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Volume 2014 - Number 7

February 21, 2014

Transition Away from GSEs Likely to Take at Least 10 Years with Non-Agency Funding Difficult to Raise Quickly

The capital markets risk-sharing transactions completed by Fannie Mae and Freddie Mac in the past year are seen by some as a model for reform of the government-sponsored enterprises. However, the GSEs are taking on significantly more risk in the transactions than the non-agency first-loss requirements contemplated in legislation pending in Congress. Analysts at Barclays Capital project that after Congress approves mortgage-finance reform legislation, it would take at least 10 years to transition smoothly to a new system. Bills in Congress contemplate a five-year transition timeline, but raising enough private capital to fund the new system in that timeframe could be difficult. Industry analysts predict...

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

 

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With rates higher this year, there has been talk of lenders liberalizing their underwriting standards in an effort to increase volume and make up for lower refis.

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