The FHFA argues: "In contrast, other federal safety and soundness regulators have statutory authority to examine companies that provide services to depository institutions..."
Increased demand for non-agency MBS and pricing policies set by the government-sponsored enterprises are prompting some lenders to deliver high-quality GSE-eligible mortgages into non-agency MBS pools. If the trend persists, GSE MBS investors could face risks from adverse selection, according to industry analysts.
Housing-finance reform won’t happen in the near future and the government-sponsored enterprises are busy expanding their footprint instead of reducing it, according to lawmakers voicing concerns during a Senate Banking, Housing and Urban Affairs Committee hearing this week.
The collateralized loan obligation market is heading for some volatility, according to industry analysts. Issuance in the sector has been strong recently, but investors are preparing for short-term losses and fighting against certain provisions in deals.
A key Treasury Department official said regulatory reform could help rejuvenate the non-agency MBS market but offered little guidance on the future prospects for Fannie Mae and Freddie Mac.
Commercial banks and savings institutions held $113.75 billion of non-mortgage ABS in portfolio at the end of March, a scant 0.1 percent increase from the previous quarter, according to a new ranking and analysis by Inside MBS & ABS. [Includes two data charts.]
The Federal Housing Finance Agency went into more detail this week about the steps it is taking to make sure Fannie Mae and Freddie Mac prepayment rates are fairly congruent. And when the difference between the GSEs’ prepayment rates spreads beyond two percentage points, it must be reported to the FHFA’s Single Security Governance Committee for an explanation and remedial actions.
The Financial Industry Regulatory Authority has filed a proposed rule with the Securities and Exchange Commission to modify the definition of “agency debt security” to include credit-risk transfers for reporting and compliance purposes.
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