Protection Bureau will be waived for the GSEs. The stickiest wicket is...
Mortgage banking and brokerage firms are about to start laying off production workers as refi applications continue to decline, but industry executives say the heaviest layoffs are unlikely to come until the end of summer. Thats when lenders begin closing mortgages that first entered the pipeline in May, when the application picture was brighter. According to figures compiled by the Bureau of Labor Statistics, the mortgage banking and brokerage sectors employed 293,800 full-time workers in May, compared to 295,500 in April, a loss of 1,700 positions. Compared to a year ago, employment is up 10 percent. The brokerage sector alone employed...