The government’s plan to wind down Fannie Mae and Freddie Mac is wrongheaded and would result in lower housing prices, economic harm and higher unemployment. So says well-regarded bank analyst Richard Bove of Rafferty Capital Markets.
In return, FHFA's pending lawsuits will be dismissed with prejudice and Bank of America and its affiliates will be released from all securities law and fraud claims, as well as certain other claims related to the non-agency RMBS in dispute.
The agency debuted its scorecard in early March 2012 under then FHFA Acting Director Edward DeMarco as a means to implement in fuller detail the Finance Agency’s “strategic plan” for a post-Fannie Mae and Freddie Mac secondary market.
Bank of America, which is among the 18 original defendants, has not yet settled and faces the largest liability because of its ownership of Countrywide Financial Corp. and Merrill Lynch.
There has been some speculation that DeMarco might want the CSP CEO job, which pays in the range of $400,000. But many sources we talked to doubt it will happen.
The Federal Open Market Committee this week voted to scale back the central bank’s purchases of agency MBS again, dropping the monthly growth target to $25 billion, but the deceleration is barely keeping even with the rapid slowdown in new MBS issuance. At its December meeting, the FOMC decided to drop its MBS purchases to a pace that would add $35 billion per month, and lowered that by another $5 billion at its January meeting. The program began in late 2012 at $40 billion a month. The central bank will continue to reinvest principal and interest payments on its holdings in the agency MBS market. The most recent available data show...[Includes two data charts]
Bipartisan mortgage-finance reform legislation from leaders in the Senate focuses on replacing Fannie Mae and Freddie Mac securitization programs with a new government MBS guaranty, but it also includes options for MBS issued outside the proposed agency-like structure. Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID, this week revealed the text of their Housing Finance Reform and Taxpayer Protection Act, which may have little chance of passage this year but may be the starting point for reform in the next Congress. Johnson-Crapo would create...
The mortgage securitization sector is pleased that the bipartisan agreement between Senate Banking, Housing and Urban Affairs Committee Chairman Tim Johnson, D-SD, and Ranking Member Mike Crapo, R-ID, on housing-finance reform includes a small but critical provision to support the to-be-announced market. The 442-page draft sets a five-year timeline to shut down Fannie Mae and Freddie Mac and in their place create a new Federal Mortgage Insurance Corp., a utility that securitizes and guarantees mortgages. The government’s MBS guaranty would be supported by a 10 percent first-loss piece funded by private investors. The FMIC would approve...
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