Chapter 28 — Further Reading

Sources are grouped by the book's three tiers. Tier 1 is canonical and you can stand behind it. Tier 2 is real industry practice whose specific current values we have not pinned down — treat every number in this tier as perishable and verify it at the source. Tier 3 is constructed for teaching and is labeled as such wherever it appears.

If you read only one thing

Spend an hour on the Ginnie Mae website's own description of what Ginnie Mae does. Not a summary, not a study guide — the agency's own plain statement that it does not buy or sell loans and does not issue mortgage-backed securities. It takes twenty minutes to read and it will permanently fix the single distinction that costs more exam points and produces more confidently wrong statements to borrowers than anything else in Part VI. Then read the equivalent "about us" page at Fannie Mae and notice how differently the verbs run.

If you have a second hour, open the Fannie Mae Selling Guide — not to read it, but to see it. Scroll for five minutes. Understand that this free, public, continuously updated document is the reason your borrower needed a letter about a \$4,900 deposit, and that nobody at your company has the authority to waive a word of it.

Tier 1 — Verified canonical

The institutions, in their own words.

  • Fannie Mae — the Federal National Mortgage Association. Its corporate site, and in particular the Fannie Mae Selling Guide, which states exactly which loans it will purchase and on what terms. Free, public, continuously updated, and the authority behind most of Part III.
  • Freddie Mac — the Federal Home Loan Mortgage Corporation, and the Freddie Mac Single-Family Seller/Servicer Guide, its parallel rulebook. Reading the two side by side on any single topic is the fastest way to understand the difference between an agency guideline and a lender overlay.
  • Ginnie Mae — the Government National Mortgage Association, within HUD. The Ginnie Mae Mortgage-Backed Securities Guide governs issuers and pools, not borrowers, which is itself the lesson. Note the Ginnie Mae I and Ginnie Mae II program structures and their different payment dates.
  • Federal Housing Finance Agency (FHFA) — regulator of Fannie Mae and Freddie Mac and their conservator since September 2008. Publishes the annual conforming loan limits, the Single Security Initiative materials, and reports on the enterprises' guarantee fees and credit risk transfer activity.
  • U.S. Department of the Treasury — the published Senior Preferred Stock Purchase Agreements entered with each enterprise in September 2008 and amended since.

The statutes and rules behind the structure.

  • Housing and Economic Recovery Act of 2008 (HERA) — created FHFA, granted conservatorship and receivership authority, and gave Treasury temporary purchase authority. The legal foundation of everything in Case Study 1.
  • Dodd-Frank Wall Street Reform and Consumer Protection Act — including the credit risk retention ("skin in the game") requirement for securitizers and the Ability-to-Repay/Qualified Mortgage rule that governs what is originable and, downstream, what is salable.
  • Real Estate Settlement Procedures Act (RESPA) and Regulation X — the servicing transfer notice requirements that every borrower in this chapter's story will eventually receive. Chapter 23 covers them; this chapter explains why they exist.
  • Securities and Exchange Commission — Regulation AB and the asset-backed securities disclosure rules, which govern loan-level disclosure in registered private-label offerings.

The history, from the record.

  • The Financial Crisis Inquiry Commission, final report. The most complete public account of what happened to the private-label market. Long, readable, and directly relevant to Case Study 2.
  • The well-documented 2008 conservatorship of Fannie Mae and Freddie Mac and the collapse of the subprime and Alt-A securitization market. Chapter 2 gives the narrative; this chapter gives the mechanics.

Tier 2 — Attributed, specifics unverified

Everything in this tier changes. Learn the structure; verify the number.

  • Current guarantee fees. Ongoing g-fees are set by the enterprises under FHFA oversight and have been adjusted repeatedly, sometimes for policy reasons rather than market ones. FHFA publishes a periodic report on guarantee fees. Never quote a g-fee from memory or from a textbook.
  • Current loan-level price adjustments. The upfront component of the guarantee fee. Published by each enterprise as a grid; substantially restructured in 2023 and subject to further change. Chapter 29 teaches the structure. Verify every current value at the enterprise.
  • Current conforming and high-cost-area loan limits. Set annually by FHFA and varying by county. A loan officer who quotes last year's limit will eventually cost a borrower a rate.
  • SIFMA Uniform Practices for the Clearance and Settlement of Mortgage-Backed Securities. Governs TBA good delivery, the settlement calendar by class, notification deadlines before settlement, and delivery variance tolerances. Conventions have been revised; verify current practice.
  • Prevailing MSR multiples, servicing-released premiums, and cost to service. These move continuously with rates, vary by product, vintage, and servicer, and are quoted by brokers and advisory firms rather than published by any authority. Every multiple in this chapter is illustrative.
  • Current MBS coupon levels and prices. Published continuously by market data providers. Any specific price in a textbook is stale before it prints.
  • Credit risk transfer program structures — Freddie Mac's STACR and Fannie Mae's Connecticut Avenue Securities, plus insurance-based and lender-based structures. Each enterprise publishes program descriptions and deal documentation. Structures have evolved considerably since 2013.
  • Current private-label market composition. Prime jumbo, expanded-credit/non-QM, and investor-property issuance. Trade publications and rating agency commentary track it; treat any specific volume or share figure as a snapshot.
  • Non-agency and jumbo guidelines. There is no single authority. Every investor publishes its own matrix and revises it without notice. The only reliable source is the specific investor you are delivering to, today.

Tier 3 — Illustrative and constructed

Everything in this list was built to teach and is labeled where it appears. None of it should be quoted as fact.

  • The Linden Street file — \$365,750.00 at 6.625%, funded day 51, and every figure derived from it in this chapter.
  • The coupon stack — the 0.250% servicing fee and 0.375% guarantee fee that produce a 6.000% pass-through rate, and the month-one split of \$2,019.24 into \$1,828.75, \$114.30, and \$76.20.
  • Figure 28.1, the pool disclosure summary — the \$49,700,000 original face, 142 loans, and all weighted-average statistics.
  • Figure 28.2, the TBA trade ticket — the \$3,000,000 par amount and the 100-24 price.
  • The execution comparison in §28.7 — the 101.500 whole-loan price (reused unchanged from Chapter 1 §1.3) and the 100-19 security price.
  • The MSR valuation in §28.8 — the 4.5× base multiple, the 3.25× and 5.25× rate scenarios, and the \$70.00 illustrative annual cost to service.
  • The composite prime jumbo deal profile in Case Study 2 — explicitly a composite built from documented industry patterns, not a real transaction.

Where to go next in this book

  • Chapter 29 rebuilds the Linden Street quote from base price and shows you exactly which adjustments moved it — the upfront form of §28.6's guarantee fee.
  • Chapter 30 takes the rate lock apart: what the day-12 lock cost, what the day-42 extension cost, and how the mechanism in §28.5 makes the whole thing possible.
  • Chapter 31 puts the warehouse line, the three business models, and the capital markets desk together.
  • Chapter 14 is where the representations and warranties in §28.10 live. Reread it after this chapter; it will read completely differently.
  • Chapter 23 covers what the borrower actually receives when servicing transfers — the consumer side of §28.8.