THE BASIS POINT

Biggest MBS Buyers. Simplifying Mortgage Disclosures.

There’s a new push to simplify mortgage disclosures following very recent January 2010 revisions that confused consumers more than ever. Here’s the Consumer Finance Protection Bureau’s latest on possibly combining two key mortgage disclosures: the Good Faith Estimate and Truth In Lending forms.

The National Association of Realtors is urging lawmakers to rethink new risk retention rules for lenders (known as QRM). The public opinion period ends June 10 and NAR’s opinion that “responsible lending standards and ensuring a borrower’s ability to repay have the greatest impact on reducing lender risk, and not high down payments” carries some weight.

Who’s buying mortgage backed securities (MBS)? The National Information Center released consolidated financial statements for bank holding companies for the 1st quarter, providing additional information to the FDIC data to be released soon. Banks continued to add Fannie and Freddie MBS from January through March to the tune of about $30 billion. This is a strong number, although not as notable as $38 billion and $48 billion in the 4th and 3rd quarters, respectively. For those interested in the non-Fannie/Freddie MBS market (called non-Agency), those holdings declined $8.6 billion over the same period.

Once again, looking at the move in non-agency amounts one wonders what would happen if Freddie & Fannie ceased to exist. The latest H.8 report from the Fed shows that domestic bank holdings of agency MBS have increased by $15 billion over the week ending on May 4. This latest spike brings the year-to-date spike in agency MBS holdings of domestic banks to $58 billion, mostly attributed to the purchases of large banks instead of small banks.