Federal Reserve chairman Ben Bernanke Wednesday afternoon said the central bank might scale up its purchases of agency mortgage-backed securities if conditions warrant, but not right now.
Speaking at the conclusion of a two-day Federal Open Market Committee meeting, the Fed chief noted that housing is a key component of the U.S. economy. “The problems in that sector are clearly a big reason why our economy is not recovering more quickly,” he said.
In October, the Fed began reinvesting principal payments from its existing holdings of agency MBS (and debt) to purchase newly issued MBS guaranteed by Freddie Mac, Fannie Mae and Ginnie Mae.
However, larger-scale MBS purchases remain a “viable option,” Bernanke said, if additional action is needed.
But for now, the Fed is sticking with its plan of keeping its existing $850 billion agency MBS portfolio from shrinking.
At the direction of the FOMC, the New York Federal Reserve Bank began purchasing agency MBS in early October. The New York bank has purchased $20.5 billion in agency MBS through Oct. 26 and plans to purchase another $10 billion by Nov. 10.
Following its September FOMC meeting, the New York Fed also began selling short-term Treasury securities and purchasing longer-term Treasuries.
That action has lowered longer-term rates as anticipated, Bernanke said. “That in turn should lead to still lower mortgage rates,” he added.
Daily Briefing | Friday, November 4, 2011
Job Losses in the Mortgage Industry Begin to Ebb
Mortgage companies pared their payrolls by just 300 full-time employees in September, compared to 3,400 cuts the prior month, according to new government figures released Friday morning.
HAMP Mods Rise Nicely, Including Principal Reductions
Residential servicers completed nearly 40,150 HAMP modifications in September, a 60% improvement from August, according to figures released by the U.S. Treasury Department.
A Deal May be Afoot to Restore GSE Loan Limits
A decision to restore the $729,750 maximum loan limit on government-backed loans likely will be made by House and Senate leaders — and not the appropriators, according to industry sources following the issue.
Genworth’s Loss Halved
The U.S. mortgage insurance business at Genworth Financial Inc., Richmond, Va., nearly halved its year-over-year loss in the third quarter as new flow delinquencies declined 14% from the previous year and new insurance written was up by 13% in the same timeframe.
Ranieri’s Selene Hires Litton and Other Top Managers
Selene Finance, a specialty servicer/loan modification company controlled by Lewis Ranieri, has hired Larry Litton Jr., and a handful of top managers from Litton Loan Servicing, Houston, according to servicing executives that have done business with the firm.
Redwood Sees Big Earnings Drop but Jumbo Production Spikes
Redwood Trust, the only firm to publicly issue jumbo MBS the past two years, earned just $1 million in the third quarter, but its acquisition of nonconforming product in the secondary market jumped by 166%.
AIG Posts Small Loss
American International Group, New York, reported a net loss of $4.1 million, which includes a $931 million decline in the fair market value of AIG’s holdings in Maiden Lane III and a $43 million decline in the fair market value of its subsidiary SunAmerica’s holdings in Maiden Lane II.
LPS Wins Court Battle Against FDIC in WaMu Appraisal Case
U.S. District Court for the Central District of California Thursday dismissed a civil claim filed against Lender Processing Services by the Federal Deposit Insurance Corp., which accused the mortgage vendor of gross negligence in appraisals conducted for the now defunct Washington Mutual, Seattle.
Another Protest to Draw Attention to Foreclosure Impact
The outcry against the financial sector has taken yet another turn, this time with a petition calling on the Minneapolis School Board to move its payroll and other accounts from Wells Fargo to a local community bank as a way to highlight the connection between foreclosures and local school systems.
Fincen Plan Requires GSEs to Develop Anti-Money Laundering Procedures
A proposal from the Financial Crimes Enforcement Network would require Fannie Mae and Freddie Mac to develop their own anti-money laundering programs as part of an ongoing effort to combat mortgage fraud.