As long as the GSEs are profit-seeking entities, Urban Institute analysts suggest that allowing Fannie and Freddie to buy large amounts of agency MBS would leave the GSEs “with every incentive to swell their balance sheets to enormous levels during these periods of volatility.”
The securitization rate for residential mortgages originated during the third quarter was near the same level seen in 2019. Meanwhile, the share of GSE-eligible mortgages that flowed into MBS increased.
Fannie and Freddie have upped their retained MBS holdings significantly in recent months, as have the Federal Home Loan Banks. Analysts expect money managers and insurance firms to remain key investors. (Includes two data tables.)
RiskSpan is piloting a platform that would provide the FHLBanks much more precise and timely views into the status and quality of the mortgage loans pledged against their advances.
Adoption of portable mortgages would be difficult under current practices in the secondary market. An official at Intercontinental Exchange believes that tokenization could address the issue.
JPMorgan Chase’s trading account held the largest combined inventory of MBS, ABS and commercial MBS at the end of the third quarter, though the total was down slightly from June. (Includes two data tables.)
Some large lenders are seeing their cash-window availability capped or being cut off altogether, according to trading advisors. Communications from the GSEs and FHFA on the matter are vague.
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