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Jul. 11, 2014, 7:15 AM
- A check of the mortgage insurers the morning after the FHFA released the proposed Private Mortgage Insurer Eligibility Requirements (PMIERs) finds Radian (RDN) lower by 2.8%, MGIC (MTG) by 2.6%, and no action in Genworth (GNW), Essent Group (ESNT), and NMI Holdings (NMIH). The revised PMIERs would require higher capital standards on the mortgage insurers Fannie Mae (FNMA) and Freddie Mac (FMCC) do business with.
- The new rules are open for comment until September 8, and Radian expects to give the FHFA an earful, including noting the new capital requirements "are more onerous than the company's historical default experience suggests would be needed to withstand a severe stress event." The proposed PMIERs, says Radian, are also not consistent with the FHFA's goal of expanding access to mortgage credit by boosting the role of private capital in the mortgage market.
- Radian also notes it is likely to be January 2017 before compliance with any new rules would be required.
Jul. 1, 2014, 10:39 AM
- Noting some nonbank servicers use short-term funding to buy MSRs which may only pay off after a lot of long-term work the Office of Inspector General says the practice can jeopardize not just the companies' operations, but also Fannie Mae (FNMA) and Freddie Mac (FMCC) which guarantee the loans.
- The report notes nonbank servicers held 17% of he MSR market at the end of 2013, up from 9% a year earlier, and the boosted share is testing their ability to handle the loans. No particular servicer is named in the report, but those in the industry include Ocwen (OCN -1.9%), Nationstar (NSM -2.6%), Walter Investment (WAC -0.8%), New Residential (NRZ +0.3%), Home Loan Serviing (HLSS +0.9%), and PennyMac Financial Services (PFSI +0.5%).
- The report cites one example in which the GSEs found a servicer didn't have sufficient infrastructure to manage its MSRs and also breached minimum capital requirements.
- NY's Ben Lawsky, of course, has put the kibbosh on transfers of servicing rights from the banks to the nonbank players until his concerns over servicing practices are satisfied.
Jun. 20, 2014, 2:00 AM
- Royal Bank of Scotland (RBS) will pay $99.5M to settle a lawsuit which accused the bank of selling sour mortgages to Freddie Mac (FMCC). The case is one of two lawsuits filed by the Federal Housing Finance Agency against RBS.
- This also marks the 15th mortgage security settlement since 2011 won by the FHFA, on behalf of Fannie Mae (FNMA) and Freddie Mac.
Jun. 13, 2014, 3:55 PM
- “Even if truly rehabilitating the GSEs were possible, recapitalizing them adequately would take at least twenty years,” says Mary Miller, Treasury's undersecretary for domestic finance. “During these 20 years, the taxpayer would remain at risk of having to bailout the GSEs during another downturn."
- Calling the current system - where the majority of housing credit is backstopped by taxpayers - "unacceptable" and "an unsound business model," Miller reiterates the administration's position that Fannie (FNMA -1.4%) and Freddie (FMCC -1.9%) be wound down. "Only legislation can protect taxpayers by responsibly winding down the GSEs and replacing them with a system where a government guarantee is transparent and explicitly priced.”
Jun. 9, 2014, 12:58 PM
- Those who say it is a good time to sell a house increased to 43%, a new all-time high, says Fannie Mae (FNMA -0.4%) in its May National Housing Survey. Those who say it's a good time to buy dipped a bit to 68%.
- "Consumers’ lukewarm income expectations and reticence about the economy seem to be holding back housing demand," says Fannie chief economist Doug Duncan. "This year’s spring and summer home buying season has gotten off to a slow start, even as mortgage rates have trended lower over the past two months ... The rebound in home sales will likely be too modest to pull sales for all of 2014 ahead of last year."
- Speaking to Duncan's remarks: Those who say their household income is significantly higher than a year ago fell four points to 21%.
- Homebuilder ETFs: XHB, ITB, PKB
Jun. 5, 2014, 4:36 PM
- The FHFA is requesting mortgage industry comment on whether Fannie Mae (FNMA) and Freddie Mac (FMCC) should raise "guarantee" fees charged to lenders. These fees are typically passed along to borrowers, but the FHFA could look to offset that by making credit more readily available to lesser qualified borrowers as well as subsidizing the cost of the fee in other ways.
- The FHFA policy on fees - that they would gradually rise throughout 2014 - changed abruptly as Ed DeMarco was replaced at the top with Mel Watt earlier this year.
Jun. 3, 2014, 1:54 AM
- Massachusetts has sued Fannie Mae (FNMA) and Freddie Mac (FMCC), saying they violate state law by blocking foreclosure buyback programs.
- Buyback programs allow a non-profit organization to purchase a foreclosed home and then resell it back to the original owner at a more reasonable price.
- Massachusetts passed a law in 2012 prohibiting creditors from blocking such programs, although Fannie Mae and Freddie Mac have failed to comply.
May 20, 2014, 11:01 AM
- Perhaps sensitive over the press bruising he's taken for being the puppetmaster behind government investigations of Herbalife, maybe look for Bill Ackman to try and stay out of the spotlight on Fannie Mae (FNMA +2.1%) and Freddie Mac (FMCC +2.1%), writes Dan Freed.
- Ignoring for the moment Ackman's 110-page slide presentation on the GSEs at Ira Sohn two weeks ago, a source close to the hedge funder says don't expect a big public campaign a la Herbalife or Allergan. While Bruce Berkowitz has publicly offered his policy assistance over Frannie to the government and Blackstone has done so privately, Ackman's camp believes D.C. has little interest in the advice of hedge funds in this instance.
- For anyone who heard at least snippets of Ackman at Ira Sohn, we'll file this story under "believe it when we see it."
May 16, 2014, 3:55 PM
- “I don’t lay awake at night worrying about what’s fair to the shareholders,” says FHFA boss Mel Watt in an interview to be aired on Sunday. "There would be no Fannie (FNMA -1.8%) or Freddie (FMCC -1.2%) but for the taxpayers."
- Watt also notes the he had no role in altering the bailout agreements to allow for the continuous taking of all GSEs profits by Treasury. “I don’t know whether I would have thought differently had I been there, but I don’t have that luxury ... It’s an arrangement that I’m comfortable operating under.”
May 15, 2014, 12:20 PM
- The Senate Banking Committee today passed a bill to wind down Fannie Mae (FNMA -2.8%) and Freddie Mac (FMCC -3%), but the vote, 13-9 in favor, looks too narrow to force the full Senate to vote on the legislation. The bill's authors say they'll try and add support in coming weeks, but the chances of something winding up on the President's desk this year look slim.
- Previously: U-turn on GSE mortgage policy
May 14, 2014, 6:24 AM
- Obtaining a mortgage may be about to get a lot easier as FHFA chief Mel Watt - in his first public speech since taking over as regulator of Fannie Mae (FNMA) and Freddie Mac (FMCC) in January - says the mortgage giants should focus on making credit more readily available to homeowners.
- The call is a U-turn from the policy of previous FHFA boss Ed DeMarco. "I don't think it's FHFA's role to contract the footprint of Fannie and Freddie," says Watt, adding that winding down the companies without proof private investors are willing to fill the gap "would be irresponsible."
May 8, 2014, 7:59 AM
May 8, 2014, 7:41 AM
- Fannie Mae (FNMA) Q1 net income of $5.3B vs. $5.7B in Q4, and includes $4.1B in revenue from legal settlements.
- Expected $5.7B dividend payment to Treasury will bring total to $126.8B vs. $116.1B in draws.
- "Fannie Mae expects to remain profitable for the foreseeable future," but annual net income going forward should be "substantially lower" than 2013.
May 6, 2014, 12:01 PM
- Now making the rounds is Bill Ackman's 111-page slide presentation laying out the bull case on Fannie Mae (FNMA +2.9%) and Freddie Mac (FMCC -0.7%)
- Yesterday: Ackman pitches Fannie and Freddie at Ira Sohn
- Ackman notes much of the GSEs losses during the financial crisis - which pushed their capital levels far below minimum requirements and precipitated the bailout - were due to credit provisions. What actually happened, though, were losses of "just" $102B, or $142B less than the cumulative provisions taken from 2007-2011.
- Further, much of those losses were the result of an ill-fated move to guarantee Alt-A and subprime loans. Losses from just the core portfolio of prime mortgages would have been only barely enough to push the GSEs below their minimum capital levels.
May 5, 2014, 3:47 PM
- Finally addressing Congressional plans to wind Fannie (FNMA +2.8%) and Freddie (FMCC +1.8%) down, Ackman isn't buying it. A private-label replacement would need to raise $500B to capitalize itself, he says - not likely given the government's "stealing" of the GSEs dividends. "We don't think there's an investor in the world of any consequence that will invest in a new version of Fannie and Freddie."
- Previously: Ackman pitches Fannie and Freddie at Ira Sohn
May 5, 2014, 3:35 PM
- One of the hot hands in the hedge fund world at the moment, Bill Ackman reiterates his bull case on the GSEs. Owning Fannie Mae (FNMA -1.8%) and Freddie Mac (FMCC -1.8%), he says, is like owning a royalty on the housing market.
- Ackman first disclosed stakes in the common stock of both last November and boosted those bets with a derivative play earlier this year.
- Earlier Sohn conference coverage
- Live blog
Fannie Mae is a government-sponsored enterprise that was chartered by Congress in 1938 to support liquidity, stability and affordability in the secondary mortgage market, where existing mortgage-related assets are purchased and sold.
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