As we noted in our analysis of the GSEs’ 2020 scorecard, FHFA is undertaking a complete review of the CRT programs with an eye to significant change.  With the release on Thursday of its first advisory bulletin on CRT, FHFA is targeting key counterparty and pricing risks that, as the GSEs impose new controls, may structurally alter forthcoming CRTs.  Importantly, while pricing risk is noted as dependent on capital regulation and costs, other risk factors – analysis of expected revenues and costs, earnings-forecast analysis and industry and rating agency analyses of CRT transactions and participants – show that FHFA no longer relies on the capital rule alone to handle growing GSE CRT risks.

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