SFA and other trade groups are seeking major changes to the re-proposed bank capital requirements. MBA raised concerns that non-agency MBS would receive more favorable capital treatment than GSE MBS.

Most analysts say that higher inflation means rate cuts are off the table for Fed Chair Kevin Warsh, even though President Trump still says he still wants lower rates.

A property law expert said securitizing real property interests encourages home price inflation.

Economists note that the pricing of mortgage credit risk depends not only on the quality of the underlying mortgages but also on who ultimately bears that risk.

Although President Trump directed the GSEs to purchase an additional $200 billion in agency MBS, they do not appear to be on track to accomplish that by year end.

MBS investors are likely to charge a pay-up for securities backed by mortgages underwritten with VantageScore — at least until they’re confident prepayment speeds won’t accelerate.

FICO’s CEO argued that VantageScore isn’t gaining much traction in the MBS and ABS markets, and that the only way the score will take share with GSE mortgages will be if lenders game the system.

Policies put in place during the pandemic prevent many small banks and credit unions from selling small-balance loans to the GSEs, which constrains mortgage lending in rural and low-income communities.

Even with strong earnings the GSEs are making little progress on meeting stringent capital levels set during the first Trump administration.

For MBS investors, the biggest complication in the GSEs’ implementation of VantageScore 4.0 is likely loan-level pricing adjustments.