The legislation appears to be a de facto extension of the qualified-mortgage patch, according to Cowen analyst Jaret Seiberg. He said the bill could be positive for housing by ensuring the supply of mortgage credit is not constrained.
Treasury claims the GSEs’ unfair advantage is because of their capital treatment. Urban Institute researchers say it’s because of the government backstop of their credit risk.
Fannie and Freddie once again posted strong earnings but the results would have been even better if not for large hedging charges. (Includes data chart.)
Based on current earnings, it will take until 4Q20 or 1Q21 for Fannie to accumulate its statutory minimum capital requirement. For Freddie, the wait will be a little longer — until the 2Q21.
FHFA Director Mark Calabria hopes to hire an advisor by next month. He said Fannie and Freddie will need to hire advisors too to help through the recap-and-release process or any possible public offering.
Fannie and Freddie will be able to retain all their second-quarter profits, rather than forward them to Treasury. Combined, the GSEs will add $5.2 billion to their net worth this month.