Brent Giese, executive director for fixed income at Daiwa Capital Markets, said the new margin requirements will put additional financial stress on mortgage lenders.
Debt service coverage ratio mortgages qualify borrowers based on rental income rather than the traditional debt-to-income ratio metric used by the GSEs.
Although FHLB borrowing declined in the first quarter, with lenders continuing to reduce outstanding advances, profits for the system as a whole were up 9.6% from the fourth quarter and 16.6% year to date. (Includes three data tables.)
The Financial Stability Oversight Council last week endorsed FHFA’s years-long request for prudential regulatory authority over nonbank mortgage servicers.
A coalition of trade groups has told FHFA that they can’t accurately compare new credit scores with old ones unless they have data going back prior to the financial crisis.
Among the questions raised is should FHFA continue to focus on how much liquidity FHLBanks provide for housing and community development or are there other components to FHLBank operations that deserve more attention.