Reforming the housing-finance system under the plan from Sen. Bob Corker, R-TN, includes having at least a handful of guarantors, winding down the GSEs and establishing a mortgage insurance fund with private capital, according to a leaked draft making the rounds this week. The 80-page document seeks to promote competition in the marketplace by having five or six guarantors of conventional mortgage-backed securities, with none of them getting more than 20 percent to 25 percent of the market. Those new guarantors would be expected to launch within two years. Section 809 of the legislation spells out that “as promptly as practicable” the FHFA can greenlight Fannie Mae and Freddie Mac to “sell or transfer” their assets.
In the event that Congress can’t come to an agreement on fixing Fannie Mae and Freddie Mac, Treasury Secretary Steve Mnuchin said the department can take matters into its own hands. But he would rather leave it up to the lawmakers. “There are certain administrative options that we have,” he said, adding, “These entities are very complicated, and I would just say my strong preference would be to work with Congress on a bipartisan basis to reach a long-term solution.” Mnuchin reaffirmed his commitment to reforming the housing-finance system and support for the 30-year fixed-rate mortgage while testifying at a Committee on Banking, Housing, and Urban Affairs hearing Tuesday morning.
GSE shareholders rights group Investors Unite took issue with a recent op/ed that suggested the Trump administration is preparing to return to the same housing-finance market that purportedly caused the financial crisis. In a piece penned for the Wall Street Journal, the American Enterprise Institute’s Peter Wallison warned that the Treasury Department is going down the wrong road on GSE reform. However, IU said Wallison's fears that the Federal Housing Finance Agency and Treasury are “marching back to the 1930’s” are unfounded. The group said in a blog posting that conservatives like Wallison will always claim that “statist prescriptions to economic questions are inevitably doomed to failure and almost always make matters worse.”
Freddie Prices First Lower LTV STACR of 2018. Freddie Mac priced a $900 million Structured Agency Credit Risk debt notes offering last week, its first lower loan-to-value deal of the year. STACR 2018-DNA1 has a reference pool of single-family mortgages with an unpaid principal balance of approximately $34.7 billion. The reference pool includes loans with LTVs ranging from 60 to 80 percent. CoreLogic to Redistribute GSE CRT Data. CoreLogic announced this week that it is redistributing credit risk transfer loan-level data from Fannie Mae and Freddie Mac. The CRT redistribution will include Fannie Mae’s Connecticut Avenue Securities data as well as data from Freddie Mac’s Structured Agency...
Departing Federal Reserve Chair Janet Yellen quietly rode off into the sunset this week, with the Fed’s Open Market Committee deciding to keep interest rates unchanged, as expected. The fed funds target range remains at 1.25 percent to 1.50 percent.
Data initiatives meant to streamline technological innovations and provide better information are actually giving mortgage lenders a hard time. A new report by Fannie Mae showed that 74 percent of lenders agree that attempts to standardize data are needed, but many run into challenges in implementation.
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