Tag Archives: MBS

JPMorgan Chase's $4 billion settlement with the Federal Housing Finance Agency (FHFA) reached late last week ""sets a relatively high bar"" for the 13 other banks still facing litigation from the federal agency, according to Fitch Ratings, which suggested Tuesday that some of the banks may need to increase their litigation reserves before settling. The $4 billion is about 12 percent of the original face value of the private-label mortgage-backed securities for which FHFA sought damages.

JPMorgan Chase reached agreements to resolve its mortgage-backed securities litigation with the Federal Housing Finance Agency (FHFA) and rep and warranty repurchase claims from Fannie Mae and Freddie Mac. Altogether, the bank has agreed to pay $5.1 billion to the GSEs.

FBR Capital Markets on Wednesday raised its projection for new mortgage volume in the third quarter to $400-$420 billion, largely due to more activity from special servicers as larger banks relinquish market share. FBR anticipates strong performance from these specialty servicers, partly because of their ability to effectually mine acquired portfolios for refinancing opportunities.

What's up with the Fed? The venerable, usually media-shy central bank came in for more than its share of attention in the past week and has no one to blame but itself. It started with the withdrawal of Larry Summers as a candidate to replace Fed Chairman Ben Bernanke who, by the way, has not said he's leaving. Then came the conclusion of a two-day, closed-door policy meeting that defied all market expectations.

While noting improvement in economic activity and labor market conditions, the Federal Open Market Committee voted Wednesday to continue its policy of near-zero interest rates and its $85-billion-per-month bond-buying program. At the same time, the Fed’s own economic projections suggested the economy might not grow this year as fast as it expected just three months ago.

Stewart Lender Services announced Tuesday that it has acquired key assets of the due diligence and credit risk management firm Allonhill. Stewart will retain all Allonhill personnel as well as Allonhill's headquarter facility in Denver and the technology developed by the Allonhill team. The acquisition strengthens Stewarts offerings by adding due diligence, loan quality reviews, compliance solutions, and servicer performance management to its suite of products provided to the mortgage servicer and investment communities.

President Obama is trying to solve the wrong problem by calling, as he did in his speech in Phoenix, for the end of Fannie Mae and Freddie Mac as we know it. To be sure, Fannie and Freddie were not the hallmarks of responsibility in the mortgage meltdown, but have gotten a bad rap. For all their housing expertise, they missed all the signals of the housing bubble (but then again so did Federal Reserve chairman Alan Greenspan and his successor Ben S. Bernanke who dismissed it when the first signs of the meltdown emerged). Instead of suggesting replacing Fannie and Freddie to restore the nation's housing markets, the president should be proposing to return them to their original charters.

The FOMC voted Wednesday to continue its policy of near-zero interest rates and its $85-billion-per-month bond-buying program. In a subtle change of language designed to assuage nervous stock investors, the FOMC statement said the committee ""reaffirmed its view that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens.""

Although policymakers have been busy introducing legislation to diminish the role of the GSEs, analysts at Moody's Investors Service ""believe GSE reform will not take place for at least a few more years."" In June, Senators Bob Corker (R-Tennessee) and Mark Warner (D-Virginia) led efforts to introduce legislation to wind down Fannie Mae and Freddie Mac in five years. Then came PATH from the House of Representatives Financial Services Committee in July.

Freddie Mac is making progress toward its goal of attracting more private capital into the mortgage market. Recently, the GSE announced the offering of a single-family credit-risk sharing transaction. The $500 million offering of Structured Agency Credit Risk (STACR) securities, which was priced Tuesday, seeks to reduce taxpayer risk while introducing more private capital into the market.