Executives from Annaly and Two Harbors worry that ending the conservatorships of the GSEs could fundamentally change the buyer base for their mortgage-backed securities.
FHFA and CFPB insiders expect the new administration to make quick changes in agency leadership, a process made easier by Republicans gaining control of the Senate.
The Fed and commercial banks purchased a combined $1 trillion in agency MBS over the past 12 months, more than 145% of the net supply. (Includes data chart.)
In an industry update, Keefe, Bruyette & Woods predicts it may still take some time before the establishment of an emergency funding facility for residential servicers with MBS payments coming due.
If Treasury converts its senior preferred shares to commons and the GSEs go for a public offering, existing shareholders will take a haircut. Valuations on the commons could dip to $1/share for Fannie and $2 for Freddie.