DS News - Digital Archives

September, 2012

DSNews delivers stories, ideas, links, companies, people, events, and videos impacting the mortgage default servicing industry.

Issue link: http://digital.dsnews.com/i/84661

Contents of this Issue

Navigation

Page 14 of 147

» VISIT US ONLINE @ DSNEWS.COM Compiled by the DS News Staff FIVE MINUTES COO FOR JPMORGAN CHASE & CO. AND CEO OF MORTGAGE BANKING AT CHASE WITH FRANK J. BISIGNANO PAGE 27 inside the journal // movers & shakers // on the web // the app spectrum Treasury Announces Plans to Garner GSE Profits The U.S. Treasury announced in mid- August a restructuring of the Preferred Stock Purchase Agreements (PSPAs) it forged to compensate the government for bailing out Fannie Mae and Freddie Mac. Federal officials contend the new terms will hasten the wind down of the two mortgage giants and recoup taxpayer dollars. Treasury put into place an annual we are taking the next step toward responsibly "With today's announcement, winding down Fannie Mae and Freddie Mac." plan to reduce taxpayer exposure to mortgage credit risk and garner all future profits brought in by the GSEs. For the second-quarter period of 2012, Fannie Mae reported net income of $5.1 billion and Freddie Mac brought in $3.0 billion. Treasury will require the GSEs to hand over every dollar of profit, starting with third-quarter earnings. Treasury's full income sweep will recompense taxpayers for their investment and replace the 10 percent quarterly dividend payments required under the original PSPAs. According to one Treasury official, the intention is to end the "circular practice of the Treasury advancing funds to the GSEs simply to pay dividends back to Treasury"—a hand-over-hand transaction that became the normal order of each company's quarterly earnings but was decried publicly by both Fannie and Freddie. In addition, the new agreements require Fannie Mae and Freddie Mac to accelerate efforts to reduce their investment portfolios. The GSEs' must trim their portfolios to the $250 billion target set in past versions of the stock agreements, but they must hit the target four years earlier than previously scheduled. The modified PSPAs are consistent with the Federal Housing Finance Agency's (FHFA) strategic plan for the GSEs' conservatorship, which the agency released in February. Edward DeMarco, FHFA acting director, says the new arrangement will help the markets build toward the future housing finance structure and prepare for a responsible transition. "With today's announcement, we are taking the next step toward responsibly winding down Fannie Mae and Freddie Mac while continuing to support the necessary process of repair and recovery in the housing market," commented Michael Stegman, counselor to the secretary of the Treasury for housing finance policy. A look at facts you didn't know you couldn't live without Capital Economics contends it is "plausible" the U.S. homeownership rate will fall as low as 64% because of tight credit, diminished consumer confidence, and millions more foreclosures still to come. top10 inside the numbers Take a look data bits HOME PRICE FORECASTS U.S. 3.1% StateBIGGEST GAINERS IN 2012Annualized* Arizona Idaho South Dakota North Dakota Hawaii Wyoming West Virginia Mississippi Florida Utah State Delaware 10.6% 10.5% 9.7% 9.1% 9.0% 8.3% 7.7% 7.4% 6.8% 6.6% BIGGEST LOSERS IN 2012Annualized* -6.40% Connecticut Illinois Vermont Rhode Island Alabama Georgia Indiana Washington Wisconsin -5.80% -3.40% -3.40% -2.40% -2.00% -1.80% -1.50% -1.10% -1.00% on number of housing units in state with at least one foreclosure filing recorded during the first six months of this year. Distressed properties accounted for 25% of existing-home sales in June, the National Association of Realtors reported, with REO sales declining to 13% and short sales rising to 12%. 13 Source: RealtyTrac. *Foreclosure rate based

Articles in this issue

view archives of DS News - Digital Archives - September, 2012