The ongoing debate over the need for a government guarantee to sustain the benefits of the to-be-announced MBS market moved this week to the Senate Housing, Banking and Urban Development Committee, where researchers covered both sides of the issue for a group of lawmakers who aren’t likely to act on their counsel any time soon. “Proponents of privatization ignore that the jumbo market does benefit from a government guarantee indirectly in multiple ways,” said Adam Levitin, professor of law at Georgetown University. “The jumbo market has long aped the standards set by the [government-sponsored enterprises] in the conforming market, including...
The Senate Banking, Housing and Urban Affairs Committee may not be moving any closer to a decision on reforming the mortgage finance system, but lawmakers should be getting well versed in the various analytic perspectives on the role of the federal government. At a hearing this week, the committee heard testimony from researchers who support winding down Fannie Mae and Freddie Mac as soon as possible and others who say private capital won’t be drawn back into the system unless there is a government guarantee. “There’s absolutely no reason to believe that private capital would immediately step-up – even if it would eventually...
A Senate lawmaker and the Mortgage Bankers Association warned House lawmakers that a narrow “qualified residential mortgage” rule will result in overuse of the FHA program and make it more difficult for private capital to re-enter the housing finance market. Testifying before the House Financial Services Subcommittee on Insurance, Housing and Economic Opportunity last week, Sen. Johnny Isakson, R-GA, said the six federal agencies charged with crafting risk-retention requirements apparently failed to consider the impact of a narrow QRM rule on the FHA program. Isakson, who co-authored a Senate exception to...
The Federal Housing Finance Agency’s legal action late last week against many of the nation’s largest financial institutions on the grounds they misled Fannie Mae and Freddie Mac about the quality of subprime and Alt A MBS purchased by the government-sponsored enterprises has few positives but plenty of negative potential consequences for the market, experts say. The 17 separate lawsuits filed by the FHFA seek unspecified damages on $196 billion in mortgage securities the two GSEs purchased, mostly between 2005 and 2008. The agency conducted extensive loan-level reviews that allegedly revealed widespread discrepancies between... [Includes two pages of data]
Fannie Mae, Freddie Mac and Ginnie Mae produced a total of $84.25 billion of new single-family MBS during August, a sturdy 19.8 percent jump from the previous month, according to a new analysis and ranking by Inside MBS & ABS. Although there was a brief bump higher in production in June, agency MBS issuance has generally been sliding lower since the end of 2010. The decline has corresponded to reduced production of refinance mortgages, which accounted for just 55.1 percent of new originations in the second quarter, down from 67.1 percent for all of last year. New data suggest the refi market is still struggling. Some 63.5 percent of...
The securitization market needs less uncertainty and a great deal more transparency in order to restore investor confidence and lure back private capital, industry executives told members of the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises. Witnesses testifying before the subcommittee, which held a field hearing in New York City, said the state of the securitization market remains uncertain, not just due to government subsidies crowding out any private sector action but also because hesitant investors do not yet see much improvement in the opaque environment that led to the...
The American Securitization Forum positioned its new model repurchase principles as a better option to restore investor confidence in non-agency mortgage-backed securities than the risk retention required by the Dodd-Frank Act. “The risk-retention rules proposed by regulators are not sufficiently tailored to different asset classes and will likely cause a host of negative unintended consequences,” said Tom Deutsch, executive director of the ASF. ...
The Department of Housing and Urban Development is pondering its next move after discussing with mortgage industry representatives their concerns about extending the current forbearance period for unemployed homeowners to a maximum of 12 months. HUD and FHA officials met recently with the Mortgage Bankers Association and several small mortgage servicers, which took issue with FHA’s recently revised forbearance policy. HUD declined to discuss the outcome of the meeting, saying it was more about understanding the industry’s concerns and discussing solutions. “No decision has been made as to whether we can or will make any changes, but we are looking into the issues they have raised,” said a HUD spokesman. On July 7, the FHA announced ...
Recent changes to Ginnie Mae’s repurchase policy are getting positive reviews from analysts. Announced on Aug. 26, the revised loan buyout policy will make it easier for servicers and issuers to buy delinquent home loans out of Ginnie Mae pools without having to wait 90 days for the loan to become eligible for repurchase. Before the change, pool repurchases were allowed only if a borrower missed three consecutive mortgage payments. Under the revised policy, issuers can buy delinquent loans out of the pool while the borrower is making partial payments under an FHA or VA trial payment plan as a prerequisite for a permanent modification. On the surface, the revised policy would appear ...
Experts agree that the federal government plays too big a role in the housing market, but panelists at a Federal Reserve conference last week said there is little consensus on how to fix it. FHA is “not our silver bullet,” observed Janis Bowdler, a director at the National Council of La Raza. “Surely, it’s stepping in while we are in a tight credit market. But it’s no long-term solution.” One problem with FHA is that lenders aren’t required to offer it, which means entire communities are left “credit-starved,” Bowdler said. “This leaves them in the same vulnerable position to predatory lenders that they were in five or six or 10 years ago,” she...
Rates were up across all default categories in the fourth quarter of 2024.
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