The Psychology Behind the Recovery

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62 | Th e M Rep o RT O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t SECONDARY MARKET LocaL edition settlement solutions Morgan Stanley announceS FHFa SettleMent. new york // Morgan Stanley is the latest company to make peace with the Federal Housing Finance Agency (FHFA) over alleged misrepresentation of bad securities sold to Fannie Mae and Freddie Mac. In a filing with the Securities and Exchange Commission (SEC), Morgan Stanley re- vealed it has reached a $1.25 billion agreement in principle with FHFA to resolve pend- ing mortgage-backed securities (MBS)-related litigation. In con- nection with the settlement, the company announced it is record- ing a $150 million addition to its fourth-quarter legal reserves. The agreement remains subject to final approvals by both parties. FHFA did not release a state- ment on the settlement, though a public affairs officer confirmed the language in the SEC filing. Morgan Stanley is the eighth bank to settle with FHFA out of 18 named in a legal complaint filed in 2011 on behalf of the GSEs. The banks were accused of making untrue statements and "material omissions" in MBS sales, resulting in disastrous losses at Fannie Mae and Freddie Mac. Last year, the agency recovered approximately $8 billion in settle- ments related to that filing, with JPMorgan Chase, UBS Americas, Citigroup, and Ally Financial— among others—all striking deals to wipe their slates clean. FHFa records Price gains for 22nd straight month tHe agency SeeS increaSed MontHly gainS. washington, D.c. // The Federal Housing Finance Agency's (FHFA) monthly House Price Index (HPI) slowed its upward march substantially in November, rising only 0.1 percent compared to October's 0.5 percent. November's increase marked the 22nd straight monthly gain in FHFA's purchase-only, seasonally adjusted index. As of the end of the month, the U.S. index was 8.9 percent below its April 2007 peak, resting at roughly the same level as it was in April 2005. Year-over-year, house prices improved 7.6 percent. Across the country, monthly price changes ranged from -1.4 percent in the Census' East South Central division to +0.5 percent in the Mountain, West North Central, and East North Central regions. Yearly changes were all posi- tive, with the lowest increase reported for the Middle Atlantic division (+3.2 percent) and the highest reported in the Pacific division (+15.4 percent). FHFA's price index is calculat- ed using sales price information from loans sold to or guaranteed by Fannie Mae and Freddie Mac. Fannie, ginnie mae msrs Up for Bid large portFolioS were up For grabS FroM tHe two governMent agencieS. washington, D.c. // Mortgage Industry Advisory Corporation (MIAC) recently offered two mortgage servicing rights (MSR) portfolios totaling more than $694 million. The first offering, which went up for bid January 30, was a $669.22 million portfolio from a seller with originations focused mostly in the Northeast. The port- folio contained a mix of Fannie Mae (47 percent) and Ginnie Mae (50.9 percent) loans, with ware- house loans making up the rest. According to MIAC, the portfolio contained all fixed-rate loans with a weighted average interest rate of 3.9 percent, a

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