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’Fannie, Freddie and FAS 166/167
Who would have thought a new accounting standard might end up increasing prepayment speeds on US mortgages?
The two US GSEs will be, like other US financial companies, adopting FAS 166/167 from 2010.
Fed to cut GSE debt purchase
The Federal Open Market Committee on Wednesday decided to shave $25bn off the planned $200bn purchase of debt issued by state-owned mortgage giants Fannie Mae and Freddie Mac. The decision was justified on technical grounds reflecting “the limited availability of agency debt”.
The automated Hamp
Hello, welcome to Every Bank. This is an automated service.
Please tell me your name and account number.
John Doe. Account Number 12345678910.
You are applying for a Home Affordable Modification Plan.
Let them eat equity tranches – for real
Lo and behold — the draft Financial Stability Improvement Act worked out between the US Treasury and the House Financial Services Committee.
Of particular interest for structured finance watchers is this bit:
Hope for second-homeowners
Are you not eligible for the US government’s Home Affordable Modification Plan — the Hamp?
Are you a second homeowner, or investor in homes, underwater and struggling to pay your mortgage?
Then never fear,
Hamp-ered
Fannie Mae chief credit officer Edward Pinto has some strong words on the US government’s Home Affordable Modification Plan — Hamp.
From Clusterstock:
Based on comments being made by industry participants and program results to date,
Convexity crops up
Uh oh. There’s that word again — convexity.
Here it is in the Wall Street Journal:
[FTN Financial's Walt] Schmidt said mortgages are performing well, considering 10-year Treasury notes are yielding close to 3.2%.
Debt and the dollar’s demise, a compendium of concerns
Here’s a stark reminder of the ticking time bomb that is the US’s federal debt — now at an $11,900bn, or $38,000 per citizen.
Ratings agency Standard & Poor’s is now warning that the US will have to officially — and imminently — raise its federal debt limit:
Introducing NattyMac
You’ve probably heard of Fannie Mae and Freddie Mac, those saved-by-the-US-government entities and linchpins of the US housing market. You may also be familiar with IndyMac, the mortgage lender which failed spectacularly – though not without warning - in July 2008.
Wells Fargo urges US to boost mortgage market
The US government should help revive the moribund market for big mortgages by getting Fannie Mae and Freddie Mac to buy large home loans from banks, the chief executive of the lender Wells Fargo urged in an interview with the FT on Tuesday.
Recovery boosts Freddie, Fannie, AIG
Shares of Fannie Mae, Freddie Mac and AIG, the three financial groups taken over by the US government at the height of the financial crisis last year, have surged over the past three weeks, making them the most improved stocks on the New York Stock Exchange since early August.
Volume magnets
As the Wall Street Journal’s Heard on the Street column reported on Tuesday, there has been astounding trade – on a volume basis – in Uncle Sam’s ‘ward’ stocks for the past week or so:
How much is the stock market driven by Washington? Forget bailouts,
Freddie Mac names Witherell COO
Freddie Mac has hired Bruce Witherell, former co-head of Morgan Stanley’s residential mortgage business, as its chief operating officer. Witherell’s appointment will help fill a glaring gap in the government-run mortgage financier’s executive offices,
Freddie, Fannie doing just fine, thank you very much
Bronte Capital’s John Hempton has gone on a Freddie Mac, Fannie Mae modelling extravaganza. And his conclusions are somewhat refreshing. Namely, he’s certain Freddie and Fannie are not the endless black hole of losses their topline numbers suggest them to be — or in the case of Freddie,
Fannie and Freddie’s uncertain future
The future of those historic linchpins of the US housing market, Fannie Mae and Freddie Mac, is looking increasingly uncertain.
Consider these two separate – though perhaps not unrelated – pieces of news.
FHLBs, you shan’t go to the securitisation ball
That’s the Federal Home Loan Banks, the 12 regional US government-sponsored enterprises charged with providing loans to some 8,000 member banks.
The FHLBs have gained some prominence in the recent financial crisis,
Freddie launches $1bn bond
Freddie Mac on Tuesday began marketing to investors the first commercial mortgage bond guaranteed by a government-sponsored mortgage agency. The new financing tool will help Freddie preserve capital while providing greater liquidity to the mortgage market.
Freddie Mac to draw further $6.1bn
Freddie Mac said on Tuesday it would draw $6.1bn of capital from the US Treasury after a $9.9bn Q1 loss drove its net worth below zero. The government-run mortgage lender said it expected further losses in coming quarters,
FICO those CDOs
Rortybomb has some fascinating data points on FICO scores, RMBS, CDOs and subprime lending.
FICO scores, which range from 300 to 850 and are provided by Fair Isaac Corp, were a key feature in the boom of subprime lending.
Freddie Mac’s finance chief found dead
David Kellermann, acting chief financial officer of troubled US mortgage financier Freddie Mac, was found dead early on Wednesday in his suburban Virginia home after his wife reported an apparent suicide.
Freddie CFO commits suicide
From WCBS:
NEW YORK (WCBS 880) — Farifax, VA police tell CBS TV affiliate WUSA in Washington DC the acting head of Freddie Mac, David Kellerman, has committed suicide.
Police responded to the Kellerman home after receiving a call from his wife.
Freddie needs $31bn injection
Freddie Mac, the US mortgage financier, said on Wednesday that a $23.9bn Q4 loss would require it to draw down $30.8bn of capital from the US Treasury, but warned it would have difficulty repaying the government.
The Tsy/Frannie connection
More grim dispatches from the US Treasury market. The WSJ runs today with a story on the popping of the Treasury bubble. Although the market is closed, there’s plenty of anticipation that with Obama signing another $800bn+ of taxpayers money away into the bailout ether,
Buried bail-outs
Yesterday was a pretty good day to bury news, amid the hoo-ha surrounding Treasury Secretary Tim Geithner’s much-anticipated ‘financial stability’ plan.
So it’s only now we’re coming to this little snippet (HT Deus ex Machiatto).
Fannie, Freddie could request $51bn
Fannie Mae and Freddie Mac could tap the government for up to $51bn in coming weeks, exceeding some Wall Street estimates, so they can continue to operate as the largest US residential mortgage providers,
FHLB, the ‘L’ stands for Libor
Well, no, not really, but there is a connection.
Dollar Libor continued its upward drive for a fourth day today — the longest run of rising rates since early October and interestingly, the upward tick may have something to do with the US’s Federal Home Loan Banks,
Fannie, Freddie, now FHLBs?
Some other banks are encountering difficulties today — namely the Federal Home Loan Banks, one of the biggest providers of funding for US mortgages.
From Bloomberg:
The Federal Home Loan Bank of Seattle said it will suspend dividends and “excess”
Agencies, bubbling over
One benefactor of concern over a treasuries bubble has been the market in agencies debt. Last month, for instance, investments in agencies returned 1.55 percentage points more than treasuries, according to Barclays.
For FHLB’s sake
FHLB.
Free Hubris Loans for Banks.
Find Huge Lumps of Bucks.
Or, simply, the Federal Home Loan Banks, one of the biggest providers of funding for US mortgages — and it may be in trouble. From Bloomberg:
New Year sales, Federal Reserve edition
From the FRBNY:
Purchases of agency MBS by investment managers acting as agents for the System Open Market Account (SOMA).
(Click image for a sharper version)
Hope they kept the receipt!
And from Brad Setser at the CFR,