U.S. Senator Elizabeth Warren urges HUD and Wall Street firms Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac to stop selling soured loans to hedge funds and private equity firms. Warren is a leading legislator to pressurize government on stopping the practice.
Make it easy for nonprofits
Representative Michael Capuano and Warren will hold a protest to push mortgage companies’ Freddie Mac and Federal National stop selling troubled mortgages to hedge funds and private equity firms. The representative wants to make it easier for nonprofits organizations to purchase them.
Investment companies have been rushing to bar on house owners rather than amend their delinquent loans. The firms package these mortgages in a way that is almost impossible for nonprofits organizations to compete. The objective of it is these mortgage sales need to have restricting guidelines with basic results for homeowners.
HUD stated that it offered over $17.3 billion of soured loans since 2010, with nearly 95% bought by investment companies. The agency has faced criticism from nonprofit units, whose primary objective is helping communities and borrowers, that its sale conditions favor large investors supported by firms such as Blackstone Group LP and Oaktree Capital Management. It is the same case with mortgage giants Federal National and Freddie Mac.
In April 2015, HUD reported modifications to its asset sale plan needing a year postponement of foreclosures after purchasing the loans and mandating assessment of borrowers for necessary modifications. It also announced additional amendments aimed at enhancing nonprofit organizations participation including providing the firms a first look at vacant assets and giving a non-profit only pool.
Along with HUD, the government-supported mortgage firms have speed up auctions of mortgages that went sour after the housing crash. In 2014, Freddie Mac began selling nonperforming loans and Federal National commenced bulk sales this year. The FHFA proposed new guidelines for the loan sales in March 2015.
Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) recovered some of the losses incurred in the previous trading session with a gain of 3.74% made yesterday. The volume surged to 2.7 million against the daily average of 2.1 million but the significance of the all the volume pattern and price action may not be too great. The instrument shows a clear contraction phase, as marked on the chart attached, and that coiling action is coming to an end. A rate increase by the US Fed in the near future can’t be ruled out which would resolve this range and trigger a trending move.