4- GSE Activity Report

30 11, 2023


2023-11-30T12:03:15-05:00November 30th, 2023|4- GSE Activity Report|

FHA’s Mission and Mishaps

A new FRB-NY study confirms that 83% of loans from 2000-2022 went to first-time homebuyers, compared to 56% for the GSEs and 57% for private lenders.  FHA loans of course have very high LTVs and low scores, with scores improving after 2008 when the PLS market stopped adversely selected FHA even though over half of FHA loans still have scores under 680.  FHA sustainability has varied based on these and other factors, but 21.8% of borrowers from 2011-2016 still lost their homes.


27 11, 2023


2023-11-27T11:49:59-05:00November 27th, 2023|4- GSE Activity Report|

An Advanced View of Regulatory Capital?

The most significant thing in FHFA’s final capital rule is not what is to be done, but what FHFA left out: ending the GSEs’ advanced-approach requirement.  As a result, Fannie and Freddie can still use models for key calculations, a requirement that makes more sense for two complex organizations than it did for the regional banks also long subject to advanced-approach requirements even though the rules required them, like GSIBs, to hold the higher of the standardized or advanced approach.


16 11, 2023


2023-11-16T12:35:35-05:00November 16th, 2023|4- GSE Activity Report|

More for Mortgages?

As our reports on the Senate and House hearings with bank regulators made clear, our prediction that the agencies would compromise on mortgage risk-based capital requirements will prove itself in the final standards.  However, it’s far from clear if the compromise the agencies think will satisfy Congress will do much beyond directly addressing concerns that the proposal adversely affects LMI loans.


8 11, 2023


2023-11-08T11:55:13-05:00November 8th, 2023|4- GSE Activity Report|

Rebirth at 91

Although FHFA calls its FHLB report a centenary event ahead of the System’s 2032 birthday, the agency clearly plans structural substantive reform well before that milestone.  Much of what’s planned will crimp FHLB profitability, increasing the importance of what would otherwise seem like tidying-up operational improvements to protect the viability of the System’s weaker Banks.  With its eye on keeping the System in line, FHFA does not even suggest it should be allowed by law or regulatory sleight-of-hand to issue MBS or like-kind instruments, get into the CRT business, or do anything much but provide ordinary advances to mission-focused members and up its own contributions to affordable housing.  A series of near-term regulations are also contemplated to ensure tighter mission compliance and more certain resilience, steps sure also to cut into the Banks’ already-challenged bottom lines.


23 10, 2023


2023-10-23T16:39:05-04:00October 23rd, 2023|4- GSE Activity Report|

Spotting SPVs

As noted in our report earlier today, the Federal Reserve’s latest financial-stability report expresses deep misgivings about complex securitizations.  This flies directly in the face of its recent decision to liberalize the capital treatment for credit-linked notes involving bankruptcy-remote SPVs, yet more evidence that the U.S. has a central bank of many silos that interact infrequently, if at all.


13 10, 2023


2023-10-13T15:22:52-04:00October 13th, 2023|4- GSE Activity Report|

30-10 or Bust

With smaller lenders today joining MBA, NAR, and HomeBuilders’ campaign to squeeze the 30-10 spread, we take a look at the odds the White House, Fed, or Treasury will do as hoped.  We think it more than possible that the PSPA could be revised with FHFA consent to allow the GSEs to hold more of their own MBS as a spread stabilizer; whether the GSEs will do so unless forced is another question given the considerable capital cost this would exert.


2 10, 2023


2023-10-02T16:13:02-04:00October 2nd, 2023|4- GSE Activity Report|

A New Cover

As we noted earlier today, the FRB has issued a seemingly technical FAQ liberalizing the treatment of certain credit-linked notes.  Fed supervised banks that find this approach appealing – and we think several big ones will – thus now have a new way to achieve risk-based capital relief for mortgages akin to certain GSE CRT products.


25 09, 2023


2023-09-25T16:06:52-04:00September 25th, 2023|4- GSE Activity Report|

Bank Rules and Housing Finance

In her Congressional testimony last week, FedFin managing partner Karen Petrou focused on the unintended consequences wrought by new banking proposal based on their cumulative impact.  She thus went beyond the housing-finance implications we identified in our in-depth analysis of the complex capital proposals also to assess high-impact resolution standards.  In this report, we expand on her testimony and our housing-finance specific assessment of the capital rules to identify how all the other rules proposed to date alter the capital proposal’s implications on its own.


20 09, 2023


2023-09-20T09:32:14-04:00September 20th, 2023|4- GSE Activity Report|

It’s Not Over…

Or maybe it is, but not everyone has heard.  Earlier this week, Rep. Andrew Ogles (R-TN) introduced H. R. 5549 to require Treasury to give Congress a complete plan to end the GSEs’ conservatorship.  Our forecast:  don’t wait up.  Our observation:  it’s interesting that a conservative freshman hasn’t given up even though there’s no sign that his leadership has any interest reviving this idea.  This is far too early and far too little to suggest a leading indicator to renewed Republican interest in tackling the GSEs now that Pat Toomey is gone from the Senate, but it’s noteworthy nonetheless.


31 08, 2023


2023-08-31T09:24:25-04:00August 31st, 2023|4- GSE Activity Report|

The Secondary-Market Suggestion Box

As we noted yesterday, the global banking, securities, and insurance regulators who comprise the Financial Stability Board (FSB) are heading back to look again at securitization to see if the post-08 framework it crafted still works.  The FSB is in our view increasingly irrelevant to home- and host-country rulemaking, but that’s not to say it’s totally toothless.  If – and this is a big if – the FSB comes up with concrete suggestions in key areas such as revisions to regulatory capital or risk-retention standards, U.S. agencies will take a hard look.


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