As Democrats in Congress worked on reforms after the financial crisis, issuers of MBS and ABS repeatedly warned that regulatory uncertainty would hurt the market. With Republicans now looking to roll back parts of the Dodd-Frank Act, industry participants are pushing for risk-retention requirements to remain in place, again citing the potential impact of regulatory uncertainty. “It’s foolish to think that we would try to tear it all down,” said Howard Kaplan, a partner at the law firm of Deloitte & Touche, during this week’s SFIG Vegas conference. Among many other changes, the CHOICE Act from Rep. Jeb Hensarling, R-TX, would repeal...

Calls from offices of members of Congress seeking information regarding reform options for the government-sponsored enterprises have increased recently, according to Andrew Davidson, president of Andrew Davidson & Co., an analytics firm. Speaking this week at the SFIG Vegas conference produced by Information Management Network and the Structured Finance Industry Group, Davidson said he has received “a surprising number of calls” from congressional staff regarding GSE reform. Fannie Mae and Freddie Mac have been...

The House Financial Services Committee, as part of the congressional budget process, this week voted on its budget views and estimates for fiscal year 2018, with an eye on changing the Dodd-Frank Act, the Consumer Financial Protection Bureau, and Fannie Mae and Freddie Mac. The committee’s report is intended as guidance for the House Budget Committee as it crafts its FY2018 budget legislation but is not binding. In reference to Dodd-Frank, the HFSC Republicans’ budget document stated...

Sen. Mike Crapo, R-ID, newly elected chair of the Senate Banking, Housing and Urban Affairs Committee, said reforming Fannie Mae and Freddie Mac would likely happen in 2018, but he’s concerned about the divisiveness on Capitol Hill. During remarks at the Mid-Size Bank Coalition of America meeting last week, the senator echoed Treasury Secretary Steve Mnuchin’s comments and said that a housing reform bill would be a “high priority” and he doesn’t expect the administration to take unilateral action. Crapo said the atmosphere on Capitol Hill is more toxic than he’s ever seen, with constant pushback over President Trump’s election win. Analysts noted that this is the ultimate risk to housing finance reform, as bipartisan support is needed.

A prolonged conservatorship coupled with a change in leadership at the Federal Housing Finance Agency could shift priorities for Fannie Mae and Freddie Mac, according to the Government Accountability Office. The GAO said a potential priority change for Fannie Mae or Freddie Mac would only send mixed messages, creating uncertainties for market participants and hindering the development of the broader secondary mortgage market. In its 2017 biennial report released this month, the GAO discussed actions that need to be taken in order to resolve the federal role in housing finance. The need for leadership commitment by Congress and the administration to reform the system was one of the primary themes.

Planned revisions to the Financial CHOICE Act would loosen regulation of rating services, according to a recent memo by Rep. Jeb Hensarling, R-TX, chairman of the House Financial Services Committee. Hensarling sent the memo to the leadership team of the House Financial Services Committee this month detailing changes that will be included in hise so-called CHOICE Act 2.0. The expected revisions to standards for nationally recognized statistical rating organizations go well beyond the rollbacks included in the version of the CHOICE Act that was introduced in September. The 2016 bill would have repealed...

A spike in FHA delinquency rates in the fourth quarter of 2016 has prompted a top House Republican leader to laud the Trump administration for its decision to suspend a 25 basis point cut in FHA mortgage insurance premiums, though some say the increase might be a fluke. Last month, an analysis by Inside FHA/VA Lending, an affiliated newsletter, revealed that delinquency rates were up across the board for FHA loans backing Ginnie Mae mortgage-backed securities. The share of current FHA loans as of the end of the fourth quarter slipped from 94.2 percent to 93.2 percent, while the share of loans 90 days or more past due rose to 0.82 percent, the highest it’s been since June 2014. The figures are based on loan count and are not seasonally adjusted. The Mortgage Bankers Association two weeks ago reported...

The chatter about the Federal Reserve shrinking its massive $4.5 trillion balance sheet and its huge $1.7 trillion portfolio of agency MBS has continued in recent days, with one Fed official talking up the idea and another describing how the U.S. central bank plans to do it. Federal Reserve Bank of St. Louis President James Bullard said in a speech last week that the Fed could begin normalizing its balance sheet. “The Fed’s balance sheet has been an important monetary policy tool during the period of near-zero policy rates,” Bullard said. Thus far, the Fed’s Open Market Committee has not set...

A revised version of the Financial CHOICE Act could make changes to the Consumer Financial Protection Bureau that are so significant that other provisions in the bill aiming to loosen standards for qualified mortgages might not be necessary. Rep. Jeb Hensarling, R-TX, chairman of the House Financial Services Committee, introduced HR 5983, the Financial CHOICE Act, in September and the committee approved the bill largely on a party-line vote that month. The bill covered a wide ...

Ben Carson is a step closer to being confirmed as secretary of the Department of Housing and Urban Development after Republicans this week invoked cloture to block any attempt by Democrats to delay or prevent a Senate confirmation vote. Republicans filed their cloture motion and waived quorum call on Feb. 13, effectively ending further debate on Carson’s nomination. At least 16 senators must sign a cloture petition.]There has been no date set for Carson’s confirmation vote. The Trump administration has been slow to fill its Cabinet positions, partly due to Democrats’ stalling techniques. So far, only nine cabinet positions have been filled. There has been no Senate action scheduled since the Senate Banking Committee approved Carson confirmation by voice vote on Jan. 24, and nobody seems to have an explanation for the delay. While the committee vote was unanimous, Democrats continue to ...