What We’re Hearing: Huge GSE Profits, Don’t Get Used to It /
The Perfect (Earnings) Storm /
A Ginnie Solution for the GSEs ? /
PHH’s New Strategy /
Aide to HUD Nominee Ben Carson Fired for Writings Critical of Trump
by Paul Muolo pmuolo@imfpubs.com
By now, perhaps, someone in the White House has whispered in the ear of President Trump: “There’s these two companies we own, Fannie Mae and Freddie Mac – they just earned $10 billion in the fourth quarter.” Despite what anyone might think of this new president, he’s a businessman first and foremost and $10 billion – $40 billion annualized – is a lot of money, especially if you’re looking to rebuild the nation’s ailing infrastructure and maybe that “wall.” Then again, before anyone in the administration gets too excited about the potential cash-flow stream the GSEs represent, there’s a cold hard reality that comes with the blow-out quarter: It’s an anomaly that won’t last…
As we point out elsewhere in today’s news feed, 4Q16 was a “perfect storm” of good news: Low interest rates early in the quarter, which bolstered loan production, MBS issuance and revenue. Toward the middle of the quarter, rates spiked and stayed that way, an event that caused the value of GSE derivatives to do the same. What are the chances of this happening again, quarter after quarter? Near zero…
So, what do certain former Fannie Mae executives think of their past employer’s earnings performance? One called the results “truly unbelievable,” suggesting the Treasury Department “should start a distressed venture fund.” Another told us that stellar profits posted by the two are “just about done.” He believes that sometime this year Republicans in Congress will start drafting legislation to end the conservatorships. Of course, maybe Treasury Secretary Steven Mnuchin – the former head of Goldman Sachs MBS trading desk – will act first?...
One possibility we keep hearing about is a “Ginnie Mae-based” approach regarding Fannie and Freddie. Sen. Mike Crapo, R-ID, chairman of the Senate Banking Committee, mentioned it in a speech this week. Stay tuned…
PHH Corp. midweek revealed another large loss, more plans to sell assets and a new blueprint for its future: It will be "capital light,” and the firm will focus on subservicing loans for others. One consultant familiar with its operations told us the publicly traded nonbank has a very low “cost to service.” But we should point out that the subservicing arena – according to figures compiled by Inside Mortgage Finance – is dominated by two firms: Cenlar and Dovenmuehle. They have a combined market share of 52.0 percent…
A couple of servicing portfolios hit the market this week that we didn’t have time to mention: a $402.3 million package of Ginnie Mae rights from Incenter Mortgage Advisors and a $351.0 million Fannie/Freddie offering from The Prestwick Group…
IN CASE YOU MISSED IT: Several more documents that the government wanted to keep hidden under executive privilege have recently been unsealed as part of the ongoing Fairholme Funds vs. United States, et al case. But just because they were unsealed, that doesn’t mean they’re available to the general public, including the press. According to GSE “shareholder rights group” Investors Unite, one of documents includes a July 2012 email/memo that mentions “thoughts on how to signal a plan to amend the PSPAs.” It was written by Treasury Under Secretary for Domestic Finance Mary Miller. PSPA stands for preferred stock purchase agreement(s), which were altered by Treasury that year. Reporting by Carisa Chappell / cchappell@imfpubs.com.
DATA POINT: In the fourth quarter, jumbo originations tanked at CitiMortgage, falling 19.9 percent on sequential basis, according to a new ranking from Inside Nonconforming Markets. For an exclusive ranking of the nation’s top 40 jumbo funders for 2016, see the new edition of Inside Nonconforming Markets.
MORTGAGE PEOPLE: Shermichael Singleton, a top aide to Ben Carson, who was nominated to head the Department of Housing and Urban Development, was fired this past Wednesday, according to a report in The New York Times. He was let go after a vetting revealed Singleton had penned “writings critical” of President Trump. GOT Appraisals Management Services, San Ramon, CA, hired Barry Epstein as a senior business development manager. During his career, Epstein has worked for such firms as Gateway Bank FSB, Bank of Internet USA, Freedom Mortgage and Ocwen Financial.
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