Fannie Mae and Freddie Mac will not be branching out into the role of a “master servicer” in a new, yet-to-be-launched $2 billion bond program as top Republican members of the House Financial Services Committee feared, according to Treasury Secretary Timothy Geithner.In a letter dated July 21 and in response to a letter sent by Committee Chairman Spencer Bachus, R-AL, Vice Chairman Jeb Hensarling, R-TX, and four of the committee’s subcommittee chairman, Geithner firmly ruled out any participation by the two GSEs in Treasury’s loan-guarantee program.
The Federal Housing Finance Agency said last week to expect further litigation in its ongoing efforts to recover losses suffered by Fannie Mae and Freddie Mac in connection to the two GSEs’ investments in non-agency securities.Last week, the Finance Agency filed suit against UBS Americas Inc. and various related entities alleging misstatements and omissions of non-agency MBS purchased by Fannie and Freddie.
High-risk mortgages securitized by Fannie Mae and Freddie Mac continued to drag down earnings for the government-sponsored enterprises in the first quarter of 2011, forcing the two GSEs to go deeper into debt to the federal government. Fannie and Freddie lost a combined $13.0 billion on their mortgage-backed security guarantee programs during the first quarter, a significant deterioration from the $6.6 billion the GSEs lost during the previous quarter, according to the Federal Housing Finance Agency’s latest conservatorship report. Since the beginning of 2008 through the first quarter of 2011, Fannie and Freddie have burned through...
Ally Financial, Inc., a major mortgage and automotive lender, said it expects to take a second-quarter charge of approximately $100 million for mortgage losses incurred by certain securitization trusts even as it disclosed new investigations by the Securities and Exchange Commission and the Department of Justice. Ally made the disclosures in an amended prospectus filed with the SEC recently proposing the sale of $100 million shares of the company’s common stock. According to the disclosure, $152 million was paid to the trusts during the second quarter to cover ...
The dramatic slowdown in mortgage lending activity during the second quarter of 2011 led to significant declines in virtually all states, according to a new analysis of agency securitization data by Inside Mortgage Trends. Fannie Mae, Freddie Mac and Ginnie Mae securitized a total of $565.5 billion of single-family mortgages during the first six months of 2011, but much of that activity was front-loaded in the first quarter. Agency mortgage-backed securities production declined 33.7 percent from the ... [includes one data chart]
It would be “wholly inappropriate” for the Treasury Department and the Federal Housing Finance Agency to permit Fannie Mae and Freddie Mac to pursue a potential role in a new yet-to-be-launched $2 billion bond program, according to the top Republican members of the House Financial Services Committee.In an effort to shut down thoughts of potential expansion of the two government-sponsored enterprises into a new line of business, Committee Chairman Spencer Bachus, R-AL, Vice Chairman Jeb Hensarling, R-TX, and four of the committee’s subcommittee chairman dispatched a letter last week to Treasury Secretary Tim Geithner and FHFA Acting Director Edward DeMarco to express their “concern.”
Another bipartisan bill to overhaul the federal mortgage finance system introduced by two House members this week would eliminate but effectively merge Fannie Mae and Freddie Mac, replacing the two GSEs with a “secondary market facility” that would issue and guarantee mortgage-backed securities.The bill, H.R. 2413, the Secondary Market Facility for Residential Mortgages Act of 2011, would create a single entity, owned by the federal government, that would issue MBS. The MBS would have an explicit government guarantee paid for by a guarantee fee set by the Federal Housing Finance Agency.
There have been only a few non-agency MBS securitizations in 2011, and the remainder of the year is not expected to be any more fruitful, according to panelists at the American Securitization Forum annual conference held last week in Washington, DC. Fitch Ratings has rated only one RMBS transaction, said Douglas Murray, group managing director at Fitch Ratings, but there have been...
Lawmakers on the House Financial Services Committee this week approved by a wide bipartisan margin a bill that would create the legislative framework for a covered bond market in the U.S., but not before some haggling regarding the role of the federal regulators. The committee voted 44-7 in favor of H.R. 940, the U.S. Covered Bond Act of 2011, clearing the way for the bill’s consideration by the full House of Representatives. Rep. Scott Garrett, R-NJ, chairman of the House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, said H.R. 940 sets up “legal certainty” that is a core element of...
The challenges confronting the recovery of the non-agency MBS market are many, but legacy issues, such as representations and warranties, are the cause of huge frustration in the industry, according to panelists at the American Securitization Forum this week. “Some of these legacy issues have very far-reaching tentacles,” observed Mani Sabapathi, principal at Prudential Fixed Income. The housing finance world has been bracing for the coming risk-retention rule with great apprehension, he said, raising the possibility that reps and warrants could be included as a part of it. “I think it can be an important aspect to the extent that if you have these loans that don’t meet...
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