The FHFA’s capital requirements include relatively harsh treatment of credit-risk transfer transactions from Fannie and Freddie but that view could change under the Biden administration.

Fannie’s new REMIC election for its multifamily MBS will not change their basic structure. The asset will remain as a single-class pass-through security is-sued through a trust agreement.

The FHFA went from allowing 18.0% capital reduction for CRT under the re-proposed rule to less than 17.1% under the final version. That means the answer may be “ no.”

The two GSEs agree that a proposed capital rule would diminish the benefit of credit-risk transfers, but Freddie plans to stay in the market under the current regime. (Includes data chart.)

Freddie has issued several securities backed by re-performing loans during the pandemic. However: Are these loans still protected by the FHFA’s moratorium on foreclosures?

The nation’s two largest MBS-investing REITs reported higher-than-expected earnings per share for the third quarter. Annaly even declared a quarterly common dividend of $0.22 per unit.

Compared to the last three pre-COVID Freddie transactions, the percentage of credit risk transferred via Agency Credit Insurance Structure deals has doubled for low-loan-to-value deals.

Fannie Mae’s credit-risk transfer loan-level data show 21.0% of borrowers that were in forbearance in June exited when their relief plans expired in July. That works out to 1.7% of the government-sponsored enterprise’s outstandings.

Much of the criticism from the GOP concerned the re-proposed capital rule for Fannie Mae and Freddie Mac, which will reduce the capital relief the GSEs receive for credit-risk transfers.

Facing pressure from both sides of the aisle, FHFA Director Mark Calabria said if the GSEs had come into the current crisis with sufficient capital, the adverse market fee could have been delayed for a few years.