4- GSE Activity Report – Page 2 – Federal Financial Analytics

24 01, 2024

GSE-012424

Arezou Rafikian2024-01-24T11:51:00-05:00January 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

Eliza Allen2024-01-22T16:02:39-05:00January 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…

12 01, 2024

GSE-011224

Shane Smith2024-01-12T13:37:08-05:00January 12th, 2024|4- GSE Activity Report|

Bad, Bad Banks?

A new staff paper from the Federal Reserve Bank of New York assesses the tender topic of bank mortgage lending to minority borrowers. Going beyond the usual statistics showing significant racial disparities, the paper dives into a bank-by-bank analysis of why this might be, finding significantly different and persistent fair-lending records at different banks. Controversially, it comes up with what might be called a structural racism rationale for bank-by-bank differences when it comes to mortgage lending for African Americans. This might not sit at all well with bankers, but it could well have political traction with progressive advocacy groups despite our methodological quibbles.

GSE-011224.pdf…

9 01, 2024

GSE-010923

Arezou Rafikian2024-01-09T15:58:33-05:00January 9th, 2024|4- GSE Activity Report|

CDFI Mac?

Based on recent dialogue with institutional investors and regulators, a new FRB-NY Teller Window article concludes that robust data collection, loan standardization, and higher volume could improve CDFI secondary market sales. This in turn would improve capital access and thereby expand LMI-lending.

GSE-010923.pdf…

8 01, 2024

GSE-010824

Shane Smith2024-01-08T10:15:27-05:00January 8th, 2024|4- GSE Activity Report|

Who Gives When GSEs Go

It’s not news to observe that things that change at the GSEs then change a lot of other things. Still, the scope of the GSEs’ influence across financial markets is startling as measured by a new Federal Reserve Bank of Philadelphia study of the spillover effect of the 2020 revisions to the PSPA. The paper looks specifically at PSPA provisions restricting GSE purchase of what the paper calls speculative mortgages (i.e., seconds and investment properties). Push here for GSE spec loans, pull there is observed for spec loans in the private sector, all other conforming loans, jumbos, and – surprisingly – bank small-business loans.

GSE-101824.pdf…

2 01, 2024

GSE-010224

Arezou Rafikian2024-01-02T13:59:38-05:00January 2nd, 2024|4- GSE Activity Report|

Data That Matters

Shortly before the new year, the banking agencies proposed new call-report requirements that would force banks with over $10 billion in assets to report new data on nonbank mortgage intermediaries and structured GSE-guaranteed positions. Don’t be fooled – just because these proposals are only about reporting doesn’t mean that they lack substantive impact.

GSE-010224.pdf…

19 12, 2023

GSE-121923

Arezou Rafikian2023-12-19T15:38:51-05:00December 19th, 2023|4- GSE Activity Report|

Money for Something

The CFPB yesterday released a fascinating research blog looking at cash-out refis. The Bureau’s researchers think cash-outs aren’t likely a renewed source of systemic risk, but then underwriting standards are better and rates have stayed low – or, they did for most of the period examined, but not now.

GSE121923.pdf…

14 12, 2023

GSE-121423

Eliza Allen2023-12-14T15:28:18-05:00December 14th, 2023|4- GSE Activity Report|

Tackling Title

In a blog post today, Fannie quietly renews its quest for alternatives to traditional title insurance. The post focuses in general on closing costs, noting for example how regressive these are by citing cost differences of 13% for low-income first-time homebuyers than for all homebuyers on median closing costs as a percent of the home purchase price and 19% for non-low-income repeat homebuyers. Title insurance is discussed at length, with Fannie noting its efforts to allow homeowners to use lower-cost options as well as emphasizing the low risk of title claims due to real-estate data digitalization. The post does not go on to suggest that Fannie might simply omit a title-insurance requirement for at least first-time or LMI borrowers, but this seems to be the point.

GSE-121423.pdf…

30 11, 2023

GSE-113023

Eliza Allen2023-11-30T12:03:15-05:00November 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.

GSE-113023.pdf…

27 11, 2023

GSE-112723

Eliza Allen2023-11-27T11:49:59-05:00November 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.

GSE-112723.pdf…