Perhaps the most important aspect of the 37 comment letters filed with FHFA on GSE risk-share options is the breadth, depth, and business focus of so many submissions. This reflects widespread expectations – correct in our view – that GSE reform in 2017 will take the shape either of de jure establishment of a risk-share structure as the U.S. mortgage-finance construct or continued de facto reliance on risk shares through Fannie, Freddie, and – to come – the Federal Home Loan Banks. The scope of these comments also lays bare the profound competitive consequences of this new-style residential-finance system, the critical importance of capital rules as a success determinant, and the challenges confronting private MIs in this emerging framework.
The full report is available to retainer clients. To find out how you can sign up for the service, click here.