Some economists suggest Fannie and Freddie should accept mortgages that include a modest prepayment penalty as a way to keep residential mortgage rates lower. But that would be a political challenge.
Milliman researchers calculate that the capital benefit Fannie Mae and Freddie Mac receive for their CRT activity reduces their capital requirement by about 20%.
Both VantageScore and FICO have commissioned research to support their claims of superiority. But the truth probably won’t be known until VantageScore 4.0 and FICO 10T compete head-to-head.
In a brief appearance on a show hosted by Steve Bannon, FHFA Director Bill Pulte suggested that part of the reason he was confirmed for the position was to address home prices.
Until Fannie and Freddie are more transparent about the loan-level pricing adjustment grids for the new credit score, lenders and investors will remain cautious about its implementation.
If FHFA reduces the GSEs’ capital requirements, that would be a key signal that efforts are moving forward to end the conservatorship of Fannie Mae and Freddie Mac.
FHFA argued that the award was an unjustified windfall for GSE shareholders, many of whom knew about the net worth sweep when they purchased the stock.
Industry watchers believe GSE reform is probably off the table until after the mid-term elections at least, as the administration’s focus has shifted to other priorities.
GAO auditors suggested FHFA update its procedures for how accounting personnel consider the impact significant policy changes may have on its financial reporting. FHFA declines, saying the current procedures are fine.
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