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Top Picks: Essential Mortgage News

Dive into the latest industry developments with The Pulse’s top picks. Our curated selection of articles draws from current headlines, delivering pertinent updates on regulatory and compliance matters. Complimented periodically by original content from our team, The Pulse is your pathway through the intricacies of the mortgage landscape.

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Featured Articles

US RMBS 4Q23 Market Trends, Special Report

This recent Fitch Ratings report looks at activity for a few hot industry topics – securitization, non-QM, closed-end seconds (CES), and HELOCs. The report suggests a cautious market influenced by economic factors, and stakeholders should closely monitor the evolving landscape, adjusting strategies as needed to navigate potential risks and opportunities.

HUD recaps homeownership achievements

The comprehensive efforts undertaken by the Biden Administration and HUD, as outlined in this DS News piece, showcase a commitment to addressing key challenges in the housing market. The focus on reducing barriers for first-time homebuyers, particularly through the significant reduction in FHA mortgage insurance premiums, has resulted in sizeable cost savings for borrowers. The emphasis on supporting nearly 1.8 million homeowners during the first three years of the administration, with a majority being first-time homebuyers, reflects a dedication to broadening access to homeownership. The response to the COVID-19 pandemic, providing forbearance options and refining loss mitigation strategies, demonstrates a proactive approach to helping homeowners stay in their homes during economic uncertainties. Also, the initiatives to tackle racial bias in homeownership, such as the PAVE task force and collaborations with the Federal Housing Finance Agency, signify a commitment to fair housing practices. This broad approach not only addresses immediate challenges but lays the groundwork for a more inclusive and resilient housing market.  We all know that the larger fix would be rate reductions, but while we battle inflation, this is what the achievements look like thus far.

Artificial Intelligence: What are the key credit risks and opportunities of AI?

This S&P Global article highlights the transformative potential of Artificial Intelligence (AI), not only offering efficiency gains but also posing risks that demand careful governance and management.

The maturing of generative AI applications is expected to bring about productivity enhancements, cost savings, and scalability benefits – particularly for early adopters in developed economies and sectors with flexible business models, with high adoption in the U.S. and other first world countries. However, technical challenges such as AI-generated misinformation, bias, and cyber risks could amplify operation and reputation risks if not addressed.

The regulatory situation is evolving globally, including the U.S.’s decentralized approach. As companies plot a course for these opportunities and challenges, a focus on risk evaluation, ongoing technical advancements, and compliance with emerging regulations will be critical. Unequal access to AI and inadequate adoption may worsen digital inequalities and non-financial risks, underlining the importance of education, governance, and protection measures. As AI continues to advance, businesses need to stay vigilant, adaptable, and ethical in their implementation to ensure sustained benefits and diminish downsides, including misinformation.

Banks increase holdings on MBS/ABS in trading accounts

The surge in ABS holdings in trading accounts indicates a growing appetite for these structured securities. Considering potential impacts, some banks are adjusting portfolios to capitalize on market opportunities or managing risk in response to economic conditions. Participants should closely monitor these shifts and assess the implications for the broader financial landscape in general, and for their businesses in particular. Prudent risk management practices and regulatory oversight will be vital l to ensure stability amid ever-evolving market dynamics.

GSE buybacks drop in third quarter

Inside Mortgage Finance tells us in their most recent article that during the third quarter, sellers repurchasing government-sponsored enterprise (GSE) loans saw a notable 29.0% decrease. Freddie Mac experienced a 38.4% decline in repurchases, coupled with a 39.1% reduction in unresolved cases, and Fannie Mae witnessed a 14.3% decrease in buybacks and a 5.7% slip in pending and disputed claims. Interested parties should monitor this trend closely, recognizing the potential impact on GSE dynamics, and consider adjustments to risk management strategies in response to changing patterns in buyback activity.  Declines are the good news!

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