The review will consider the interplay between the non-agency market and the GSEs and the impact of the exemption for qualified residential mortgages...
One Freddie shareholder quipped: "It sounds like something their advisors would have recommended – to improve proforma [earnings] going into a capital raise."
The deduction for mortgage insurance premiums and a tax break on forgiven mortgage debt had expired at the end of 2017 while funding for the National Flood Insurance Program was set to elapse on Dec. 20.
Among the proposed changes: A residential loan made to a high-income individual residing in low- and moderate-income neighborhoods would no longer qualify for CRA credit.
The forms of documentation allowed through Sterling's Advantage Loan program are more vulnerable to manipulation and misrepresentation than traditional documentation programs, according to Fitch.
The crux of the matter: “The agencies are aware that the use of certain alternative data may present no greater risks than data traditionally used in the credit evaluation process.”