PowerPoint PresentationPresentation prepared for
Public Finance Headquarters 1400 Wewatta Street, Suite 800 • Denver, CO 80202 • (800) 722-1670
2014 Annual Conference
Structuring Homeownership Programs
Presentation prepared for
Changing HFA Strategies
HFA’s switching to (or including) MBS’s are also selling into the cash or TBA market using their balance sheets, “zeros” or TBA as a rate hedge.
2006
HFA Rates as of October 13, 2014
Freddie Mac Primary Mortgage Market Rate 4.12%
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HFA Rates as of January 13, 2014
HFAs that do not have a posted rate on their website include: Arkansas, Hawaii, Indiana, Massachusetts, Mississippi and Virginia.
(D) denotes rates that include DPA, (M) denotes HFAs advertising an MCC program on their website.
Freddie Mac Primary Mortgage Market Rate 4.510%
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U.S. Bank – Self Hedge
U.S. Bank – Non TBA
Idaho – 3rd Party Hedge
Timeline of Asset Purchase Programs
Source: Board of Governors of the Federal Reserve System
USD, Billions (Par) SOMA Domestic Securities Holdings
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TBA – Where the Rate Subsidy is Found
Since the beginning of the current purchase program in 2012, we have purchased nearly $75 billion in MBS on average per month, including reinvestments. This translates into about 50 percent of monthly gross issuance, below the monthly purchase rate of roughly two-thirds, during the first round of large-scale MBS purchases in 2009.
– SIMON POTTER, Federal Reserve Bank of New York
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Note: Figures are monthly
Billions of U.S. Dollars
The State of the Market
SOMA Agency MBS Purchases as a Share of Gross Fixed-Rate Issuance
Source: Federal Reserve Bank of New York; eMBS
Note: Figures are monthly
SOMA Agency MBS Holdings
Percent
- Streamline process
- Not using Premium Pricing as Source
Other-
- MCCs
Setting Your HFA Product Apart – The Basics of Adding Value
Using balance sheet subsidy-refundings,
HFA preferred pricing
Lower Rates
Streamline process
Not using premium pricing as source
Down Payment Assistance
Differentiate between customers and constituents
Other
Take Control of Your Program
Tapering of the Federal Reserve Stimulus bond buying program might increase mortgage rates.
GSE reform has set as a goal more reliance on private label issuance.
HFA whole loan indentures are functionally private label mortgage securities.
As GSE fees are increased, HFA conventional whole loan programs get more competitive.
Dropping MRB requirements when using market rate programs will make it harder to convert back.
Successful HFAs have both first-time homebuyer and higher rate non-first-time homebuyer products.
HFAs are finding other ways to provide better products beyond down-payment assistance
and Fannie preferred pricing and products.
Use of other HFAs as Master Servicer
Using Program Advisors
Stay mission focused
Use of Market Rate Programs are familiarizing HFA staff on how to use the TBA market to hedge pipelines and execute MRB, TBA or Market Rate Programs in-house.
Summary
So Many Options-
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Presentation prepared for
The Good News
This report was prepared from data believed to be reliable but not guaranteed by us without further verification or investigation, and does not purport to be complete. It is not to be considered as an offer to sell or a solicitation of an offer to buy the securities of the entities covered by this report. Opinions expressed are subject to change without notice. George K. Baum & Company may act as a principal for its own account or as agent for another person, in connection with the sale or purchase of any security which is subject in this report.
Competition Just Makes
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0.000%0.500%1.000%1.500%2.000%2.500%3.000%3.500%4.000%4.500%5.000%5.500%Hawaii D M*Wyoming DMaine D*Connecticut D M*Illinois D MMinnesota D MIowa D MD.C. DIdaho D MNebraska DSouth Dakota D MNorth Carolina D MNew Mexico D*Mississippi D M*Rhode Island D MNorth Dakota D*Maryland D MCalifornia D MGeorgia DKentucky D MAlaska DPennsylvania D MColorado D MDelaware D MMissouri D MOhio D MNew Hampshire D M*Utah D MMontana D MVermont D M*Alabama D M*West Virginia DOregon D*Washington D MMichigan D M*Tennessee D M*Florida D M*Nevada D M*South Carolina D*Wisconsin D M*Louisiana D*Oklahoma D M*Arizona D M*Texas D MNew Jersey DNew York D M
Rates shown above are for unassisted loans. HFAs that do not have a posted rate on their website include: Arkansas, Indiana, Massachusetts and Virginia.
(*) denotes HFAs with no difference between the DPA and no DPA rate, (D) denotes a DPA program, and (M) an MCC program.
0.000%0.500%1.000%1.500%2.000%2.500%3.000%3.500%4.000%4.500%5.000%5.500%Oregon DConnecticut D MIdaho D MNebraska DNorth Dakota DCalifornia DMaine DMontanaSouth Dakota D MWyoming DAlaska DMichigan D MMinnesota D MColorado D MD.C. DDelaware D MIowa D MNew Hampshire D MNew York D MNorth Carolina D MOhio D MPennsylvania D MUtah DVermont D MGeorgia DMissouri D MRhode Island DTennessee MAlabama D MFlorida DIllinois D MMarylandNevada DWest Virginia DWisconsin D MArizona D MKentucky DLouisianaOklahoma DWashington D MSouth Carolina DTexas D MNew Jersey DNew Mexico D
3.003.504.004.505.005.506.006.507.007.50Traditional MRB Fixed Mortgage RateFannie Mae 60 Day Forward