Fannie Mae (FNMA)

[navycmdr]

What We’re Hearing: Death, Taxes and the GSEs

Sweet Tax Cows

Not a Peep Out of Pershing Square and Fairholme

The Wrath of Jeb

MSR Market Heats Up

IMFnews ... Friday, Feb 16, 2018 ... By Paul Muolo ... [e-mail]



If the conservative wing of the GOP is successful in eliminating Fannie Mae and Freddie Mac as corporate entities, they’d better come up with $27.19 billion so Treasury Secretary Steven Mnuchin doesn’t get mad. How’s that? Inside Mortgage Finance took a close look at the 4Q17 results of both companies, discovering that Fannie paid $15.98 billion in federal income taxes last year while Freddie forked over $11.21 billion…

The year prior the two forked over $9.84 billion in federal income taxes to Uncle Sam. Why was the 2017 payment higher? Because of the cockamamie accounting behind tax payments and deferred tax assets and sundry items that only certified public accountants can fathom…

Keep in mind that besides the federal income tax payments the GSEs make to Treasury, they’re forking over billions of dollars in cash (real money) in the form of dividends owed on their senior preferred stock. Suffice it to say, Fannie and Freddie are two cash cows that only a crazy person would eliminate, unless that crazy person doesn’t like money…

Holders of Fannie/Freddie common and junior preferred shares get no dividends whatsoever. Meanwhile, two of the largest private investors in the mortgage giants – Pershing Square and Fairholme – have been exceedingly quiet on the topic of GSE reform lately. Maybe they’re quietly lobbying behind the scenes…

IN CASE YOU MISSED IT: On Wednesday, Rep. Jeb Hensarling, R-TX, had this to say about Fannie’s 4Q17 loss: “Today’s announcement that Fannie Mae has once again run out of money to pay its own bills is the latest example of why we need to repeal the GSEs’ government charters once and for all. After footing the bill for the costliest bailout in history, taxpayers are sick and tired of getting ripped off by Fannie and Freddie and then scolded by GSE apologists when they complain. Americans deserve better. That’s why Congress can and should enact comprehensive housing finance reform this year to create a sustainable housing system.” Hensarling’s press statement omitted the fact that Fannie (and Freddie) lost money in the fourth quarter because of changes ushered in under the new tax law – which Hensarling voted for.

Several mortgage servicing portfolios are hitting the auction circuit the next few weeks, including offerings from Interactive Mortgage Advisors, Mortgage Industry Advisory Corp., and The Prestwick Group. For an update on the MSR market, see the new edition of Inside Mortgage Trends…

The nation’s largest MBS-investing real estate investment trust, Annaly Capital Management, posted a net profit of $746.7 million in the fourth quarter, more than double what it earned in 3Q17…

MORTGAGE PEOPLE: Citizens Bank hired Eric Schuppenhauer as president of its mortgage banking franchise. He joins the bank from Capital One, the credit card giant which tossed its residential finance business overboard in November. According to figures compiled by Inside Mortgage Finance, Citizens ranks 45th among all home servicers.

NON-QM UPDATE: Citadel Servicing’s foray into securitizing home loans that don’t meet the qualified-mortgage test is now slated for some time in March, after multiple delays, according to sources familiar with the company’s operations. The nonbank’s first nonprime deal is expected to be roughly $150 million