TheMReport — News and strategies for the evolving mortgage marketplace.
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Local edition SECONDARY MARKET Global bank reaches an agreement over soured residential mortgagebacked securities. Fannie Mae says the proof is in the pudding in terms of the sustainability of its growth. washington, D.c // As July approached its last week, economists at Fannie Mae maintained their forecast for greater economic growth in the second half of 2013. —Wes Anserson, On Message, Inc. last month," said Doug Duncan, chief economist at Fannie Mae. "We continue to see growth in housing, partly due to an increase in existing home sales as buyers choose to act while rates remain near historic lows." On the housing front, Fannie Mae predicts mortgage rates will rise gradually, averaged 4.7 percent in Q 4. The surge in rates is expected to continue dragging down refinancing activity into next year. For all of 2013, total mortgage originations are forecast to decline to $1.65 trillion from an estimated $2.03 trillion in 2012, Americans Sour on GSEs Fears of Wall Street instability perpetuate among consumers. washington, D.c // A survey conducted for the American Action Forum (AAF) shows the majority of American voters view Fannie Mae and Freddie Mac unfavorably and would support phasing out the mortgage giants. The poll, conducted by media and research firm On Message, Inc., used a sample of 1,200 likely voters across 18 congressional The M Report | 61 se c on da r y m a r k e t GSE Continues to Predict Growth The real finding here is that the voters know very little of this subject and therefore have not formed an opinion on the matter." districts from around the country. Survey respondents were broken into three different groups: those living in conservative districts, those living in districts that lean Democratic, and those in swing districts. The survey found that the enterprises have yet to recover in the public eye, with 52 percent of those surveyed saying they view the companies unfavorably and only 20 percent viewing them favorably. Wes Anderson, the partner at On Message who oversaw the poll, described the public image of Fannie Mae and Freddie Mac as "nearly toxic." "Even a majority of Democrat voters are negative toward both entities," Anderson noted. "Voter opinions about Fannie and Freddie and their future all but collapse when reminded about the massive nature of taxpayer bailouts they received." According to the survey, 52 percent of potential voters favor phasing the companies out. "We have known for years that Fannie Mae and Freddie Mac played central roles in the 2008 financial crisis and the right policy course is to be phase them out," said AAF president Douglas Holtz-Eakin. "It is fascinating to see that, across party lines, the public also shares this view." On the topic of Wall Street, 52 percent of voters said their greatest concern is the lack of accountability and the possibility of another bailout should another "too big to fail" firm get into trouble. However, despite their concerns about Wall Street and its influence on the economy, respondents weren't sure about recent banking regulations, with 38 percent saying they'll cause more harm than good and 41 percent saying they'll be helpful. "More important, neither supports nor opponents of these new regulations reach 50 percent," Anderson said. "The real finding here is that the voters know very little of this subject and therefore have not formed an opinion on the matter." A na ly t ic s it has reached an agreement in principle with the Federal Housing Finance Agency (FHFA) to settle claims related to soured residential mortgage-backed securities (RMBS) sold to Fannie Mae and Freddie Mac. UBS was one of 18 institutions filed against by FHFA—acting as the GSEs' conservator—for securities sold between 2004 and 2007. According to a release from the bank, it has highlighted the case in its litigation note since the third quarter of 2011. According to a release issued days later from FHFA, UBS will pay a total of $885 million: $415 million to Fannie Mae and $470 million to Freddie Mac. The settlement is subject to documentation and final approval by both parties. Representatives of UBS did not immediately return a request for comment. In a statement for the FHFA, acting director Edward DeMarco said, "The satisfactory resolution of this matter provides greater clarity and certainty in the marketplace and is in line with our responsibility for preserving and conserving Fannie Mae's and Freddie Mac's assets on behalf of taxpayers." with refinance share dropping to an estimated 62.0 percent. Meanwhile, home sales are expected to rise 8.0 percent throughout 2013; little changed from previous forecasts. Overall economic growth is forecast at 2.0 percent in 2013, "underscoring an ongoing lackluster recovery." However, "further momentum later this year should help carry growth in 2014 to an above-par pace of 2.6 percent, the strongest since 2005," Duncan said. s e r v ic i ng New York // UBS announced In its latest Economic and Housing Outlook, Fannie Mae's Economic and Strategic Research Group points to steady year-todate job creation, high consumer confidence, and positive housing data as proof the economy is on a positive, though modest, growth path. "We are keeping a very close eye on the effect of rising mortgage rates on the housing market and the economy, but our July forecast is little changed from Or ig i nat ion UBS Settles with FHFA on RMBS Complaint