The program is intended to provide smaller mortgage lenders that lack direct access to the secondary mortgage market with another option for their home buying customers.
Publicly traded REITs like Redwood Trust would fill the void if Fannie Mae and Freddie Mac lower loan limits next year. But they will be competing against portfolio lenders.
It appears the House of Representatives is giving up on GSE reform this year. However, the Senate could move forward, even though passage is considered a long shot, at best.
Nonbanks are stepping up to the plate on agency MBS. Meanwhile, a handful of large "term" loans are being put together, allowing investors to finance MSRs.
The firms deal will be financed with bonds that are expected to have a five-year maturity, a floating-rate coupon and a rating from a major rating service.