Secondary Market

Warren and Capuano are trying to prevent the delinquent mortgage loans from being acquired by investors who are quick to foreclose on them. The lawmakers would rather see the loans acquired by non-profits who would be more likely to engage in the loss mitigation process with borrowers and prevent foreclosure.

Single-family mortgage loans backed by Fannie Mae and Freddie Mac perform better after modification when they are modified through the government's Home Affordable Mortgage Program (HAMP), according to the FHFA's Foreclosure Prevention Report for Q2 2015 released this week.

The latest ACIS transaction transfers much of the remaining credit risk associated with the first actual loss STACR offering from April 2015 (STACR Series 2015 DNA1), and it transfers combined maximum limit of up to about $132.5 million in losses on single-family mortgage loans acquired by Freddie Mac in Q4 2012.

The serious delinquency rate on Freddie Mac-backed loans is now seven basis points lower than it was in November 2008 at the start of the financial crisis (1.52 percent) and nearly 2 percentage points lower than the national serious delinquency rate reported by CoreLogic for July 2015 (3.4 percent).

This transaction is the fourth in Fannie Mae's Credit Insurance Risk Transfer (CIRT) series, and third since the start of 2015. In the CIRT series, credit risk for a pool of loans is transferred to a panel of reinsurers.

The Commission's lawsuit claimed that during the years 2007 and 2008 immediately before the crisis, Fannie Mae executives said their exposure to subprime and riskier mortgage loans was about $4.8 billion when it was about 10 times greater.

Approximately 33 percent of the aggregate pool balance consisted of loans that were modified and later became delinquent. The aggregate pool has a loan-to-value ratio of approximately 91.1 based on broker price opinion and is geographically diverse, according to Freddie Mac.

According to Freddie Mac, the SPO of JPMorgan-serviced loans are being marketed as two geographically diversified pools that are offered via auction, with bids due from qualified bidders on October 6. Freddie Mac said the sale is expected to settle in December 2015.

Freddie Mac announced its intention on Monday to sell its first actual loss offering of loans with high loan-to-value (LTV) ratios, further expanding the GSE's Structured Agency Credit Risk (STACR) debt notes program.

As Fannie Mae and Freddie Mac celebrate their seven-year anniversary of conservatorship, new legislation is being drafted in the U.S. House of Representatives that will allow them to establish more capital and prevent another taxpayer-sponsored bailout.