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Volume 2014 - Number 17

May 2, 2014

Capital Markets Option Seen as Vital For Reformed Housing Finance System

Concerns about the functionality of the to-be-announced market and potential incentives for riskier lending have prompted some to suggest that legislation under consideration in the Senate to reform the government-sponsored enterprises should remove the capital markets option for risk sharing and rely solely on a guarantor model. A number of agency MBS participants aren’t too pleased with the suggestions and have countered that a capital markets option is necessary in the country’s housing finance system. Under the capital markets option envisioned in the GSE reform bill from Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID, investors would hold...

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This weekly covers the secondary mortgage market, including mortgage-backed securities and asset-backed securities.



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After the November elections, how long will it take for a new Congress and White House to pass GSE reform legislation?

I’m confident a bill will be passed the first year.


2 to 3 years. GSE reform is complicated.


Sadly it won’t happen in a Clinton or Trump first term.


Not in my lifetime.


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