The No-Down Low-Down
BofA’s new no-down payment mortgage is another innovative product in which banks use their balance sheets to address their CRA obligations by offering down payment assistance or, as here, flat out nothing down. The extent to which nonbanks can match these programs depends on the extent to which Fannie and Freddie are able and then willing to cross-subsidize the loans and then purchase them, surely a hot topic of debate between the nonbanks and the GSEs and FHFA.
BofA’s new no-down payment mortgage is another innovative product in which banks use their balance sheets to address their CRA obligations by offering down payment assistance or, as here, flat out nothing down. The extent to which nonbanks can match these programs depends on the extent to which Fannie and Freddie are able and then willing to cross-subsidize ….
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Two Things
We yesterday provided a complete assessment of Sandra Thompson’s sojourn on HFSC’s griddle, noting the lack of any insights into essential issues such as conservatorship’s end or the full scope of CRT’s new beginning. More interesting to us are new battlelines on new products, including signs of renewed skirmishing over GSE self-insurance in lieu of MI. Unlike FHFA under Calabria, Fannie and Freddie appear to have a friend in one critical high places for new ventures, especially those said to be good for equitable finance.
Fed Seeks to Bring Order Out of Looming LIBOR Chaos
Fighting the end-September deadline demanded in the new law (see FSM Report LIBOR7), the Federal Reserve Board today unanimously proposed the formulas by which benchmark-rate compliance will be judged in LIBOR-based legacy contracts without rate-fallback contractual clarity.
House Advances Sanctions, Cash-Access, Credit-Union, Mortgage Legislation to Uncertain Senate Fate
Chairwoman Waters (D-CA) today released an accounting of all the HFSC measures included in the massive National Defense Authorization Act (NDAA) approved by the House late last week.
House Judiciary Damns Bigtech, Skirts Financial Services
House Judiciary Committee Democrats today tried to reinvigorate antitrust legislation focused on bigtech companies with a report concluding that stronger antitrust and merger enforcement is needed for Google, Amazon, Facebook, and Apple.
CFPB Presses SPCs
The CFPB today issued a staff statement reiterating key points in February’s inter-agency statement encouraging special-purpose credit (SPC) programs. The new CFPB release reiterates the criteria for SPCs that comply with the Equal Credit Opportunity Act, noting also the benefits such programs may afford to racial equity.
OFR Details Commercial Real Estate Recovery, Emerging Risks
OFR today released a study detailing how the commercial real estate (CRE) market weathered the 2020 recession, also describing CRE’s future risks.
Home in the OK Corral
On Wednesday, FHFA Director Thompson will come before HFSC for what will be an important discussion of housing policy under the newly-confirmed director if Members of Congress allow policy substance to supersede political battles over who is responsible for inflation for which dastardly reason. In hopes of substance, we’ll monitor the hearing and provide you quickly with an in-depth analysis.
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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Equitable Endeavors
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.
Risk-On CRT for a Risk-Off Market?
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.
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.
The full report is available to subscription clients. To find out how you can sign up for the service, click here.…
CFPB Reiterates Need for Small-Business ECOA Reporting
The CFPB has reiterated its plans to quickly enact new rules requiring small-business lender reporting (see FSM Report FAIRLEND7), asserting that demographic and pricing data are necessary to ensure fair credit to otherwise under-served small businesses. T
G20 Ministerial Frets re Central Banks, CBDC, Climate, NBFIs
Perhaps the most interesting aspect of the G20 finance ministerial communiqué is the new assertion that crafting effective exit strategies is not only critical to sustained and stable macroeconomic growth, but also to central-bank “credibility.” We have been tracking growing concerns about central-bank credibility, and its relation to central-bank independence in connection with work related to Karen Petrou’s book.
FSB Looks for New Distressed-Debt Options Ahead of Lots More Debt
The FSB has issued a new discussion paper seeking ways to exit widespread forbearance and central-bank programs during the pandemic that have increased the likelihood that highly-indebted corporate borrowers will experience severe distress as interest rates rise. Although these concerns are particularly acute in the EU, where “zombie” borrowers have been a major market presence since 2008, they are also a growing concern in the U.S. and elsewhere due to the sharp run-up in highly leveraged corporate finance along with the sharp growth in private-capital structures.
Agencies Give All-Clear for Special Credit
The banking agencies, CFPB, FHFA, NCUA, and the Departments of Justice and HUD today issued a statement on special-purpose credit programs.