In a scenario that Fannie and Freddie exit conservatorship, Urban Institute analysts believe that the courts will allow the uniform MBS to persist, even though it requires coordination between the GSEs that could invite antitrust litigation.
Lenders responsible for the majority of conventional mortgage originations are currently using VantageScore in some fashion, but it’s still not clear how they deal with differences between VS4 and classic FICO.
Four of the 11 regional Federal Home Loan Banks saw double-digit declines in net income in the first quarter, even though total assets grew for the period. (Includes three data tables.)
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.
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.
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.
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.
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