Since the launch of the single security, investors have increasingly turned to the use of specified pools rather than the TBA market, said Bob Ryan, a former FHFA official and one of the architects of the UMBS.
Loans that qualify for purchase by the GSEs will continue to be exempt from the 43% debt-to-income ratio cap. This development was not unexpected. In July, the CFPB said it would consider a short extension.
Policy changes impacting 15% of GDP in an election year are inherently risky, according to Isaac Boltansky of Compass Point. The result, he said, is likely to be “a long and winding road” toward housing-finance reform.
The GSEs’ loan performance data excludes various loan types, such as ARMs and low-documentation loans, that performed poorly in the financial crisis. Nearly half of the GSE loans originated in 2006 and 2007 are expurgated from the data provided to CRT investors.
The Supreme Court will not hear arguments in Collins v. Mnuchin in its current session, but the issue of the constitutionality of the single-director status of the FHFA is still alive. That’s because oral arguments in Seila Law v. CFPB, a case addressing similar issues, are scheduled for early March.