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New FHFA leader; JPM, UWM; new financial crisis? 😵

By June 24, 2021 No Comments

President replaces head of the FHFA

Well, that was quick.

One the same day the Supreme Court ruled the President has the power to fire the head of the FHFA, the President fired the head of the FHFA.

Goodbye Mark Calabria, hello Sandra Thompson.

Since 2013 Thompson​ has served as Deputy Director of the Division of Housing Mission and Goals (DHMG). 

As the Deputy Director, Thompson oversaw FHFA’s housing and regulatory policy, capital policy, financial analysis, fair lending and all mission activities for Fannie Mae, Freddie Mac and the Federal Home Loan Banks. She has served in this position since March of 2013. 

Prior to joining FHFA, Thompson worked at the FDIC, for more than 23 years in a variety of leadership positions, most recently as Director, Division of Risk Management Supervision.

Her appointment was met with industry approval.

“MBA congratulates Sandra Thompson on her appointment as the Acting Director of the Federal Housing Finance Agency. Her experience, expertise, and deep knowledge of housing finance will serve her well in this role,” said MBA President and CEO Bob Broeksmit.

“MBA has worked with the Acting Director extensively in the past and looks forward to continuing this relationship as she addresses a variety of housing finance issues, including the conservatorship of Fannie Mae and Freddie Mac,” Broeksmit added. “This will include protecting taxpayers, serving the GSEs’ affordable housing mission, and ensuring a stable secondary mortgage market for a wide variety of single-family and multifamily lenders, regardless of size or business model.”

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JP Morgan follows United Wholesale into private mortgage bond investments

JP Morgan is reinvesting in an electronic clearinghouse for “private-label“ mortgages, which are packaged and sold to investors without a guarantee from a government-backed firm like Fannie Mae. The market has been growing during this year’s hot housing market and United Wholesale recently announce plans toward working their own bond deal, as Rise&Shred first reported.

The investment bank has contributed additional venture capital funding to Maxex LLC, a growing digital exchange for residential mortgages, executives at both companies said. Terms of the deal weren’t disclosed (WSJ paywall).

Maxex connects sellers and buyers of the home loans, providing standardized documentation so they can be easily purchased by financial firms. Those firms invest in the loans or bundle them into mortgage-backed bonds, or securitizations, they sell to others.

Maxex provides a clearinghouse where mortgage lenders can sell loans and where large banks and asset managers can buy them. The company, which launched in 2016, conducts due diligence on the loans it lists for sale and uses a standardized contract for buyers and sellers, streamlining the trading process, said chief executive Tom Pearce.

Loans funded on the platform averaged about $1 billion a month this year. JPMorgan has traded about $4 billion this year, up from $2.2 billion in all of 2020, according to Mr. Pearce and Marc Simpson, a managing director at JPMorgan. The bank helped finance Maxex’s launch and is investing the new funds to help the platform attract other large banks and institutional investors to increase trading activity, they said.

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Treasury Secretary Yellen warns of new financial crisis

U.S. Treasury Secretary Janet Yellen warned Congress that the United States risks a debt default and a new financial crisis as soon as the August recess if lawmakers fail to act quickly to suspend 

or raise the federal borrowing limit.

The Treasury in the past has been able to stave off potential default for several months by employing extraordinary cash-flow management measures such as suspending contributions to government employee pension funds.

Asked how long these measures could last to allow the government to continue borrowing, Yellen said it was difficult to estimate that because spending on COVID-19 relief programs has added more uncertainty to Treasury’s payment flows.

“We can’t tolerate any chance of defaulting on the government debt, and there is a lot of uncertainty. It’s possible that we could reach that point while Congress is out in August, and I would really urge prompt action on raising the limit or suspending it,” Yellen said.

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