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Ginnie liquidity initiative discussion added to MSR webinar today
An official with Ginnie Mae recently announced a new initiative that seeks to address concerns about the liquidity of nonbank issuers in Ginnie’s single-family mortgage-backed securities (MBS) program.
Since Leslie Meaux Pordzik, acting senior vice president in the Office of Issuer and Portfolio Management at Ginnie Mae, made the announcement two weeks ago during the annual convention of the Mortgage Bankers Association, Ginnie formalized the policies within the initiative. Last week, Ginnie sent some nonbank issuers a letter with an outline of the proposed policies.
The letter was sent in advance of policy feedback interviews with issuers in the first quarter of 2019. The policies outlined encompass strategic planning for financial soundness as part of a larger initiative designed to take strategic steps towards managing liquidity in the current environment.
“A handful of liquidity planning variables were listed at a high level,” according to Tom Cronin, managing director of The Collingwood Group, a Situs company. “The request was for identification of strategies to counter a downturn in originations, which could be associated with increases in interest rates; the plan if delinquencies increase and the level of advances increases; and how overall liquidity would be impacted by losses of warehouse and MSR financing lines. What was missing – and where there will be questions and feedback for Ginnie – were more specific parameters and best practices.”
“There are many interconnected things in servicing that affect your financial statement, so when you’re modeling losses in general, you’re pulling on one string which starts to unwind several parts of the ball,” added Mark Garland, managing director of analytics and head of MSR valuation at MountainView Financial Solutions, a Situs company.
With this initiative top of mind for Ginnie Mae issuers, Cronin is going to be a guest presenter in MountainView’s MSR Asset Monthly Snapshot webinar today. Garland and Cronin will discuss the key points issuers should focus on over the next two months in anticipation of their feedback meetings with Ginnie Mae. Registration for the webinar will be open until the 1 p.m. ET start.
GSE risk-sharing deals hit $12 billion, with more to come in 2019
Fannie Mae and Freddie Mac transferred a substantial amount of credit risk to the private sector through both single-family and multifamily market transactions in the first half of the year, with activity expected to rise in 2019, according to the Federal Housing Finance Agency (FHFA).
The FHFA established a 2018 scorecard objective for Fannie and Freddie to transfer a meaningful portion on at least 90% of the unpaid principal balance of their single-family loan acquisitions targeted for credit risk transfers (CRT) by the end of the year. They transferred 77% of the risk on 85% of the unpaid principal balance (UPB) of targeted new single-family acquisitions through the second quarter.
The government-sponsored enterprises (GSEs) transferred risk on about $367 billion of UPB with a risk in force (RIF) of $12 billion; Fannie transferred risk on $179 billion, with a total RIF of $5.9 billion, and Freddie transferred risk on $188 billion of UPB with a total risk in force of $6.2 billion, according to an FHFA progress report.
Read more: National Mortgage News
Report: Housing prices rise as more people work at home
The location of one’s job has generally been a major determining factor for where people live. However, with technological expansion has come the rise of telecommuting, freeing some employees from the location-based constraints of their work. According to the latest Home Value Forecast from Pro Teck Valuation Services, this changing landscape of the labor force is having a notable impact on home prices in markets across the nation.
“Technology has revolutionized how business is done, allowing workers to escape the office and work from anywhere,” Pro Teck stated with the release of its latest forecast. “This, combined with employment gains and a shift from a labor-based to knowledge-based economy, is impacting home prices across the country.”
Metros such as Cleveland and Pittsburgh are beginning to see increased demand and rising home prices after wallowing in recent years. In fact, after crashing during the housing crisis, Cleveland’s home prices are at record highs, according to Pro Teck.
Cleveland’s economy outpaced both Cincinnati and Columbus in 2017, growing at a pace of 2.9 percent. This spur in growth is due to an uptick in the professional services sector, according to Pro Teck.
Read more: DS News
Home flippers are fleeing the market as their profits shrink
A rough combination of higher costs and lower demand is putting a chill on the once red-hot house-flipping market. After the epic housing crash, flippers poured in, buying up distressed properties at bargain prices, fixing them up and flipping them either to residents or to other investors. That continued for years, but now the math isn’t working so well, and some flippers are fleeing.
The number of home flips, defined as a home bought and sold within the same 12-month period, fell 18 percent nationally in August, compared with August 2017, according to Attom Data Solutions. Flipping volume has been falling annually by double-digit percentages for three of the past six months.
“A competitive housing market with just trace amounts of distressed deals available is a challenge for home flippers because the traditional flipping model depends on a steep discount when the home flip is purchased,” said Daren Blomquist, senior vice president at Attom. “This year the disposition side of the home flip equation has also become more challenging, as rising mortgage rates have cooled off demand from first-time buyers and other financed buyers who flippers often sell their product to.”
Read more: CNBC
Millennial buyers drive uptick in homeownership
The U.S. homeownership rate edged higher in the third quarter, driven by many young buyers entering the housing market for the first time.
The share of households who own their home and are headed by someone under 35 years old rose to 36.8% in the third quarter from 36.5% in the second quarter, and was up 1.2 percentage points from a year earlier.
That was significantly more than the overall increase in the homeownership rate. The share of American households that own a home inched up to 64.4% in the third quarter, from 64.3% in the second quarter and up half a percentage point from a year earlier, according to data released last week by the U.S. Census Bureau.
“The recovery is now at this point driven by first-time home buyers and not older generations,” said Skylar Olsen, director of economic research and outreach at Zillow.
Read more: Wall Street Journal
Fannie/Freddie post healthy profits, resume full dividend payments
Both of the two government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, which remain in government receivership 10 years after the housing crisis, posted strong financial results for the third quarter of this year. Freddie Mac reported net income of $2.7 billion and comprehensive income of $2.6 billion while Fannie Mae’s comprehensive and net were both $4.0 billion.
Freddie Mac’s results are slightly ahead of those in the second quarter when comprehensive income was $2.4 billion, but down from the $4.6 billion reported in the third quarter of 2017.
The company said its results reflected continued strong earnings from guarantee fee income, which rose from $169 billion in the third quarter of 2017 to $209 billion in the recent period. Income from its Multifamily Guarantee Portfolio increased from $184 million to $226 million over the same period and income from its Capital Markets businesses was also stable. The line item for credit losses increased from a provision of $716 million to a benefit of $380 million.
Read more: Mortgage News Daily
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