MBS investors are likely to charge a pay-up for securities backed by mortgages underwritten with VantageScore — at least until they’re confident prepayment speeds won’t accelerate.
Early interest in the VantageScore 4.0 pilot has been strong, but participants note that the new score can be up to 100 points different from Classic FICO.
If FHFA reduces the GSEs’ capital requirements, that would be a key signal that efforts are moving forward to end the conservatorship of Fannie Mae and Freddie Mac.
Industry watchers believe GSE reform is probably off the table until after the mid-term elections at least, as the administration’s focus has shifted to other priorities.
The president wants Fannie and Freddie to buy $200 billion in agency MBS to lower interest rates and reduce the cost of buying a home. Initial reaction from MBS analysts was mixed.
Bill Ackman’s plan calls for Treasury to forgive its senior preferred shares, a strategy that some industry observers say would be politically risky for President Trump.
Mortgage industry stakeholders discussed what happens to the UMBS, LLPAs and capital rules if shares in the GSEs are sold without letting them out of conservatorship.