The amended preferred stock purchase agreement provides Treasury with a liquidation preference, which undermines the GSEs’ ability to afford an exit from conservatorship.
Mortgage insurers have endorsed the proposed guidelines, even arguing the process should be made more transparent and objective. However, Quicken believes it will stifle innovation by the GSEs.
Four and a half years after the OIG recommended that FHFA notify GSE directors of supervisory concerns, the agency continues to notify Fannie and Freddie management instead.
The FHFA is looking for stakeholder views on the risks faced by the GSEs and the supervisory and regulatory framework necessary to meet these challenges.
Fannie financed $76 billion through its Delegated Underwriting and Servicing program, while Freddie pumped out $82.5 billion in loan purchases and guarantees.
Freddie’s multifamily structured credit risk notes are structured on actual losses. Previous issuances were based on a fixed-severity formula, which created a gap between when losses were booked and reimbursed.
The latest transaction is an actual loss deal issued through a trust; previous Multifamily Structured Credit Risk deals were structured as fixed-severity deals issued as corporate debt.