Implications of Obama’s Reelection to Mortgage Investors

by San Antonio Attorney

Annaly Capital Management Inc. (NLY), the biggest U.S. real-estate investment trust that purchases mortgage debt, said that if President Barack Obama is re-elected it will result in a more aggressive housing policies, such as new attempts to urge mortgage refinancing among borrowers with loans backed by the government.

If Obama triumphs, the mortgage lenders can expect more meddling in the policies, said the Annaly CEO Wellington Denahan-Norris on a conference call.

The presidential election features a series of implications for investors of the government sponsored mortgage-backed securities worth $5.2 trillion. They involve a possible new regulator for Fannie Mae and Freddie Mac to further develop Obama’s push for refinancing this year and a new and tougher chairman of the Federal Reserve, which has started obtaining $40 billion of the bonds per month starting September to help improve the economy, the analysts of Bank of America Corp. (BAC) said.

Also, debt yields are on the line with a so-called fiscal cliff of budget reductions and tax raises that would more likely be avoided if Mitt Romney is elected, according to a report written by analysts headed by Chris Flanagan. They also said that Romney may choose Fed officials who are less aggressive.

The new 30-year mortgage rates, which hit an all-time low of 3.36% in October, would most likely be 0.15% point to 0.2% point higher if Romney won and less than 0.1% point under Obama, according to analysts.

Moreover, mortgage-bond holders face a higher level of prepayments resume if Obama is wins, Annaly’s said.

Investors who acquired the securities for over 100 cents on the dollar would probably see lower returns or losses in case loans are prepaid faster while principal is returned more quickly at the same amount and interest rate is contained.

– The American housing market is in mayhem, as is the economy. If you have mortgage-related concerns, contact a Real Estate Attorney San Antonio to ensure that your rights are protected and your best interests are being served.



Leave a Comment

Previous post:

Next post: