home subscribe advertise reprints e-mail help RSS about us LOG IN

Mortgage News

 

Mortgage News

HOT Topics

production

servicing

compliance

legal

fraud

secondary

jobs

appraisal

site map

www.loan-academy.com/
twitter linkedin
facebook google+
Search:

Mortgage News

News by Subject
Complete list of specialty news sections.

Purchase Subscription
Subscribe to MortgageDaily.com and get immediate access to all news, statistics and archives.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Consumer Mortgage News
Free mortgage news for prospective borrowers.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from MortgageDaily.com.

Mortgage News Reprints
Put entire MortgageDaily.com stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed MortgageDaily.com stories free on your Web site or for your RSS reader.

News Archives
Archive of MortgageDaily.com stories by month going back to 1999.

Press Releases
Reports and announcements from MortgageDaily.com.

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Directories
Directories of lenders, branch operators and mortgage service providers.

Mortgage Graphs
Directories of lenders, branch operators and mortgage service providers.

Political Mortgage News | Mortgage Laws
Mortgage people in politics. Political contributions by mortgage companies. Coverage of political support by lenders and executives. GSE lobbying and issues.



Paulson Announces Major Steps to Restore Mortgage Liquidity

Paulson says GSEs, Treasury to step up MBS purchases

September 19, 2008

By MortgageDaily.com staff


The Bush administration announced major steps in unclogging mortgage securities in the U.S. financial system and said legislation may be passed as early as next week to relieve financial institutions of illiquid mortgage assets.

Mortgage assets are tying up the entire U.S. economy, U.S. Treasury Secretary Henry M. Paulson Jr. said at a press conference this morning. He noted that he, along with Federal Reserve Chairman Ben Bernanke and Securities and Exchange Commission Chairman Christopher Cox, met with congressional leaders last night to discuss a comprehensive legislative plan to deal with mortgage-related securities that are depriving financial markets of liquidity.

Paulson said talks with members of Congress will continue through the weekend.

He noted that the government has addressed problems with Fannie Mae and Freddie Mac, worked with market participants to prepare for the failure of Lehman Brothers, and made loans to AIG so it can sell assets in an orderly manner. He also highlighted a temporary guarantee program announced today for the U.S. money market mutual fund industry.

photo of Henry Paulson
Henry M. Paulson

"Despite these steps, more is needed," Paulson said. "We must now take further decisive action to fundamentally and comprehensively address a root cause of our financial system stresses.

"The underlying weaknesses in our financial system today is the illiquid mortgage assets that have lost value as the housing correction has proceeded," he continued. "These illiquid assets are choking off the flow of credit that is so vitally important to our economy."

He explained that troubled loans have been frozen on the balance sheets of banks and financial institutions, preventing more lending in other areas. Meanwhile borrowers, securitizers and investors are also being choked.

"The normal buying and selling of nearly all types of mortgage assets has become challenged," Paulson stated. "These illiquid assets are clogging our financial system and undermining the strength of otherwise sound financial institutions."

Paulson said the federal government must take major steps to remove these illiquid assets from financial institutions, though taxpayers must still be protected. While a significant amount of taxpayer dollars will be involved, the cost will be far less than the alternative.

In addition to legislation that will be passed over the next week involving hundreds of billions of dollars, the secretary talked about two immediate steps the administration will take.

The first step to be taken includes an increase by Fannie and Freddie in purchases of mortgage-backed securities to provide critical additional funding to mortgage markets.

"These two enterprises must carry out their mission to support the mortgage market," he said.

In addition, the Treasury will expand its MBS purchase program announced earlier this month.

The Treasury announced on Sept. 7 that it would begin investing in new GSE MBS until December 2009, noting at the time, "Given that Treasury can hold these securities to maturity, the spreads between Treasury issuances and GSE MBS indicate that there is no reason to expect taxpayer losses from this program, and, in fact, it could produce gains."

"These two steps will provide some initial support to mortgage assets, but they are not enough," he added.

He explained that many of the mortgage assets clogging the system do not qualify for purchase by the government sponsored enterprises or the Treasury program, and the legislation currently under discussion is needed to remove them from the financial system.

"These measures will require us to put a significant amount of taxpayer dollars on the line. This action does entail risk," President Bush said in a White House statement. "The vast majority of assets the government is planning to purchase have good value over time, because the vast majority of homeowners continue to pay their mortgages."

Bush said not acting could place further stress on the financial markets, causing massive job losses, devastating retirement accounts and pushing home values lower.

Once the current crisis is under control, Paulson called for an overhaul of the "sub-optimal, duplicative and outdated" financial regulatory structure.

"Until we get stability in the housing market, we are not going to get stability in our financial markets."

GSE News | Fannie/Freddie Share Statistics
Fannie, Freddie and FHLB news. Coverage of government sponsored enterprise regulation, operations and litigation.


Mortgage Backed Securities | MBS News | MBS Statistics
News about commercial and residential mortgage-backed securities. Stories about ratings actions and changes to servicer ratings. Studies and reports about the performance of securitizations and problem vintages and classes. Subprime, Alt-A, home equity and j u m b o analysis.



SUBSCRIBERS: Edit Subscription | Subscription Help | or call 214.521.1300

Subscribe Contact Us Site Map

Copyright © 2017 Mortgage Daily, D a l l a s
Subsribers Only:

AMC directory

ARM indexes

mortgage company directory

mortgage regulations

net branch directory

p r i c i n g engine directory

wholesale lender directory

More Mortgage News Resources (full site map):

advertising news

appraisal news

bank news

biggest lenders

commercial mortgage news

corporate mortgage news

credit news

FHA news

financial regulation news

foreclosure news

GSE news

jumbo mortgage news

interest rates

loan modification news

loan originator survey

LOS Newsletter

MBS

mortgage associations

mortgage-backed securities

mortgage books

mortgage brokers

mortgage compliance

mortgage conferences

mortgage directories

mortgage education

mortgage employment

mortgage employment index

mortgage executives

mortgage fraud

mortgage fraud blog

mortgage fraud local news

Mortgage Fraud Index

Mortgage Graveyard

mortgage insurance news

mortgage lawsuits

mortgage leads

mortgage lender ranking

mortgage licenses

mortgage litigation

Mortgage Litigation Index

Mortgage Market Index

mortgage mergers

mortgage news

mortgage politics

mortgage press releases

mortgage production

mortgage public relations

mortgage rates

mortgage servicing

mortgage statistics

mortgage technology

mortgage video

mortgage Webinars

net branch

net branch directory

nonprime news

origination news

originator tools

real estate news

refinance news

reverse mortgage news

secondary marketing

social media

servicing news

subprime news

wholesale lenders