With the official onset of FHFA and FHA forbearance, the GSEs are at near-term risk of renewed capital stress due to the uncertain ability of nonbank servicers to sustain advances to the GSEs as they must simultaneously forward funds to Ginnie investors. Reliance on risk-based pricing, not capital, gives the GSEs scant reserves to absorb even short-term liquidity interruption or longer-term losses.
The full report is available to subscription clients. To find out how you can sign up for the service, click here.