The New York Fed argues that CRTs have reduced the GSEs’ exposure to mortgage credit risk without disrupting the stability of the secondary mortgage market…
Fannie Mae is keeping a close watch on any future changes to the CFPB’s ability-to-repay/qualified mortgage rule, saying whatever happens could have a “material effect on the quality and quantity of loans available for sale to us.” Roughly a year ago, the CFPB announced it would begin its statutorily-mandated assessment of the ATR and QM provisions. “The CFPB is required to assess the effectiveness of the regulations in light of its stated goals and to publish a report, after public comment, on whether ...
The cross-subsidization baked into current GSE guarantee-fee pricing could be made to work better, according to Urban Institute researchers. Current GSE pricing under guidelines from the Federal Housing Finance Agency are not fully adjusted to risk: low-risk borrowers pay a little more than they should and higher-risk borrowers pay a little less. Urban Institute researchers Jim Parrott and Laurie Goodman in a new paper say there are shortcomings in the existing cross-subsidy system that result in support going to borrowers who may not need it. “First, it does not effectively target those who need the help,” they said, adding that close to one of four beneficiaries of the subsidy are not in the low- to moderate-income category.
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