Some economists believe eliminating all GSE MBS would lower rates on Treasury securities and reduce the government’s borrowing costs.

If the GSEs are released from conservatorship, some participants in the agency MBS market insist the to-be-announced market, uniform MBS and Fannie/Freddie CRT activity should remain untouched.

But Fannie Mae and Freddie Mac pursued different strategies in their retained mortgage portfolios. (Includes data table.)

Treasury Secretary Bessent’s cautious remarks about the prospect for GSE reform heighten industry skepticism about the release of Fannie Mae and Freddie Mac from conservatorship.

The leaders of the big REITs that invest in agency MBS want a federal backstop for GSE MBS to continue.

The Federal Housing Finance Agency in recent years has done a better job than Ginnie Mae in interagency planning for a hypothetical nonbank crisis, according to the Government Accountability Office.

Obstacles like how to deal with the implicit guarantee and excessively high capital requirements make it unlikely that the GSEs will exit conservatorship under Trump, though the chances are higher than before his election.

The debate over how to end the conservatorships of Fannie Mae and Freddie Mac hinges on whether rating services would downgrade the GSEs if they exit without an explicit government guarantee.

Critics argue that, if Fannie Mae and Freddie Mac are released from conservatorship without an explicit government guarantee, MBS investors will demand wider spreads to cover the added credit risk.

Trump has nominated Bill Pulte to be director of the Federal Housing Finance Agency; Fitch upgrades master servicer rating on Mr. Cooper; new ABS issuer.