Jacob Gaffney is the Editor-in-Chief of HousingWire and HousingWire.com. He previously covered securitization for Reuters and Source Media in London before returning to the United States in 2009. While in Europe for nearly a decade, he covered bank loans and the high yield market, in addition to commercial paper, student loan, auto and credit card space(s). At HousingWire, he began focusing his journalism on all aspects of the housing and mortgage markets.
For the fourth quarter of 2016, Fannie Mae reported net income of $5 billion and comprehensive income of $4.9 billion. As a result, the company expects to pay Treasury a $5.5 billion dividend in March 2017.
One of the larger shifts this quarter, although profits remain flat, is earnings from guarantee-fees now outpace portfolio investments. In other words, Fannie Mae is now making more money off of business it is doing rather than business it once did.
One thing that gets little coverage is how effective Freddie Mac CEO Donald Layton managed his team, which runs $2 trillion in assets. So, it seemed appropriate to find out his formula for retaining top staff and keeping the foot soldiers motivated. Layton puts it down to 4 ways they helped turn around this “supertanker.”
Higher g-fee income helped drive $3.9 billion in fourth-quarter income. This also includes $2.3 billion of market-related gains, primarily driven by a significant increase in longer-term interest rates during the quarter.
Maurice Greenberg, the former CEO of American International Group, denied he misrepresented loss reserves when selling reinsurance to mortgage bond investors. Twelve years later, we finally get something back; an admission of wrongdoing.
The Wall Street Journal once referred to Daniel Tarullo as "The Most Powerful Man in Banking". Come April 5, that statement will no longer apply. Tarullo submitted his resignation as a member of the Board of Governors of the Federal Reserve System, in a letter to President Donald Trump.
While author Joy Wiltermuth refers to targeted staffers as those “who worked in Deutsche Bank's mortgage unit in the run-up to the financial crisis,” the indication is that Justice is going after former mortgage bond salespersons.
Why such an upbeat outlook? Well, troubled vintages are winding down in an orderly fashion. Also, recent mortgages are comparatively high credit in terms of underlying quality. And it’s not just for 2017, as S&P predicts private mortgage insurers are set to enjoy robust earnings over the next few years. But, here's the catch.
Clearly, the housing market is doing just fine. Read the latest Case-Shiller. Housing pretty much recovered. And Ten-X, too. Home sales increased in January. Don’t forget Black Knight. Home prices are so close to a new peak. So why isn't Freddie Mac on board with all these rosy, housing outlooks?
The Data & Analytics division of Black Knight Financial Services released its latest Home Price Index report, based on November 2016 residential real estate transactions.
The company finds that after rising 5.7% from the start of 2016, U.S. home prices are now within just 0.3% of a “new national peak.”
In the aftermath of the financial crisis, low interest rates and strict capital requirements combined to make servicing a losing proposition for many banks. The sharp glare of regulators didn’t help either, as banks and nonbanks navigated the already thankless waters of servicing with a new target on their backs. But all that changed abruptly in the fourth quarter of 2016 with the one-two punch of a Trump win and a rate hike by the Federal Reserve.
Singling out the law that created the CFPB generated a backlash from Congressional Democrats, but it remains to be seen what Democrats can do to stop the Trump juggernaut. See what Mike Jones of Navigant advises servicers to do in this uncertain environment.
Portfolio managers and investors also have a vested interest in the expansion of the non-QM market. They have an appetite for non-QM assets as they represent an attractive yield opportunity. That’s why we’re seeing more “hold” strategies at work with current non-QM production.