The new FHFA-sponsored capital rule is finally here. But how long will it take for Fannie and Freddie to meet the standard before they can be released from conservatorship prison?
FHFA Director Mark Calabria: “Homeowners who are in COVID-19 forbearance but continue to make their mortgage payment will not be penalized. Today’s action allows homeowners to access record low mortgage rates and keeps the mortgage market functioning as efficiently as possible.”
Fannie Mae: “The financial advisor will work closely with the company and the FHFA to consider business and capital structures, market impacts and timing, and available capital raising alternatives, among other items.”
KBW believes the Freddie announcement could improve valuations for mortgage servicing rights “as the market reduces its expectations for potential servicing advance costs.”
Uncertainty regarding the performance of mortgages underlying its CRT in-vestments prompted PMT to boost the discount rate on its loans from just 5% at the end of the fourth quarter to about 11% as of March 31.
Since March, spreads between SOFR and the three-month LIBOR have widened to roughly 80 basis points. The five-year average, which the ARRC recommends as a “spread adjustment,” is only 27 bps.