Industry observers like Tim Howard, a former Fannie CFO, said that while reducing the corporate tax rate would lower the taxes the GSEs pay in the long run, it would drain the value of their DTAs in the short term.
Some in the industry believe the GSE common shares are essentially worthless with the junior preferred falling into the category of being a speculative bet.
Treasury Secretary Steve Mnuchin has been vocal about his views on the GSEs the past week or so, and on May 1, he stated that he wants Fannie Mae and Freddie Mac to keep sending their profits to the Treasury per the terms of the preferred stock purchase agreement. Mnuchin kicked off the week by speaking at a conference hosted by the Milken Institute in Los Angeles. …
Risk-retention requirements for MBS and ABS have been in effect for over a year, but industry participants are still grappling with how to comply with the standards, according to industry attorneys. Angela Ulum, a partner at the law firm of Mayer Brown, said industry practices and interpretations of the risk-retention requirements are starting to differ among different asset classes. During a webinar hosted by Mayer Brown last week, Ulum noted...
Fannie Mae late last month loosened its underwriting guidelines for borrowers with student loan and other types of debt, and is currently working on pilot programs aimed at helping consumers amass a downpayment. In an interview with Inside MBS & ABS this week, Fannie Vice President of Product Development and Affordable Housing Jonathan Lawless said the government-sponsored enterprise has “more to come” on loosening guidelines. Although he could not provide much in the way of detail, he said...
With domestic economic growth stagnating in the first quarter as consumer debt levels continue to climb, the Federal Reserve Open Market Committee this week opted to leave interest rates unchanged and to maintain the status quo when it comes to its agency MBS investment strategy. The Bureau of Economic Analysis put the rate of growth in gross domestic product at 0.7 percent, versus the 2.1 percent growth seen in the fourth quarter of 2016, suggesting that the economic recovery from the Great Recession may be getting long in the tooth. At the same time, on the consumer front, a new study from Northwestern Mutual found...
The House Financial Services Committee this week approved legislation that would allow the White House to fire the director of the Federal Housing Finance Agency at will and allow Congress to set the agency’s annual budget. Those provisions are included in the CHOICE Act, a Republican bill that would make sweeping changes to the Dodd-Frank Act. While the legislation is expected eventually to be cleared by the full House on a partisan vote, its fate in the Senate is murkier. FHFA Director Mel Watt’s term as chief regulator of Fannie Mae and Freddie Mac ends...
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