As anticipated, Treasury and HUD last night released GSE-reform plans that signal consequential administrative action with significant strategic impact on all housing-finance entities. Although some have discounted the reports on ground that they do not now dramatically restructure the GSEs, we note many near-term administrative actions that would radically alter the GSEs’ single- and multi-family purchases in concert with credit-risk transfer and ancillary-product activities. Even more dramatically, Treasury and FHFA are considering near-term realignment of the Treasury stock-ownership agreement that could shrink the GSEs’ footprint or even put them into receivership. No Congressional approval is necessary for these actions which, while not definitely announced, nonetheless make it clear that radical redesign is likely over the next few years absent Congressional intervention.
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