It may take time for MBS investors to fully understand how use of the new credit score for underwriting loans sold to the GSEs impacts pricing and hedge strategies.

The boom in ABS backed by vehicle and business finance mostly helped the big-three rating services, but Kroll and Morningstar remained major players in rating non-agency MBS. (Includes two data tables.)

In the wake of Trump’s social media posts pledging to retain the implicit guarantee for GSE MBS, industry analysts see signs for support for the administration’s plans for GSE reform.

President Trump attempted to mollify concerns about the post-conservatorship guarantee of GSE MBS, but questions remain about the regulatory treatment of those securities and the TBA market.

S&P says the current AA+ rating enjoyed by the GSEs is a function of their government support. Because of their capital shortfalls, both GSEs have a B- standalone credit profile rating.

Fitch, Kroll and DBRS continued to dominate the business of rating non-agency MBS in 2024, but S&P and Moody’s remained heavy hitters in rating ABS.

Treasury Secretary Bessent’s cautious remarks about the prospect for GSE reform heighten industry skepticism about the release of Fannie Mae and Freddie Mac from conservatorship.

Obstacles like how to deal with the implicit guarantee and excessively high capital requirements make it unlikely that the GSEs will exit conservatorship under Trump, though the chances are higher than before his election.

The debate over how to end the conservatorships of Fannie Mae and Freddie Mac hinges on whether rating services would downgrade the GSEs if they exit without an explicit government guarantee.

Critics argue that, if Fannie Mae and Freddie Mac are released from conservatorship without an explicit government guarantee, MBS investors will demand wider spreads to cover the added credit risk.