BRIEF-Fannie Mae reaches $170 million settlement of shareholder lawsuit


Oct 24 (Reuters) – Federal National Mortgage Association
:
* Fannie mae, fhfa reach $170 million cash
settlement of shareholder

lawsuit — court papers
* Settlement resolves claims by fannie mae shareholders from
November 2006 to

September 2008
* Settlement allocates $123.8 million to holders of common
stock, $46.2 million

to holders of preferred stock
* Settlement resolves claims that fannie mae misled
shareholders about its risk

management, mortgage exposure, and capitalization prior to
being put into

conservatorship — court papers
* Settlement papers filed with U.S. district court in Manhattan

Fannie Mae: Positive on US economy despite global growth decline

Real economic growth in the U.S. appears ready to exceed 3% for the second half of the year, providing a sound basis for growth in 2015, according to Fannie Mae’s Economic Strategic Research Group.

The group’s macroeconomic theme for 2014, “Private Forces Move to the Fore,” materialized in the second quarter as reduced fiscal uncertainty and slowing monetary intervention helped private sector momentum to build.

Fannie says that although a variety of factors are slowing growth on a global scale, which may discourage the Federal Reserve Board from making any changes in interest rate policy until Q3 2015, the global economic slowdown has had little negative impact on the fundamentals of the U.S. economy so far.

“Given the expected strengthening economic activity in the U.S. in the second half of the year, we continue to expect to finish just above 2% growth for all of 2014,” said Fannie Mae Chief Economist Doug Duncan. “The risks are tilted to the downside due to current geopolitical events in Russia, Ukraine, Hong Kong, and the Middle East, as well as the economic slowdown in the Eurozone, China, and Japan. However, recent data suggest these factors have not significantly swayed American consumers. Real consumer spending is poised to pick up in the second half of 2014 from the first half, due in large part to improving labor market conditions, continued declines in gasoline prices, and a subdued pace of inflation.”

Fannie expects housing sales to continue to face challenges, but by the end of 2015 expects the best sales performance in eight years.

“From a housing perspective, we anticipate that overall home sales will be weaker in 2014 than in 2013. For 2015, we expect only a moderate pickup in total home sales, but enough to post the best performance since 2007,” said Duncan. “We lowered our expectation for housing starts just slightly to 1 million units for 2014, but our view of mortgage originations has not changed. Our estimate for 2013 was in line with the recent release of 2013 data under the Home Mortgage Disclosure Act, and our projection of total production in 2014 is little changed at approximately $1.1 trillion. For 2015, we are cautiously optimistic that ongoing labor market improvements, low mortgage rates, rising inventories, and some easing of lending standards will boost home sales by roughly 5%. However, we still believe housing will continue along its upward grind rather than have the breakout year some are expecting.”

Fannie Mae settles shareholder lawsuit for $170 million


NEW YORK (Reuters) – Fannie Mae (FNMA.OB) has reached a $170 million settlement of a lawsuit accusing it of misleading shareholders about its finances, risk management and mortgage exposure before it was seized by the U.S. government during the 2008 financial crisis.

The settlement, which requires court approval, was disclosed in a Friday filing with the U.S. District Court in Manhattan.

It resolves shareholder allegations that Fannie Mae defrauded shareholders and inflated its stock by issuing false and misleading statements about its internal controls, capitalization, accounting, and exposure to subprime and low-documentation “Alt-A” mortgages.

The settlement allocates $123.8 million to common stockholders and $46.2 million to preferred stockholders between Nov. 8, 2006 and Sept. 5, 2008.

Fannie Mae’s market value peaked during that period at more than $60 billion. It is now $2.71 billion.

“We are pleased to put this matter behind us,” Joseph Grassi, Fannie Mae’s interim general counsel, said in a statement. “This is another sign of progress as Fannie Mae continues our focus on serving the market and helping lenders make mortgage credit available to qualified borrowers.”

The government seized Fannie Mae and the smaller Freddie Mac (FMCC.OB) on Sept. 7, 2008, and put them into a conservatorship under the Federal Housing Finance Agency, where they remain.

Fannie Mae and Freddie Mac together drew about $187.5 billion of bailout funds, but have returned roughly $218.7 billion to taxpayers in the form of dividends.

The lead plaintiffs suing Fannie Mae are the Massachusetts Pension Reserves Investment Management Board, the State-Boston Retirement Board and the Tennessee Consolidated Retirement System, and are seeking class-action status.

They said the settlement averts potential “numerous and substantial risks” of continuing the lawsuit after similar litigation against Freddie Mac was dismissed last year.

“We’re extremely pleased with the results, particularly in light of the dismissal of a similar lawsuit against Fannie Mae’s sibling company, Freddie Mac,” Daniel Greene, the chairman of State-Boston, said in a statement.

The law firms Labaton Sucharow and Berman DeValerio, which represent common stockholders, and Kaplan Fox Kilsheimer, which represents preferred stockholders, plan to seek fees of as much as 20 percent of the settlement fund, court papers show.

A separate lawsuit over Fannie Mae’s disclosures was brought in 2011 by the U.S. Securities and Exchange Commission against former Chief Executive Officer Daniel Mudd and former Chief Risk Officer Enrico Dallavecchia, and remains pending.

The SEC filed a similar lawsuit against former Freddie Mac officials, including onetime Chief Executive Officer Richard Syron.

The case is In re: Fannie Mae 2008 Securities Litigation, U.S. District Court, Southern District of New York, No. 08-07831.

(Reporting by Jonathan Stempel in New York; Editing by Chris Reese and Alan Crosby)

Judge dismisses Coakley federal housing lawsuit

BOSTON (AP) — A federal judge has dismissed a lawsuit filed by Massachusetts Attorney General Martha Coakley against the Federal Housing Finance Agency and mortgage giants Fannie Mae and Freddie Mac, saying the court doesn’t have oversight of the matter.

Coakley sued the agencies earlier this year for refusing to comply with a state law designed to ease the tide of foreclosures in Massachusetts.

Coakley said Fannie Mae and Freddie Mac violated a 2012 Massachusetts law allowing the sale of homes in foreclosure to nonprofit organizations who intend to restructure the loan and sell the property back to the original homeowner.

U.S. District Court Judge Richard Stearns dismissed the lawsuit, saying federal lawmakers have “expressly removed such conservatorship decisions from the courts’ oversight.”

“However well intended the stated goals of programs like the SUN Initiative, Congress has removed from the purview (of) the court the power to second-guess the FHFA’s business judgment,” he wrote, referring to the Stabilizing Urban Neighborhoods initiative, a buyback program by the nonprofit Boston Community Capital.

Brad Puffer, a spokesman for Coakley, said she’s weighing her options.

“We brought this case to protect Massachusetts homeowners facing foreclosure, help stabilize communities, and to give all families the protection provided by state law,” Puffer said in a statement. “It’s a shame that this decision puts Fannie and Freddie out of the reach of our law and that’s why we are seriously considering an appeal.”

Coakley, a Democratic candidate for Massachusetts governor, had argued that the state law has worked in Massachusetts.

“It just makes sense to take action that will continue to keep people in their homes,” Coakley said when she filed the lawsuit in June. “It makes commercial sense. It makes financial sense, and it’s frankly the law and not to do it is really unfair.”

The 2012 state law explicitly forbids banks and lenders from refusing to consider offers from legitimate buyback programs merely because the property will be resold to the former homeowner.

Critics of the Massachusetts law have argued that allowing homes to be sold back to homeowners who were unable to maintain their original mortgage would create a “moral hazard” by essentially allowing the homeowner to benefit from a bad contract.

But Coakley has said that argument is outdated given that the state is still trying to dig out of the foreclosure crisis.

Charlie Baker, Republican gubernatorial candidate, has criticized Coakley, saying she didn’t do enough to disclose that the lawsuit could benefit a nonprofit housing agency run by her campaign finance committee co-chair Elyse Cherry, who also donated to Coakley’s campaign and is the CEO Boston Community Capital.

Coakley said those contributions were public. She faulted Baker for refusing to say whether he supported the lawsuit.

In the complaint, Coakley had alleged two of FHFA’s policies violate state law. One, intended to keep Fannie and Freddie in an “arm’s-length transaction,” prohibits property sales to nonprofits who resell to the original homeowner. A second “make whole” policy prevents Fannie and Freddie from accepting anything less than the outstanding loan amount from the former homeowner or anyone seeking to resell or rent to the former homeowner.

Freddie STACR braves volatility but has to pay up

Freddie Mac printed a new US$1bn-plus risk-sharing trade Thursday much wider than previous deals in the STACR program, as the recent sell-off and volatility continues to dog the sector.

The priciest piece to sell was the riskiest slice typically favored by hedge funds, paying investors one-month Libor plus 475bp for an unrated 9.07-year US$171m M3 HQ3 bond.

That was a full 100bp more than the L+375bp level when a similar bond priced in September, according to IFR data.

Top to bottom, the trade was the second-widest print to date in the Structured Agency Credit Risk (STACR) programme.

Michael Reynolds, director of portfolio management at Freddie, said the issuer was nonetheless pleased with the deal, even if the agency had to pay more this time around.

“Last week there was substantial market volatility, mostly on the rates side, which had a spillover into the credit markets and into our space,” he said in an interview with IFR.

“We looked at that, made a call and decided to go forward with the deal,” said Reynolds, noting the decision was rooted in Freddie’s aim to be a programmatic issuer.

“We won’t be tone deaf to the market,” he said. “But you’ll see Freddie make decisions (like) scaling back size of issues.”

Investors started to shake off market jitters later in the week, which helped tighten the deal some 10bp–20bp from guidance on Wednesday.

Wider anyway

Despite the tightening, however, pricing was wider when weighed against STACR prints from six months ago.

The tightest print for unrated notes, for example, was L+360bp in April, albeit before loans with higher leverage were included into the program.

And while Reynolds said that all of this week’s classes were oversubscribed, the top M1 tranche printed significantly outside of the spring low of L+85bp.

The deal’s lower-leverage US$611m DN4 2014 segment printed at L+140bp for the 1.63-year A1/A rated M1 tranche; L+240bp for the 3.94-year A3/BBB- rated M2 class; and L+455bp for the 8.66-year unrated M3 bond.

Like its unrated slice, the rated portions of the riskier US$429.4m HQ3 2014 portion were also wider. Its 1.87-year A1/A rated M1 cleared at L+165bp, while its 4.78-year Baa1/BBB- rated M2 landed at L+265bp.

Joint leads were Bank of America and JP Morgan.

It was Freddie’s third deal with a riskier “HQ” bucket of government-guaranteed loans of up to 95% of a home’s value.

When the risk-share programs kicked off roughly 15 months ago, loan leverage was capped at 80% of a home’s value.

Like Fannie Mae’s Connecticut Avenue Securities (CAS) program, STACR aims to attract private capital to the agency MBS market by offloading the first-loss slice of government-guaranteed loan pools via these new securities.

Freddie said it has now offloaded a total of US$205bn in exposure to single-family mortgages through the STACR program

Mortgage rates sink; 30-year averages 3.92%, Freddie Mac says

The lowest mortgage rates of the year sank a bit lower this week, with Freddie Mac reporting that lenders were offering 30-year fixed loans at an average of 3.92%, down from 3.97% a week ago.

The average rate for a 15-year loan also ratcheted down, from 3.18% to 3.1%, according to Freddie Mac’s weekly survey, offering borrowers an inexpensive way to pay their mortgages faster.

Related story: Lower mortgage rates a silver lining of stock market drops

With inflation running below the Federal Reserve’s target of 2% and consumer prices up just 0.1% in September, investors are accepting rock-bottom returns on mortgage bonds guaranteed by Freddie Mac and Fannie Mae, the housing finance giants.

The average rate on the 30-year fixed mortgage was at its lowest point since June 2013, Freddie Mac said in its weekly report, issued Thursday. A year ago at this time, borrowers were offering 30-year loans at an average of 4.13%.

lRelated Existing home sales in September rise to highest level this year
BusinessExisting home sales in September rise to highest level this yearSee all related

Freddie Mac asks lenders every Monday through Wednesday about the terms they are offering to low-risk borrowers who pay minimal points and fees to lenders — half of 1% of the loan amount in the latest survey.

Keep an eye on banking and mortgage news by following @ScottReckard

Copyright © 2014, Los Angeles Times

Fitch Affirms FREMF 2012-K711 & Freddie Mac Structured Pass-Through …

CHICAGO–(BUSINESS WIRE)–Fitch Ratings has affirmed all six classes of FREMF 2012-K711
multifamily mortgage pass-through certificates and three classes of
Freddie Mac structured pass-through certificates, series K-711. A
detailed list of rating actions follows at the end of this release.

KEY RATINGS DRIVERS

The affirmations are based on overall stable performance of the
underlying collateral pool. As of the October 2014 remittance, the pool
had no delinquent or specially serviced loans. The pool’s aggregate
principal balance has been paid down by 0.8% to $1.37 billion from $1.38
billion at issuance. Seventy-six loans (100% of the pool) reported full
year 2013 financial statements. Based on the full year financial
statements, the pool’s overall net operating income (NOI) improved 7.1%
since YE 2012. Two loans (0.67%), one of which is considered a Fitch
Loan of Concern, are on the master servicer’s watchlist primarily due to
deferred maintenance issues associated with infrastructure and life
safety deficiencies.

The affirmations of the Freddie K-711 certificates are the result of the
pass-through nature of the certificates, as they are dependent on the
underlying ratings of corresponding classes of FREMF 2012-K711.

The Fitch loan of concern (0.5%) is secured by Eastern Parkway, a
110-unit six building apartment complex located in Brooklyn, NY.
Performance of the loan has steadily declined since issuance with the
full year 2013 debt service coverage ratio listed at 0.96x from 1.32x at
issuance. The loan was assumed during the first quarter of 2014 and full
year operations are unavailable for comparison. The servicer commentary
from the watchlist indicates that a number of deferred maintenance
issues exist on the property which contributed to poor rating at time of
the servicer’s inspection. The most recent reported occupancy was 97% in
Jan. 2014 compared to 100% at issuance.

The largest loan of the pool (5.0%) is secured by Canyon Creek
Apartments, a 558-unit forty-eight building apartment complex located in
Bothell, WA. The apartment complex amenities include three pools, two
fitness centers, a barbeque area, two fitness centers, and a racquetball
court. The subject is located less than 10 miles from the offices of two
the region’s largest employers, Boeing and Microsoft.

The second largest loan (4.4%) is secured by, Hudson Park North, a
294-unit apartment complex situated on 2.1 acres approximately 17 miles
north of New York City. The two high-rise buildings, built in 2008, are
in excellent physical condition and located in the desirable submarket
of Southern Westchester. The common amenities include a fitness center,
clubroom, onsite parking, and concierge services. Residents can easily
access New York City via the Metro North train station that is located
directly across from the property.

RATINGS SENSITIVITIES

All classes maintain Stable Outlooks. Due to the recent issuance of the
transaction and stable performance, Fitch does not foresee positive or
negative ratings migration until a material economic or asset level
event changes the transaction’s portfolio-level metrics. Additional
information on rating sensitivity is available in the report ‘FREMF
2012-K711 Multifamily Mortgage Pass-Through Certificates and Freddie Mac
Structured Pass-Through Certificates, Series K711′ (Dec. 11, 2012),
available at www.fitchratings.com.

Fitch has affirmed the following classes as indicated:

FREMF 2012-K711 Multifamily Mortgage Pass-Through Certificates

–$99.5 million class A-1 at ‘AAAsf’; Outlook Stable;

–$1.042 billion class A-2 at ‘AAAsf’; Outlook Stable;

–$1.141 billion class X1 at ‘AAAsf’; Outlook Stable;

–$1.141 billion class X2-A at ‘AAAsf’; Outlook Stable;

–$89.7 million class B at ‘A-sf’; Outlook Stable;

–$34.5 million class C at ‘BBBsf’; Outlook Stable.

Freddie Mac Structured Pass-Through Certificates, Series K-711

–$106.4 million class A-1 at ‘AAAsf’; Outlook Stable;

–$1.042 billion class A-2 at ‘AAAsf’; Outlook Stable;

–$1.141 billion class X1 at ‘AAAsf’; Outlook Stable.

Of FREMF 2012-K711, Fitch does not rate the $227.7 million interest-only
class X2-B, the $227.7 million interest-only class X3, and the $103.5
million class D. Of the Freddie Mac Structured Pass-Through
Certificates, Series K-711, Fitch does not rate the $227.7 million
interest-only class X3.

Additional information is available at ‘www.fitchratings.com‘.

Applicable Criteria and Related Research:

–’Global Structured Finance Rating Criteria’ (Aug. 4, 2014);

–’U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC
Criteria’ (Dec. 11, 2013).

A comparison of the transaction’s Representations, Warranties, and
Enforcement (RWE) mechanisms to those of typical RWEs for the asset
class is available in the following reports:

–’FREMF 2012-K711 Multifamily Mortgage Pass-Through Certificates and
Freddie Mac Structured Pass-Through Certificates, Series K-711′ (Dec. 11
2012).

–’FREMF 2012-K711 Multifamily Mortgage Pass-Through Certificates and
Freddie Mac Structured Pass-Through Certificates, Series K-711 Appendix’
(Dec. 11 2012).

Applicable Criteria and Related Research:

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724961

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=906335

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE
AVAILABLE ON THE AGENCY’S PUBLIC WEBSITE ‘WWW.FITCHRATINGS.COM‘.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
SITE AT ALL TIMES. FITCH’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE ‘CODE OF CONDUCT’ SECTION OF
THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE
RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR
RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY
CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH
WEBSITE.

Fitch Affirms FREMF 2012-K711 & Freddie Mac Structured Pass-Through Certificates, Ser K-711

CHICAGO–(BUSINESS WIRE)–

Fitch Ratings has affirmed all six classes of FREMF 2012-K711 multifamily mortgage pass-through certificates and three classes of Freddie Mac structured pass-through certificates, series K-711. A detailed list of rating actions follows at the end of this release.

KEY RATINGS DRIVERS

The affirmations are based on overall stable performance of the underlying collateral pool. As of the October 2014 remittance, the pool had no delinquent or specially serviced loans. The pool’s aggregate principal balance has been paid down by 0.8% to $1.37 billion from $1.38 billion at issuance. Seventy-six loans (100% of the pool) reported full year 2013 financial statements. Based on the full year financial statements, the pool’s overall net operating income (NOI) improved 7.1% since YE 2012. Two loans (0.67%), one of which is considered a Fitch Loan of Concern, are on the master servicer’s watchlist primarily due to deferred maintenance issues associated with infrastructure and life safety deficiencies.

The affirmations of the Freddie K-711 certificates are the result of the pass-through nature of the certificates, as they are dependent on the underlying ratings of corresponding classes of FREMF 2012-K711.

The Fitch loan of concern (0.5%) is secured by Eastern Parkway, a 110-unit six building apartment complex located in Brooklyn, NY. Performance of the loan has steadily declined since issuance with the full year 2013 debt service coverage ratio listed at 0.96x from 1.32x at issuance. The loan was assumed during the first quarter of 2014 and full year operations are unavailable for comparison. The servicer commentary from the watchlist indicates that a number of deferred maintenance issues exist on the property which contributed to poor rating at time of the servicer’s inspection. The most recent reported occupancy was 97% in Jan. 2014 compared to 100% at issuance.

The largest loan of the pool (5.0%) is secured by Canyon Creek Apartments, a 558-unit forty-eight building apartment complex located in Bothell, WA. The apartment complex amenities include three pools, two fitness centers, a barbeque area, two fitness centers, and a racquetball court. The subject is located less than 10 miles from the offices of two the region’s largest employers, Boeing and Microsoft.

The second largest loan (4.4%) is secured by, Hudson Park North, a 294-unit apartment complex situated on 2.1 acres approximately 17 miles north of New York City. The two high-rise buildings, built in 2008, are in excellent physical condition and located in the desirable submarket of Southern Westchester. The common amenities include a fitness center, clubroom, onsite parking, and concierge services. Residents can easily access New York City via the Metro North train station that is located directly across from the property.

RATINGS SENSITIVITIES

All classes maintain Stable Outlooks. Due to the recent issuance of the transaction and stable performance, Fitch does not foresee positive or negative ratings migration until a material economic or asset level event changes the transaction’s portfolio-level metrics. Additional information on rating sensitivity is available in the report ‘FREMF 2012-K711 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K711′ (Dec. 11, 2012), available at www.fitchratings.com.

Fitch has affirmed the following classes as indicated:

FREMF 2012-K711 Multifamily Mortgage Pass-Through Certificates

–$99.5 million class A-1 at ‘AAAsf’; Outlook Stable;

–$1.042 billion class A-2 at ‘AAAsf’; Outlook Stable;

–$1.141 billion class X1 at ‘AAAsf’; Outlook Stable;

–$1.141 billion class X2-A at ‘AAAsf’; Outlook Stable;

–$89.7 million class B at ‘A-sf’; Outlook Stable;

–$34.5 million class C at ‘BBBsf’; Outlook Stable.

Freddie Mac Structured Pass-Through Certificates, Series K-711

–$106.4 million class A-1 at ‘AAAsf’; Outlook Stable;

–$1.042 billion class A-2 at ‘AAAsf’; Outlook Stable;

–$1.141 billion class X1 at ‘AAAsf’; Outlook Stable.

Of FREMF 2012-K711, Fitch does not rate the $227.7 million interest-only class X2-B, the $227.7 million interest-only class X3, and the $103.5 million class D. Of the Freddie Mac Structured Pass-Through Certificates, Series K-711, Fitch does not rate the $227.7 million interest-only class X3.

Additional information is available at ‘www.fitchratings.com‘.

Applicable Criteria and Related Research:

–’Global Structured Finance Rating Criteria’ (Aug. 4, 2014);

–’U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria’ (Dec. 11, 2013).

A comparison of the transaction’s Representations, Warranties, and Enforcement (RWE) mechanisms to those of typical RWEs for the asset class is available in the following reports:

–’FREMF 2012-K711 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-711′ (Dec. 11 2012).

–’FREMF 2012-K711 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-711 Appendix’ (Dec. 11 2012).

Applicable Criteria and Related Research:

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724961

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=906335

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY’S PUBLIC WEBSITE ‘WWW.FITCHRATINGS.COM‘. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE ‘CODE OF CONDUCT’ SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Mortgage rates sink; 30-year averages 3.92%, Freddie Mac says

The lowest mortgage rates of the year sank a bit lower this week, with Freddie Mac reporting that lenders were offering 30-year fixed loans at an average of 3.92%, down from 3.97% a week ago.

The average rate for a 15-year loan also ratcheted down, from 3.18% to 3.1%, according to Freddie Mac’s weekly survey, offering borrowers an inexpensive way to pay their mortgages faster.

Related story: Lower mortgage rates a silver lining of stock market drops

With inflation running below the Federal Reserve’s target of 2% and consumer prices up just 0.1% in September, investors are accepting rock-bottom returns on mortgage bonds guaranteed by Freddie Mac and Fannie Mae, the housing finance giants.

The average rate on the 30-year fixed mortgage was at its lowest point since June 2013, Freddie Mac said in its weekly report, issued Thursday. A year ago at this time, borrowers were offering 30-year loans at an average of 4.13%.

lRelated Existing home sales in September rise to highest level this year
BusinessExisting home sales in September rise to highest level this yearSee all related

Freddie Mac asks lenders every Monday through Wednesday about the terms they are offering to low-risk borrowers who pay minimal points and fees to lenders — half of 1% of the loan amount in the latest survey.

Keep an eye on banking and mortgage news by following @ScottReckard

Copyright © 2014, Los Angeles Times

Freddie Mac Prices Two STACR Credit Risk Sharing Transactions

MCLEAN, VA–(Marketwired – Oct 23, 2014) – Freddie Mac (OTCQB: FMCC) priced two Structured Agency Credit Risk (STACR®) transactions today totaling $1 billion. The company priced a $611 million offering of STACR debt notes, Series 2014-DN4, and a $429 million offering of STACR debt notes, Series 2014-HQ3 with a reference pool of loans with higher loan-to-value (LTV) ratios. These offerings represent the sixth and seventh STACR offerings this year where Freddie Mac transfers a portion of its credit risk on certain groups of loans to private investors.

“Credit risk sharing is a top priority at Freddie Mac,” said Kevin Palmer, vice president of single-family strategic credit costing and structuring for Freddie Mac. “We are happy to see such strong demand for STACR bonds especially given last week’s market volatility.”

When these transactions settle, the company will have issued $6 billion of STACR debt notes and obtained insurance coverage through ACIS (Agency Credit Insurance Structure) reinsurance transactions of $631 million since they were launched last year. Through these credit risk transfer transactions, the company will have laid off a substantial portion of the credit risk on $205 billion UPB in single-family mortgages.

STACR Debt Notes, Series 2014-DN4 and Series 2014-HQ3 were offered to the market by Bank of America Merrill Lynch and J.P. Morgan as co-lead managers and joint bookrunners. Citigroup, Deutsche Bank Securities and Wells Fargo Securities served as co-managers, and Bonwick Capital as selling group member. These transactions will be listed on the Global Exchange Market of the Irish Stock Exchange and have indicative regulatory assessment designations from the National Association of Insurance Commissioners.

STACR, Series 2014-DN4

Pricing for the STACR Series 2014-DN4, M-1 class was one-month LIBOR plus a spread of 140 basis points. Pricing for the M-2 class was one month LIBOR plus a spread of 240 basis points. Pricing for the M-3 class was one month LIBOR plus a spread of 455 basis points. The offering is scheduled to settle on or around October 28, 2014.

The Series 2014-DN4, M-1 class has 4.2% subordination and received an investment grade rating of A-sf from Fitch and A1(sf) from Moody’s, subject to ongoing monitoring. The M-2 class has 2.9% subordination and received an investment grade rating of BBB-sf from Fitch and A3(sf) from Moody’s, subject to ongoing monitoring. The M-3 class was not rated and has .50% subordination. The three classes have an exchangeable feature giving investors the option to either combine pro-rata portions of the cash flows from the M-1, M-2 and M-3 classes or strip off a portion of the interest from any class to create bonds with different margins.

For Series 2014-DN4, the amount of periodic principal and ultimate principal paid by Freddie Mac is determined by the performance of a very large and diversified reference pool of almost 70,000 residential loans, representing an unpaid principal balance of more than $15.7 billion. This pool consists of a subset of 30-year fixed-rate single-family mortgages acquired by Freddie Mac in the first quarter of 2014. Freddie Mac holds the senior risk and the first loss risk in the reference pool, and a portion of the risk in the M-1, M-2 and M-3 classes.

STACR, Series 2014-HQ3

Pricing for the STACR Series 2014-HQ3 M-1 class was one-month LIBOR plus a spread of 165 basis points. Pricing for the M-2 class was one month LIBOR plus a spread of 265 basis points. Pricing for the M-3 class was one month LIBOR plus a spread of 475 basis points. The offering is scheduled to settle on or around October 28, 2014.

The Series 2014-HQ3, M-1 class has 4.75% subordination and received investment grade ratings of A-sf from Fitch and A1(sf) from Moody’s, subject to ongoing monitoring. The M-2 class has 3.1% subordination and received investment grade ratings of BBB-sf from Fitch and Baa1(sf) from Moody’s, subject to ongoing monitoring. The M-3 class was not rated and has .85% subordination. The M-1, M-2 and M-3 Classes of the Series 2014-HQ3 have an exchangeable feature giving investors the option to either combine pro-rata portions of the cash flows from the M-1, M-2 and M-3 classes or strip off a portion of the interest from any class to create bonds with different margins.

For Series 2014-HQ3, the amount of periodic principal and ultimate principal paid by Freddie Mac is determined by the performance of a very large and diversified reference pool of more than 36,000 residential loans, representing an unpaid principal balance of approximately $8 billion. This pool consists of a subset of 30-year fixed-rate single-family mortgages acquired by Freddie Mac in the first quarter of 2014. Freddie Mac holds the senior risk and the first loss risk in the reference pool, and a portion of the risk in the M-1, M-2 and M-3 classes.

This announcement is not an offer to sell any Freddie Mac securities. Offers for any given security are made only through applicable offering circulars and related supplements, which incorporate Freddie Mac’s Annual Report on Form 10-K for the year ended December 31, 2013, filed with the Securities and Exchange Commission (SEC) on February 27, 2014; all other reports Freddie Mac filed with the SEC pursuant to Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) since December 31, 2013, excluding any information “furnished” to the SEC on Form 8-K; and all documents that Freddie Mac files with the SEC pursuant to Sections 13(a), 13(c) or 14 of the Exchange Act, excluding any information “furnished” to the SEC on Form 8-K.

Freddie Mac’s press releases sometimes contain forward-looking statements. A description of factors that could cause actual results to differ materially from the expectations expressed in these and other forward-looking statements can be found in the company’s Annual Report on Form 10-K for the year ended December 31, 2013, and its reports on Form 10-Q and Form 8-K, filed with the SEC and available on the Investor Relations page of the company’s Web site at www.FreddieMac.com/investors and the SEC’s Web site at www.sec.gov.

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four home borrowers and is one of the largest sources of financing for multifamily housing. Additional information is available at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog.