When we looked at the GSEs 1Q earnings, we asked if it was “curtains for CRT.” The question came then because of the sudden rout in CRT counterparties caused by March’s market madness. Since then of course has come FHFA’s capital proposal along with it its tough stand on CRT. Now in their 2Q earnings statements, Fannie has essentially abjured CRT but Freddie thinks deals can be done as long as current capital rules prevail. Indeed, it did one single-family deal earlier this month. Based on Fannie’s CRT assessment, it could well join in, but only if FHFA’s capital rule is postponed or its CRT construct becomes less expensive.
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