Supporters of the program say the expanded use of second mortgages is a less costly way for homeowners to access their home equity when interest rates are high. But they worry about the pilot’s restrictions.
Researchers say strategic securitization by lenders exposes the GSEs to higher insurer counterparty risk, especially in regions with frequent climate-related disasters. The proposed cure: LLPAs and capital rules that compensate the GSEs for this risk.
Beginning July 1, the capital markets team at Freddie Mac will start offering multifamily giant PCs, products that will allow investors to pool larger securities and better manage their portfolios.
Many trade groups denounced Freddie’s plan to buy second liens, saying key details were lacking. There are also concerns that Freddie’s effort will simply cannibalize an otherwise healthy and liquid non-agency market for second liens.
A coalition of trade groups has told FHFA that they can’t accurately compare new credit scores with old ones unless they have data going back prior to the financial crisis.
A proposal from Freddie Mac to acquire second liens prompted immediate reactions. The GSE rebuts claims that its plan represents “mission creep” or that it would interfere with the existing securitization market for closed-end seconds.
The rating service focuses on the government’s implicit guarantee and the critical role the GSEs play in housing finance and the financial sector more generally. Fannie and Freddie also have healthy earnings.
The Federal Reserve published a hypothetical economic collapse for banks to use in their annual stress test this year. The same scenario might be used by FHFA for Fannie Mae and Freddie Mac.
Fannie Mae has added three new attributes to its daily prepayment report for mortgage-backed securities. The enhancements will provide timely data on principal reductions.
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