Secondary Market

The Government has been trying to figure out where the profits from Fannie Mae and Freddie Mac will go for over four years now, but according to a prominent hedge fund manager, it could go on another five more. When investors bought into the GSEs during the 2008 housing crash, they were under the impression that the allocation of profit would be amongst the shareholders. When the company changed their terms in 2012, a legal battle ensued that could last a total of 10 years.

The U.S. is embarking on its ninth year of economic expansion and Fannie Mae is predicting economic growth rebound. Consumer spending growth is expected to return to its position as the biggest contributor to economic growth. With labor and inventory shortages still prevalent, the housing market hasn’t changed very much and home prices are still on the rise. Based on their research, Fannie expects mortgage rates to remain supportive, but the outlook on existing home sales remains cautious.

The Supreme Court ruled Monday in a unanimous decision that the Fair Debt Collection Practices Act did not extend its reach to entities that purchase defaulted loans on the secondary market. The petitioners brought their case in front of the Supreme Court in an appeal of the 4th Circuit Court ruling in favor of the respondent. Justice Neil Gorsuch delivered his first opinion since his conferral to the Court.

On Thursday, the House of Representatives passed a landmark bill--233 to 186--that, in its current form would dramatically change the future of financial regulation. The Financial CHOICE Act, originally introduced by Representative Jeb Hensarling (R-Texas), Chairman of the House Financial Service Committee, on April 26, 2017, significantly amends the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The CHOICE Act is the Republican response to reforms put in place after the 2008 economic collapse.

In February, the D.C. Circuit panel gave the U.S. Department of the Treasury and Federal Housing Finance Agency (FHFA) a win over the allocation of profits from Freddie Mac and Fannie Mae to the Treasury. This affirmed a lower court’s ruling that actions taken under the FHFA’s conservatorship of the GSEs cannot be challenged in court, however Fannie and Freddie shareholders sued the two for agreeing to the deal. Now, the FHFA and Treasury are urging the D.C. Circuit not to modify its ruling.

Fannie Mae's Book of Business increased at a compound annualized rate of 1.3 percent in April. Fannie Mae's Gross Mortgage Portfolio increased temporarily in April, at a compound annualized rate of 52.5 percent. The Conventional Single-Family Serious Delinquency Rate decreased five basis points to 1.07 percent

Freddie Mac’s latest summary report reveals an increase in both its total mortgage portfolio and its mortgage-related securities. Its mortgage portfolio rose 0.5 percent over the year, while its mortgage-related securities and guarantees jumped by 2.1 percent. The government-sponsored enterprise has funded $127 billion mortgages year-to-date.

The United states had alleged that Financial Freedom had not properly disclosed on the insurance claims forms it filed with the FHA that the mortgagee was not eligible for such interest payments because it had failed to meet various deadlines relating to appraisal of the property, submission of claims to HUD, and pursuit of foreclosure proceedings. Despite this, had sought to obtain insurance payments from insurance.

According to an executive at Wells Fargo, the bank will begin issuing private-label bonds—the first time it's done so since 2008. Backed by non-government guaranteed mortgage loans, these bonds offer lower risk to banks and, therefore, lower interest rates for borrowers. JPMorgan and Redwood Trust have also begun issuing these types of bond as of late.

On Monday, Fannie Mae and Freddie Mac released their proposed Duty to Serve (DTS) plans. The purpose of the plan is to better serve some persistent affordable housing problems in the U.S. DTS is a Federal Housing Finance Agency plan which requires Fannie and Freddie to increase the availability of mortgage financing in rural housing, manufactured housing, and affordable housing preservation in order to serve very low- to moderate-income families.