The Treasury Market Practices Group released a white paper identifying how a change in the ownership structure of Fannie Mae and Freddie Mac could impact the broader financial markets.

Since the Iran war started, interest rates have returned to where they were when President Trump directed the GSEs to purchase $200 billion in MBS and most analysts say GSE reform is now off the table.

Republicans are poised to introduce a bill that would codify reforms of the GSEs that have been completed administratively. The bill would also establish a utility model framework for Fannie Mae and Freddie Mac and alter how calculations are made to annual changes in loan limits.

Bill Ackman’s plan calls for Treasury to forgive its senior preferred shares, a strategy that some industry observers say would be politically risky for President Trump.

Securities industry stakeholders say preservation of the secondary mortgage market, especially MBS futures trading on the TBA market, is essential to keeping mortgage rates low.

In the early years of Fannie/Freddie conservatorship, investors were seeking an explicit guarantee of GSE MBS as part of any reform effort. More recently, they have shown an acceptance for maintaining an implicit guarantee.

Key mortgage industry stakeholders say an IPO of GSE stock would have trouble attracting investors if FHFA remains their conservator or they are released without an explicit guarantee.

President Trump said he plans to maintain an implicit guarantee for the GSEs if they’re removed from conservatorship. Prominent agency MBS investors expressed relief about the administration’s stance on GSE reform even though they don’t expect near-term action.

Changes to Common Securitization Solutions, including being renamed U.S. Financial Technology, appear to set the company up to serve additional secondary mortgage market participants.

President Trump attempted to mollify concerns about the post-conservatorship guarantee of GSE MBS, but questions remain about the regulatory treatment of those securities and the TBA market.