Tag Archives: Mortgage Bonds

Mortgage rates ran a tepid streak started three weeks ago by hovering at around 4 percent this week, according to Freddie Mac, largely because investors continue to flee European sovereign bonds for the safe haven of U.S. Treasury debt. For Freddie, rates for the benchmark 30-year fixed-rate mortgage inched forward by a percentage point, placing it at 4 percent after the loan averaged 3.99 percent. Bankrate.com noted the same difference, reporting that the 30-year loan fell to 4.24 percent this week, down from 4.25 percent last week.

The Federal Housing Administration submitted an annual actuarial report to Congress Tuesday that suggests diminishing returns from a fledgling growth strategy could lead the agency to a taxpayer-funded bailout next year. The reason why? The FHA currently fails to meet a 2-percent capital reserve ratio mandated by federal law, with cash reserves on hand falling to less than an eighth below the required threshold. The report said that cash reserves on hand fell accordingly from $4.7 billion last year to $2.6 billion over 2011. Estimates predict that it could require $50 billion.

Fielding more pressure for housing finance reform, Sen. Bob Corker (R-Tennessee) introduced a bill Wednesday that aims to decouple government assistance from the GSEs and shore up private-sector involvement in mortgage markets. The bill, titled the Residential Mortgage Market and Privatization Act, proposes gradually reducing the percentage of principal in the GSEs├â┬ó├óÔÇÜ┬¼├óÔÇ×┬ó mortgage-backed securities, streamlining underwriting standards and origination databases, and removing federal guarantees to create a much-discussed to-be-announced market.

If a new Senate bill becomes law, it could finally create a long-awaited covered bond market for the nation, effectively making mortgages easier to securitize and increasing their appeal for investors. Earlier Wednesday a bipartisan group of senators, led by Sens. Kay Hagan and Bob Corker, introduced the United States Covered Bond Act of 2011 in order to kick-start what some regard as necessary for a full-fledged housing recovery. European nations have long benefited from a covered bond market, with legal bodies in place for bonds.

More refinance loan applications inspired a 10.3-percent leap forward in mortgage applications last week, according to the Mortgage Bankers Association. The MBA released a weekly survey responsible for tracking mortgage application volume. The surge in mortgage loan application volume follows a shortfall in contract interest rates on average for fixed-rate mortgages, with the 30-year loan seeing a drop from 4.31 percent the week before to 4.22 percent last week.

Nonfarm payrolls counted more than 80,000 new jobs for the economy over October, slashing the unemployment rate by a few percentage points but at a clip that analysts say will marginally improve an otherwise uncertain economic outlook. The Labor Department reported Friday that the jump to more than 100,000 new jobs over September - a facelift driven largely by a return to work by striking Verizon employees - slid back to new figures with few surprising numbers for several industries.

The head of the agency that regulates the GSEs addressed one lawmaker's recent proposal to eliminate the federal lifeline for Fannie Mae and Freddie Mac Thursday even as the latter filed staggering third-quarter losses and requested another $6 billion in taxpayer funds. Federal Housing Finance Agency Acting Director Edward DeMarco and several others testified before the House Subcommittee on Capital Markets, which heard the chief regulator describe why the federal government needs to slowly phase out taxpayer support for the GSEs.

The Federal Reserve restrained itself from announcing any new monetary or fiscal stimulus measures, deciding instead that it will continue to reinvest principal payments for agency debt in mortgage-backed securities while it keeps a heel on historically low interest rates. Continuing a public relations tour at a time of increasing unpopularity on both the right and left, Federal Reserve Chairman Ben Bernanke addressed reporters from behind a desk.

Modifications in line for the Home Affordable Refinance Program from the Obama administration will buoy homeowners with negative equity and origination markets, but field few other benefits for investors in mortgage-backed securities, according to a new outlook. Analytics provider CoreLogic released a statement Monday demarcating HARP├â┬ó├óÔÇÜ┬¼├óÔÇ×┬ós benefits and problem areas, skewering assertions that the program will alleviate a chronic lack of demand and showing that economic troubles may persist despite government assistance.

Lawmakers and policymakers from both sides of the aisle recently teamed up to head a bipartisan commission on the future of U.S. housing policy. The Bipartisan Policy Center, a D.C.-based nonprofit organization, floated commission leaders whose names include former HUD secretaries Henry Cisneros and Mel Martinez, ex-Sen. Kit Bond, and onetime Senate Majority Leader George Mitchell, who also founded the organization. The commission will finalize the details of these recommendations in a major package for current lawmakers and policymakers.