Wall Street MBS insiders met this week to talk about making Fannie Mae and Freddie Mac MBS backed by high loan-to-value refinance mortgages eligible for the to-be-announced market. The Securities Industry and Financial Markets Association held a telephone conference call to discuss the issue, a SIFMA representative confirmed, but the group declined to provide any details. Mortgages with LTV ratios above 105 percent can be sold to Fannie Mae and Freddie Mac under the Home Affordable Refinance Program, but these loans must be pooled in separate MBS that are not eligible for the TBA market. HARP loans with...(Includes one data chart)

The share of mortgage loans that were held in portfolio rather than sold into the secondary market rose for the second consecutive year in 2010, but that may have more to do with the peculiarities of the rules for complying with the Home Mortgage Disclosure Act. A Federal Reserve analysis of the lastest HMDA data found that portfolio lending, especially involving owner-occupied refinance loans, has risen since the beginning of 2009 but is still far short of the levels portfolio lenders achieved in 2004 and 2005. Overall, originators held a total of 1.30 million mortgages in portfolio in 2010, with...

While it will be nice if it materializes, MBS market watchers are taking a wait-and-see posture to the Federal Housing Finance Agency’s professed intention to explore new and alternative methods of sharing Fannie Mae and Freddie Mac’s credit risk with the private sector. In a speech early this week, FHFA Acting Director Edward DeMarco outlined efforts his agency is taking to ramp up private market discipline while reducing Fannie’s and Freddie’s risk to taxpayers. “The FHFA will be considering a number of alternatives, such as expanded use of mortgage insurance and securities structures that allow for...

The supply of MBS in the market edged slightly higher in the second quarter of 2011, appearing to stem a nearly two-year decline in the market, according to a new Inside MBS & ABS analysis. A total of $6.58 trillion of MBS were outstanding at the end of June, up 0.3 percent from the first quarter. The MBS market was still down 1.7 percent from a year ago. All of the growth came from Ginnie Mae and Fannie Mae. The supply of Ginnie single-family MBS rose 4.0 percent in the first quarter, hitting a record $1.12 trillion and extending a vigorous growth trend since the housing market began to unravel in 2007. Ginnie MBS accounted for...(Includes one data chart)

Although the outlines of an expanded Home Affordable Refinance Program are far from clear, MBS analysts say the most likely changes designed to help more borrowers take advantage of record low mortgage rates will not have a disastrous impact on the MBS market. Observers note that there are two ways to expand the potential HARP population: remove the existing chronological restriction (loans made prior to June 2009) or lift the current loan-to-value restriction of 125 percent. The chronological restriction is relevant because a lot of borrowers who have used HARP already could benefit from refinancing again because...

The House this week voted to reject a short-term government spending bill but what’s interesting is what’s not in it: a provision extending the temporary loan limits. While attention is on the possibility of a government shutdown, it appears that a last-ditch effort by the mortgage industry and its allies in Congress to extend the current $729,750 high-cost area loan limit before Sept. 30 has failed. The measure lost by a vote of 195-230 after Democrats withdrew their support and 48 Republicans defied party leaders in protest over spending caps. It would have kept the government operating through...

Expect a gradual but deliberate increase in Fannie Mae and Freddie Mac guarantee fees to a level that more closely reflects what a private market would charge, the head of the Federal Housing Finance Agency announced this week. In a speech at the American Mortgage Conference in Raleigh, NC, FHFA Acting Director Edward DeMarco said that since Fannie and Freddie were placed into government conservatorship three years ago this month, the two government-sponsored enterprises have steadily increased g-fees and lessened the degree of cross subsidization in credit pricing. Yet, DeMarco noted, the GSEs’ current pricing for credit guarantees “is...

Industry groups are ramping up efforts to extend conforming loan limits currently available in high-cost markets that are set to expire at the end of the month, focusing their lobbying efforts on appropriations legislation in the House. The National Association of Realtors and the National Association of Home Builders are dou-bling their efforts to persuade Congress to extend current limits for Fannie Mae, Freddie Mac and the FHA, which top out at $729,750 for single-family units in the lower 48. Barring legislative action, the top loan limit will drop to $625,500 on Oct. 1. In addition to the lower ceiling, loan limits in most high-cost markets will...

In order to provide a benchmark that helps the private sector price mortgage credit, policy makers need to make an effort to replicate the standardization and uniformity currently provided by agency mortgage-backed securities, the managing director of Barclays Capital told lawmakers last week.

During the past three years, the GSEs have steadily increased their commercial mortgage-backed security issuance, assuming a role of dominance that private investment banks once held, concluded a recent report by Standard & Poor’s Ratings Services.