4- GSE Activity Report

8 04, 2024

GSE-040824

2024-04-08T15:25:01-04:00April 8th, 2024|4- GSE Activity Report|

Discounting Discount Points

It wasn’t hard for us to forecast that, after NEC Director Brainard endorsed CFPB Director Chopra’s jihad against mortgage “junk fees,” that the discount points that received particular opprobrium would be moved up the priority ladder for federal restriction.  A Friday CFPB report makes clear that this is indeed very much in the works.  We expect new standards to mandate additional protections for borrowers through more complex disclosures, sharp restrictions on comparison-shopping and lead-generation sites, and maybe even a UDAAP edict requiring that discount points be in a borrower’s best interest based on the likely break-even point.

GSE-040824.pdf

29 03, 2024

GSE-032924

2024-03-29T11:08:37-04:00March 29th, 2024|4- GSE Activity Report|

Heading Your Way?

Following FSOC’s fulminations about nonbank mortgage companies, FHFA in 2023 heightened its supervisory standards mandating GSE prudential governance of eligible seller servicers.  A new OIG report likes most of this a lot, but wants structural improvements in how FHFA executes its obligations and ensures Fannie and Freddie do the same.  A bit of this will brush off on other counterparties, most likely MIs.

GSE-032924.pdf

15 03, 2024

GSE-031524

2024-03-15T17:20:04-04:00March 15th, 2024|4- GSE Activity Report|

Fees on the Firing Line

If it wasn’t clear before that the CFPB’s blog post targeting “junk” mortgage fees meant business, NEC Director Brainard’s comments endorsing it brought this on home.  No matter the controversy and litigation, the Bureau has toppled credit-card late fees at least for now.  It clearly plans a like-kind assault on mortgage costs, so we here turn to an analysis of which are on the firing line and how deadly the Bureau’s shots are likely to prove.

GSE-031524.pdf

16 02, 2024

GSE-021624

2024-02-16T11:18:38-05:00February 16th, 2024|4- GSE Activity Report|

All Stressed Out

In this report, we build on our in-depth analysis yesterday of the Fed’s new stress-test scenarios to focus on their mortgage-market impact.  The binding stress tests won’t make portfolio mortgage finance any easier, but they also won’t make it much worse.  However, new “exploratory” stress tests will take interest-rate risk into account with particular attention to mortgages and MBS.  That won’t help.

GSE-021624.pdf

31 01, 2024

GSE-013124a

2024-01-31T12:41:24-05:00January 31st, 2024|4- GSE Activity Report|

Would a Trump Victory Set the GSEs Free?

Common-stock investors clearly think so, but they’re a notably speculative lot and more than likely wrong.  In this report, we lay out why we think the limbo in which the GSEs have languished since 2008 is now a permanent quasi-vegetative state.

GSE-013124a.pdf

31 01, 2024

GSE-013124

2024-01-31T11:13:49-05:00January 31st, 2024|4- GSE Activity Report|

Steady As They Go Scores

We have reviewed the 2024 scorecards FHFA released for Fannie and Freddie.  Unlike prior years, it contains no new initiatives or aspirations, largely holding Fannie and Freddie to account for much of what they’ve been asked to do before.  Fannie is given indirect encouragement to continue its title-insurance plans, but that’s only if it comports with added cost-efficiency under several longstanding FHFA goals.  The directive regarding property insurance is only somewhat less elliptical, scoring the GSEs on the extent to which they develop property-insurance options that “mitigate risk while furthering sustainable homeownership” – whatever that may come to mean.  Climate risk comes in for mention among goals telling the GSEs to “enhance” consumer understanding of climate risk and do their best to avoid it on their own via monitory and analysis that identify at-risk borrowers and “informs” policy.  And, of course, the GSEs are to be safe and sound, transferring credit risk in large amounts to the greatest extent possible.

GSE-013124.pdf

 …

24 01, 2024

GSE-012424

2024-01-24T11:51:00-05:00January 24th, 2024|4- GSE Activity Report|

The Next Mortgage Round in the Capital End-Game

n this report, we build on our previous analyses of the mortgage implications of the pending capital rules, forecasting what’s next for mortgage assets as the FRB, FDIC, and OCC wrestle with the mess Karen Petrou has elsewhere argued they brought upon themselves by careless analytics and political misjudgment.  We think the odds for significant changes to mortgage risk weightings are high, but this won’t be enough to quell demands for a brand-new proposal.

GSE-012424.pdf

22 01, 2024

GSE-012224

2024-01-22T16:02:39-05:00January 22nd, 2024|4- GSE Activity Report|

Securitization and Systemic Risk

A new Fed staff study uses models to conclude that government-backed mortgage securitization  exacerbates financial crises, contradicting conventional wisdom that – GSE blow-ups notwithstanding – properly-regulated GSEs create a liquid, diversified asset pool for an otherwise illiquid, risky asset class.  However, our read of the study leads us to side with conventional wisdom.

GSE-012224.pdf

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