Johnson Crapo GSE Discussion Draft
, Posted: April 14, 2014
Over the past several years, a consensus has developed on the goals of GSE Reform: preserve the liquidity of the mortgage market while protecting the taxpayer by putting private capital in a first loss position, retain wide access to long-term fixed rate mortgages, provide access and equity for lenders of all sizes, and support affordable housing. Senators Tim Johnson (D-SD) and Mike Crapo (R-ID) released new draft legislation in March 2014 striving to achieve these goals. While this bipartisan proposal is a major step forward for housing finance reform, we suggest improvements in two critical areas: the structure of the private capital in the first loss position and the affordable housing incentive fee provisions. In both cases, the system as proposed has intellectual appeal, but is apt to have unintended and undesirable consequences.
National Mortgage Settlement
, Posted: April 14, 2014
In early 2012, the nation’s five largest mortgage servicers entered into a $25 billion settlement with the Department of Justice, Department of Housing and Urban Development, and 49 state Attorney Generals. This settlement, which addresses questionable servicing practices, was the largest joint state-federal civil settlement in US history. As a result, Bank of America, Citi, JP Morgan Chase, Rescap/Ally and Wells Fargo have since dispersed more than $50 billion in gross relief to over 600,000 families. In this commentary, we examine each servicer’s strategies in providing relief to borrowers, consider how those actions were impacted by the settlement's crediting system, and suggest improvements for future settlements.
Housing Finance At A Glance: A Monthly Chartbook
, , , , , , , , , Posted: April 15, 2014
At A Glance, the Housing Finance Policy Center's monthly chartbook, provides timely metrics on the state of the housing market and examines public policy's role in housing finance. April's issue includes a special quarterly feature on GSE loan performance and new numbers on the Federal Reserve's activity in the mortgage market.
OASIS: A Securitization Born from MSR Transfers
, Posted: April 01, 2014
Early in 2014, Ocwen Loan Servicing, the nation’s largest nonbank mortgage servicer, completed a new type of quasi-securitization to help Ocwen fund its servicing business, which has grown as mortgage servicing has shifted from depository institutions to nonbanks. This shift has occurred in response to Basel III regulations, which make it more costly than in the past for large banks to hold mortgage servicing rights. In this commentary, we describe the changing mortgage servicing market and the reasons for those changes. We then look at Ocwen’s new security, its purpose, and its appeal to investors.
Where Have All the Loans Gone? The Impact of Credit Availability on Mortgage Volume
, , Posted: March 13, 2014
The total number of purchase mortgages originated in 2012 is considerably less than half of peak levels, and down 44% from the 2001 levels. The authors estimate that a large portion of the drop-as many as 1.2 million loans in 2012 alone-can be attributed to low credit availability, and find that African American and Hispanic borrowers have been disproportionately affected by the credit box tightening.
Lifting the Fog around FHA Lending? Posted: March 13, 2014
The Federal Housing Administration (FHA) is taking new steps to encourage lenders to extend credit to first-time homebuyers and other traditionally underserved borrowers. Jim Parrott explains the problem that has constrained FHA lending in recent years and how the FHA is attempting to solve it.
The Mortgage Forgiveness Debt Relief Act Has Expired. Renewal Could Benefit Millions.
, Posted: February 14, 2014
At year end 2013 the Mortgage Forgiveness Debt Relief Act expired. Unless Congress extends it, debt on principal residences that has been forgiven or written down after 2013—through short sales, deeds-in-lieu, foreclosures or loan modifications will generally be treated as taxable income. We argue that the act is an important facilitator of principal-reduction modifications. Failure to renew is likely to generate little net revenue.
Single-Family Securitized Financing: A Blueprint for the Future? Posted: January 17, 2014
In November 2013, Invitation Homes LP, the Blackstone subsidiary that is the largest of the REO-to-rental operations, completed the first securitized financing of REO-to-rental properties (Invitation Homes 2013-SFR1). The private placement was very well received by the market, producing more favorable terms than many had anticipated. In this short article, we walk through why the deal was done, how it was structured, and what the financing means for the market.
GSE Reform: Diversification is Critical in Sizing the Capital Requirement in the New Regime
, Posted: January 15, 2014
The GSE Reform Debate has thus far succeeded in building a broad (though not universal) consensus that Freddie and Fannie should be replaced by a system in which private capital bears the first loss, with a catastrophic government guarantee behind it taking the residual risk. Investors would continue to have access to mortgage backed securities with a full faith and credit guarantee, but, in contrast to the current situation, the bulk of the credit support would come from private capital. The Corker-Warner proposal, S. 1217, for example, has this structure.
FHA Loan Limits: What Areas Are the Most Affected?
, , Posted: January 15, 2014
On December 31, 2013, the Federal Housing Administration (FHA) reduced the loan limits for its single-family insurance program in 652 counties, while increasing them in 89 counties. The changes result from the expiration of provisions of the Economic Stimulus Act of 2008 (ESA).