Transcript Document

October 2014
2014 Annual Conference
Structuring
Homeownership
Programs
In a Competitive Market
Who? What? Why?
JIM STRETZ
Senior Vice President
[email protected]
Public Finance Headquarters
1400 Wewatta Street, Suite 800 0• Denver, CO 80202 • (800) 722-1670
Presentation prepared for
Changing HFA Strategies
2006
2014
(estimated)
Whole Loan
30
6
MBS
18
29
Mixed
3
16
MCC
14
27
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.
1
Presentation prepared for
HFA Rates as of October 13, 2014
5.500%
5.000%
4.500%
Freddie Mac Primary Mortgage Market Rate 4.12%
4.000%
3.500%
3.000%
2.500%
2.000%
1.500%
1.000%
0.500%
Hawaii D M
*Wyoming D
Maine D
*Connecticut D M
*Illinois D M
Minnesota D M
Iowa D M
D.C. D
Idaho D M
Nebraska D
South Dakota D M
North Carolina D M
New Mexico D
*Mississippi D M
*Rhode Island D M
North Dakota D
*Maryland D M
California D M
Georgia D
Kentucky D M
Alaska D
Pennsylvania D M
Colorado D M
Delaware D M
Missouri D M
Ohio D M
New Hampshire D M
*Utah D M
Montana D M
Vermont D M
*Alabama D M
*West Virginia D
Oregon D
*Washington D M
Michigan 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 M
New Jersey D
New York D M
0.000%
Rates shown Rates
above
are for unassisted loans. HFAs that do not have a posted rate on their website include: Arkansas, Indiana,
shown above are for unassisted loans. HFAs that do not have a posted rate on their website include: Arkansas, Indiana, Massachusetts and Virginia.
(*) denotes
with no difference
between
DPA and no DPA
rate, (D) denotes
a DPA and
program,
(M) anrate,
MCC program.
Massachusetts and Virginia.
(*)HFAs
Denotes
HFAs with
nothedifference
between
the DPA
noandDPA
(D) denotes rates that include
DPA, (M) denotes HFAs advertising an MCC program on their website and (L) a local premium priced DPA program as competition.
2
Presentation prepared for
Oregon D
Connecticut D M
Idaho D M
Nebraska D
North Dakota D
California D
Maine D
Montana
South Dakota D M
Wyoming D
Alaska D
Michigan D M
Minnesota D M
Colorado D M
D.C. D
Delaware D M
Iowa D M
New Hampshire D M
New York D M
North Carolina D M
Ohio D M
Pennsylvania D M
Utah D
Vermont D M
Georgia D
Missouri D M
Rhode Island D
Tennessee M
Alabama D M
Florida D
Illinois D M
Maryland
Nevada D
West Virginia D
Wisconsin D M
Arizona D M
Kentucky D
Louisiana
Oklahoma D
Washington D M
South Carolina D
Texas D M
New Jersey D
New Mexico D
HFA Rates as of January 13, 2014
5.500%
5.000%
4.500%
Freddie Mac Primary Mortgage Market Rate 4.510%
4.000%
3.500%
3.000%
2.500%
2.000%
1.500%
1.000%
0.500%
0.000%
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.
3
Presentation prepared for
Who is Doing What?
Rhode Island
Connecticut
New Jersey
Delaware
Maryland
Washington, D.C.
U.S. Bank – 3rd Party Hedge
Idaho – 3rd Party Hedge
Alabama – 3rd Party Hedge
U.S. Bank – Self Hedge
Idaho – Self Hedge
Self Hedge – Self Serve
U.S. Bank – Non TBA
Alabama – Self Hedge
Non-TBA – Multiple Servicers
4
Non-TBA – Self Serve
Presentation prepared for
The Fed Driving Mortgage Rates Down
Timeline of Asset Purchase Programs
USD, Billions (Par)
SOMA Domestic Securities Holdings
Source: Board of Governors of the Federal Reserve System
5
Presentation prepared for
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
‘‘
‘‘
TBA – Where the Rate Subsidy is Found
SOMA Agency MBS Purchases
Billions of U.S. Dollars
Source: Federal Reserve Bank of New York
Note: Figures are monthly
6
Presentation prepared for
The State of the Market
SOMA Agency MBS Purchases as a Share of Gross Fixed-Rate Issuance
Percent
Source: Federal Reserve Bank of New York; eMBS
Note: Figures are monthly
7
Presentation prepared for
The Fed’s Sweet Spot
Percent
SOMA Agency MBS Holdings
August 2014
Coupon (Percent)
Source: Federal Reserve Bank of New York; eMBS
8
Presentation prepared for
Your Opportunities
9
Presentation prepared for
The Mortgage Market
10
Presentation prepared for
Mortgage Rates and MRBs
The Mortgage
MortgageMarket
Market
The
7.50
7.00
6.50
6.00
5.50
5.00
4.50
4.00
3.50
3.00
Traditional MRB Fixed Mortgage Rate
11
Fannie Mae 60 Day Forward
Presentation prepared for
Setting Your HFA Product Apart – The Basics of Adding Value
Lower Rates
 Using balance sheet subsidy-refundings,
short term debt and reserves
 HFA preferred pricing
 Fannie Mae risk share
 Taking PMI exposure risk
 Using CRA motivated investors
 Drive costs down and revenues up
Better Distribution






Down Payment Assistance
 Flexibility in setting rate and DP amount
 Not using premium pricing as source
Other
 MCCs
 Listing of rates on industry pricing services
 Differentiate between customers and constituents
Paying competitive SRPs
Higher level of service
Using HFA status in community
Marketing to realtors and lenders
Streamline process
Taking broker risk
12
Presentation prepared for
Summary
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.
•

HFAs are finding other ways to provide better products beyond down-payment assistance
and Fannie preferred pricing and products.
•
•
•

Successful HFAs have both first-time homebuyer and higher rate non-first-time homebuyer 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.
13
Presentation prepared for
So Many Options- How can you choose?
So Many OptionsWhich strategy is right for
your market?
14
Presentation prepared for
The Good News
Competition Just Makes
Us Stronger!
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.
15
Presentation prepared for