The New York Times today reports that FHFA plans on behalf of Fannie and Freddie soon to take a dozen or so big banks to court over their alleged lapses in pre-crisis securitization.  Unless or until the case is filed, its specifics are of course uncertain.  But, its impact isn’t.  We think even the litigation – let alone any verdict favoring the GSEs – will exacerbate pressure on bank-originated mortgage lending, keeping it firmly on the FHA/GSE securitization track and darkening the prospects for portfolio lending and PLS.

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