FHFA

30 06, 2022

FedFin: Equitable Servicing Standard Time?

2023-01-24T15:55:53-05:00June 30th, 2022|The Vault|

The Federal Reserve Bank of Philadelphia’s latest report on foreclosure risk includes a worrisome finding:  the sharp rise in interest rates means that most loan-mod recipients won’t actually get much relief.  This combined with troubling data on GSE loan-mod results and racial equity could spur FHFA intervention if market conditions worsen…

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9 06, 2022

FedFin on: Equitable Endeavors

2023-01-27T15:57:10-05:00June 9th, 2022|The Vault|

When Sandra Thompson earlier this year enunciated a new equitable-finance mission, we forecast that Fannie and Freddie would undertake an array of new activities that significantly expand their footprint along with their equity and equality impact.  As anticipated, the plans announced yesterday by Fannie and Freddie go beyond FHFA’s reiterated mission statement earlier this week, mirroring in some ways the banking agencies’ broad view of CRA as a community-development and racial-equity instrument as well as the boost to LMI housing on which attention long focused.  But, for all the public-good creds these plans engender, several will doubtless promote market angst as the GSEs launch pilots that tread heavily on MI, title-insurer, and servicer toes.

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21 04, 2022

FedFin: Risk-On CRT for a Risk-Off Market?

2023-03-02T10:38:46-05:00April 21st, 2022|The Vault|

In our last CRT analysis, we looked at transaction viability under the Basel IV rewrite set for rapid release once key Fed nominees are finally confirmed.  Now, we turn to another viability consideration: the extent to which CRT can thrive in spite of these capital obstacles and accomplish a vital purpose spelled out in a recent Urban Institute report: enhance equitable finance as FHFA demands.  In short, we hope so, but it won’t be easy.

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1 03, 2022

FedFin: Capital Grease for CRT Expansion

2023-04-04T14:46:28-04:00March 1st, 2022|The Vault|

As we noted late last week, FHFA has finalized revisions to its 2020 capital rule that most importantly lighten the GSEs’ capital load and reinvigorate credit risk transfer.  Deals from both Fannie and Freddie will come fast, but how furiously will depend also on externalities — i.e., how QT redefines RMBS demand and CRT pricing, what Ukraine does to market risk-on tolerance.

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28 02, 2022

FedFin: Servicer 2.0 Strikes

2023-04-04T14:50:44-04:00February 28th, 2022|The Vault|

Responding to continuing FSOC complaints about nonbank servicers, FHFA has proposed new seller-servicer eligibility standards that crack down hard on any nonbank servicer whose size evokes systemic qualms.  Although all nonbanks and perhaps a few small bank seller-servicers will come under tougher net-worth requirements that hive off Ginnie servicing, FHFA targets its wrath at large nonbanks.  These must not only comply with new capital and liquidity planning standards along with stringent liquidity standards, but are apparently viewed so dubiously by the agency that nonbanks also must get a third party to vouch for their viability under standards that get tougher as the servicer gets bigger.

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9 02, 2022

FedFin: Plan B

2023-04-05T10:02:28-04:00February 9th, 2022|The Vault|

Continuing her very different vision of Fannie and Freddie, FHFA Acting Director Thompson today has released a new strategic plan for the agency emphasizing the importance of both equitable and sustainable housing finance.

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14 01, 2022

FedFin: If At First You Don’t Succeed….

2023-04-24T15:26:17-04:00January 14th, 2022|The Vault|

As noted in our in-depth analysis of Acting FHFA Director Thompson’s confirmation hearing, it’s clear that Democrats and Republicans are thinking hard about resurrecting statutory changes to the GSEs’ charters.  They are, though, about as far apart as usual on the constructs they prefer, ….

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17 12, 2021

FedFin: Building Buffers

2023-05-22T15:57:33-04:00December 17th, 2021|The Vault|

As noted on Thursday, FHFA continues to tread carefully through the big-bank rulebook, adopting standards said to be like-kind that aren’t quite so similar when it comes to critical details.  The latest proposal demands capital planning in a construct akin to the one Democrats favored as the agencies finalized the big-bank stress capital buffer (SCB) minus express restrictions on capital distributions.  Although the SCB will make Fannie and Freddie more resilient, it also steepens the climb out of conservatorship unless some new capital comes along.

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9 12, 2021

FedFin: Super-Special

2023-05-23T12:54:23-04:00December 9th, 2021|The Vault|

On Tuesday, HUD and the CFPB opened the door to special-purpose mortgage finance.  Now, we expect FHFA to use this safe harbor to mandate express GSE equitable-finance programs and for banks to take much of what’s left in all their commitments after George Floyd’s murder and turn it into mortgage and other community-finance products.

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