Agency Debt
By Ryan Schuette | 05/09/2012
Fannie Mae revealed that it produced $2.7 billion in net income for the first quarter this year, enough to prevent another draw from the Treasury, a first for the mortgage giant since it entered federal conservatorship in 2008. The favorable results offer a significant difference to a net loss of $6.5 billion from the same quarter last year, along with a net loss of $2.4 billion by the fourth quarter. Despite net income for the first quarter, Fannie Mae sustains a debt for more than $180 billion in taxpayer funds it has received with Freddie Mac since 2008.
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By Ryan Schuette | 05/04/2012
Mortgage giant Freddie Mac saw $577 in net income over the first quarter, less than $619 million for the same by the fourth quarter last year. The GSE said that its net worth deficit would require a Treasury draw of $19 million, adding that it offset comprehensive income over the first quarter by senior preferred dividends worth $1.81 billion. The company laid claim to more than $114 billion of liquidity in the mortgage market over the first quarter, including $89 billion single-family refinance loans that resulted in an estimated $1.4 billion in aggregate annual interest savings.
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By Ryan Schuette | 04/10/2012
Mortgage rates fell to lows not seen in a month on the heels of an underwhelming jobs report and concerns that Spain may follow Greece into default-scenario territory. Real estate Web site Zillow found interest rates for the 30-year fixed-rate mortgage zigzagging across the country, just as it fell from 3.81 percent to 3.73 percent this week. Rates for the 15-year loan hovered near 2.95 percent, while those for 5-year and 1-year adjustable-rate mortgages slumped to 2.56 percent. The Labor Department flattened expectations by reporting that the economy added only 120,000 jobs in March.
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By Ryan Schuette | 03/05/2012
A prominent housing trade group joined a growing roster of policy makers by outlining ways to take the GSEs off federal conservatorship, reintroduce private mortgage-backed securities, and charge existing government entities with stewardship of the new system. The National Association of Home Builders released a white paper Monday that calls on lawmakers to slowly transition a system dominated by Fannie Mae and Freddie Mac to one that shares and balances responsibility. The proposal comes as others arrive from lawmakers and policy makers to replace the GSEs.
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By Ryan Schuette | 03/01/2012
Fannie Mae fielded $2.4 billion in net losses for the fourth quarter, less than $5.1 billion quarter-over-quarter but unhelpful to more losses year-over-year than seen in 2010. The federally conserved mortgage company said in a filing with the Securities and Exchange Commission Wednesday that net losses amounted to $16.9 billion last year, more than $14 billion it bled in 2010. The mortgage giant said that the Federal Housing Finance Agency would request around $4.6 billion from the Treasury.
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By Ryan Schuette | 02/21/2012
The federal agency responsible for Fannie Mae and Freddie Mac released a proposal Tuesday that calls for lawmakers to gradually wean the GSEs off taxpayer funds and stand up a new secondary market, replete with new institutions, securitization measures, and servicing standards. The proposal outlines steps for ways to shift risk and responsibility from Fannie Mae and Freddie Mac to a new market that lawmakers would need to establish without destabilizing a cornerstone of the economy.
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By Ryan Schuette | 01/25/2012
Members of the Federal Open Market Committee decided Wednesday to keep interest rates between 0 percent and .25 percent until 2014, even while the economy steadily improves. All but one of the Fed’s governors voted to extend the policy enacted last fall for another two years, where originally the central bank had determined to delay higher interest rates until 2013. The Fed said that it made the decision in lieu of evidence from December that showed unemployment remaining steady. Experts disagree over whether low interest rates will help the market.
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By Ryan Schuette | 01/18/2012
Witnesses testifying before the House Financial Services Committee Wednesday warned lawmakers that the controversial Volcker Rule could tighten bank liquidity and make U.S. financial institutions less competitive with banks overseas. Once finalized by regulators, the rule – unless modified or repealed by lawmakers – will enact a provision under the Dodd-Frank Act that prohibits U.S. banks from engaging in short-term proprietary trading practices. Douglas Elliott, a fellow with the Brookings Institution, called for an outright repeal of the Volcker Rule.
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By Ryan Schuette | 01/17/2012
Earlier Tuesday the FDIC went forward with a notice of proposed rulemaking in the Federal Register that calls for annual stress tests to determine capital adequacy for banks. The notice built on the Basel Accords, which the Basel Committee on Banking Supervision revisited with help from a consortium of central bankers over 2010 and 2011. Basel III is the latest by BCBS to require stress tests for systemically important financial institutions, which include Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, and several other U.S. lenders.
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By Ryan Schuette | 01/03/2012
With the euro zone crisis deepening, members of the Federal Open Market Committee elected to stay the course in November by keeping interest rates historically low and pooling investments from agency debt into agency mortgage-backed securities. Minutes framed discussions around concerns about weakening confidence in the markets as a result of any potential default by euro zone nations, even while the U.S. economy signaled that it would continue climbing out of the financial crisis. Europe helped rattle markets and compel the Fed's action in 2011.
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