Inside Mort Fin 3
Mike SP
Ginnie to Align Liquidation Reporting With GSE Standards
Ginnie Mae is set to require issuers to report the removal of single-family loans from its mortgage-backed security pools on the business day following the liquidation event, aligning its policies with Fannie Mae and Freddie Mac standards.
The agency plans to implement the change during the February reporting period. The new liquidation event reporting process will co-exist with the required issuer monthly report of pool and loan data.
Ginnie President Joe Gormley said the move will make the agency’s platform more resilient, while reducing the need for issuers to maintain different reporting processes for Ginnie and the government-sponsored enterprises.
Industry participants welcomed the move. The Mortgage Bankers Association said its members see value in switching to short-term liquidation reporting.
For more details, see the new issue of Inside MBS & ABS.
Mike SP
Former Freddie CEO Raises Concerns on Changes to CRT Program
Former Freddie Mac CEO Don Layton said in a recent essay for New York University’s Furman Center that changes to the credit risk transfer program are adding to an excessive concentration of credit risk at the government-sponsored enterprises.
According to Layton, the program began to change in mid-2019, when President Trump — then in his first term — appointed Mark Calabria to head the Federal Housing Finance Agency.
Layton pointed out that Calabria was a long-time critic of the GSEs and a CRT skeptic.
It was the new enterprise regulatory capital framework put in place by Calabria in late 2020 that was most damaging to the CRT programs, Layton said. He argued that the ERCF underestimated the capital relief the GSEs received from their CRT transactions. As a result, those transactions began to look uneconomic in the sense that the capital benefits no longer seemed to justify the fees paid to investors.
For more details, see the new issue of Inside The GSEs.
Mike SP
Lenders repurchased or made other indemnification on defective loans from government-sponsored enterprise mortgage-backed securities totaling $602.29 million in the third quarter, a 19.8% increase from the second quarter, according to filings by the GSEs with the Securities and Exchange Commission.
Fannie Mae said in its SEC filing that repurchases by dollar volume were up 37.9% in the third quarter. Freddie Mac repurchases were up 5.3% from the second quarter, according to its third-quarter SEC filing
Roughly half of the combined third-quarter repurchases involved loans securitized in 2024, when Fannie/Freddie mortgage-backed securities issuance was up 7.3% from the prior year.
At this point, the 2024 vintage still looks relatively pristine, with a repurchase rate of just 0.20%, which is significantly lower than the 0.33% buyback rate on loans securitized in 2023.
For more details, see the new issue of Inside the GSEs.