Wednesday
Apr102013
Kyle Bass: The Best Way To Get Paid Back By Fannie
Kyle Bass earlier today on Bloomberg.
The Fannie solution begins at 1:10. Hayman Capital's Kyle Bass discusses the housing market, and dumping Fannie and Freddie preferred shares.
Bass says it's all about the G-Fees for Fannie...
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Further reading:
G-Fee hike boosts Fannie Mae bottom line
The Federal Housing Finance Agency is targeting five states in its plan to adjust the guarantee fees Fannie Mae and Freddie Mac charge for single-family mortgages. It hopes to recover a portion of the “exceptionally high costs” the GSEs incur in cases of mortgage default in those states.
The five states are Connecticut, Florida, Illinois, New Jersey and New York.
Update:
Fannie Mae Still Owes Taxpayers $80 Billion
Apr 10, 2013 at 4:11 AM
Reader Comments (2)
Fees charged by mortgage-backed securities (MBS) providers, such as Freddie Mac and Fannie Mae, to lenders for bundling, servicing, selling and reporting MBS to investors. The main component of the guarantee fee is charged to protect against credit-related losses in the mortgage portfolio (think of it like MBS insurance)
Investopedia explains 'Guarantee Fees'
Commonly known in the industry as "g-fees", this small deduction (the average is 15-25 basis points in relation to the stated coupon rate) allows the corporations selling the MBS to make a profit, while benefiting both mortgage lenders and borrowers by making groups of mortgages more marketable and liquid. This helps bring investor capital into the business, allowing all participants to lower their risk exposure and enabling them to offer mortgages to borrowers of lower credit quality.
The coupon rate on an MBS (also known as the pass-through rate) is the average rate on the underlying mortgages minus the guarantee fees.
http://www.investopedia.com/terms/g/guarantee_fees.asp