In this report, we continue our analysis of the impact of the U.S. Basel III proposals on residential-mortgage finance, moving beyond our initial assessment to reiterate that the standardized approach will, despite policy-maker hopes, promote wholesale reliance on Ginnie and the GSEs at the expense of private-label securitization and undermine the role of private MI. We also here turn to additional strategic issues, most notably capital disincentives for all but HAMP loan-mods, a major take out of home-equity lending and a new capital charge for many reps and warrantees that makes them akin to direct credit enhancement.
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