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’Meanwhile, in Bank of America news
Sure, it’s been a bad year but there must be a reason why BofA is the biggest Friday faller (down 8 per cent) on the DJA and S&P.
It’s because BofA’s 10-Q reveals the bank underestimated the cost of those dastardly GSE settlements.
Is the debt ceiling drama really all about the GSEs?
You’re looking at an excerpt from the 2008 Housing and Economic Recovery Act. That’s the thing which created the Federal Housing Finance Agency (FHFA), which is currently charged with regulating the US’s massive Government Sponsored Enterprises (GSEs),
The need for an IOER-fed funds spread
Here’s an interesting view we caught sight of in Bank of America Merrill Lynch’s latest ‘US rates weekly’ note.
The Fed’s interest on excess reserve (IOER) policy — which currently pays out 25 bps
The end of the home ownership “dream”
Government reports don’t normally make for interesting eulogies, but this one is an exception.
The Treasury-HUD report to Congress on the future of the US housing market is out and generating qualified praise (though little surprise).
Top of the bond yield to you
Yup. It seems there’s nothing stopping Irish bond yields racing higher on Wednesday.
Last check at about 2:42pm London time showed yields approaching a whopping 8.5 per cent. Meanwhile one of the Irish two-years was trading around 6.14 per cent.
Those money-guzzling GSEs
The Federal Housing Finance Agency, the US body charged with overseeing Fannie Mae and Freddie Mac after the two were placed into conservatorship in 2008, has released new projections for how much additional money the Government-Sponsered Enterprises will have to draw from taxpayers over the next three years.
Banks’ buyback pain to be $17bn – $42bn, Fitch estimates
While the Firm uses the best information available to it in estimating its repurchase liability, the estimation process is inherently uncertain and requires the application of judgment.
- JP Morgan’s Q2 10-Q filing.
That cornered – failing – MBS market
Fails to deliver — to the moon!
That’s trade settlement failures in mortgage-backed securities (MBS) — the most liquid US bond market after US Treasuries — and they’ve spiked this summer. The fails occur when the MBS seller fails to deliver on an agreed upon settlement date.
‘General collateral remains puzzlingly inverted to fed funds’
Here’s another one for filing under the ‘quality collateral/unsecured lending anathema’.
Or, for that matter — the ‘unsecured lending is dead’ category.
Barclays Capital’s Joseph Abate has noticed that US general collateral is currently trading above the effective fed funds rate.
The $11.1bn buyback pain at BAC
A sharp-eyed spot over at American Banker.
They’ve noticed this little section from Bank of America’s recently filed second-quarter 10-Q:
Although the timing and volume has varied, repurchase and similar requests have increased from buyers and insurers including monolines.
Hamp – it’s worse than we thought
So the US Treasury’s centrepiece mortgage modification programme — Hamp — is something of a failure. That much we knew already.
But Laurie Goodman over at Amherst Securities brings up another point.
The Great Mortgage Refinancing, by the numbers
Deutsche Bank have returned with some numbers to back up their cost claims when it comes to the Great Mortgage ReFi Rumour of August 2010.
Analyst Steven Abrahams noted last week that “hitting that reset button”
Hitting the reset button on US mortgages…
Have you heard the Great Mortgage ReFi Rumour of August 2010?
Now that the US Treasury’s Hamp programme is widely recognised as a failure, attention is turning to new efforts to reinvigorate the lagging American housing market.
The plain vanilla mortgage LIVES! It’s just called ‘qualified’
Did any one catch this bit in the latest (and last?) draft of theUS financial reform bill?
From page 189 of Title IX :
‘‘(B) require a securitizer to retain— 16 ‘‘(i) not less than 5 percent of the 17 credit risk for any asset— 18 ‘‘(I) that is not a qualified resi19 dential mortgage that is transferred,
From junk bonds to junk mortgage bonds
If investors really ♥ junk for most of this year, they really really might ♥ mortgages.
It’s a point you might not have realised just by looking at non-agency residential mortgage-backed securities (RMBS) and high-yield bond indices over the past 13 months or so.
Please sirs, Fannie Mae wants some more
Fresh off Freddie Mac asking the US Treasury for $10.6bn to offset losses on bad loans, Fannie Mae entered its own plea for a $8.4bn helping of financial aid.
Moreover, the home-loan company — which on Monday reported a net loss of $13.1bn for the first quarter of 2010 — warned in its 10-Q filing with the SEC that there is “significant uncertainty as to our long-term financial sustainability”:
Fannie Mae’s insatiable appetite for bailout cash
It is rare that FT Alphaville agrees with a Wall Street Journal op/ed.
But in case of Fannie Mae, the WSJ’s characterisation of the government sponsored entity and its executives is spot on:
It was another impressive three months at Fannie Mae,
GSE losses could stand at $448bn, Amherst says
Here’s something that struck us in a bit of testimony submitted to the FCIC hearings on Wednesday.
In a document that’s well worth reading for some interesting banking statistics, J Kyle Bass, managing partner at hedge fund Hayman Advisors,
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.
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%.
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,
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: