Analyst Richard Bove thinks the new net worth sweep agreement is just a gimmick because the liquidation preference on Treasury’s preferred stock will offset any increase in the GSEs’ capital buffers.
Origination pipelines remain full and lenders, for the most part, are feeling optimistic about profits. Can it last? Probably, as long as rates remain low.
Fannie and Freddie can keep more of what they earn thanks to a new Treasury/FHFA edict, but buying stock in the two companies remains a dicey proposition.
In addition to making a decision on how DTI ratios should factor into determining QM status, the CFPB is being asked to endorse an automated underwriting system for the same.