If the FHFA wants to release the GSEs from conservatorship before President Trump leaves office, it will need a big assist from Treasury. And therein lies the problem.
Under the final rule, Fannie and Freddie will have to hold slightly more than $283 billion in capital. That’s $49 billion more than what FHFA had estimated when it re-proposed the rule in May.
The new rule provides clarity about how much and what kind of capital Fannie and Freddie will need in order to exit conservatorships. But the likelihood of that kind of capital raise seems remote.
Under the new guidelines, at least 50% of the multifamily loans that Fannie and Freddie purchase must be for affordable housing. That’s up from 37.5% under the prior caps.
This won’t be Ron Klain’s first dance at the White House. He has also served as chief of staff of two vice-presidents: Joe Biden (2009-2011) and Al Gore (1995-1999).
Fannie and Freddie combined to issue $266 billion of single-family MBS in October, the third monthly production record set this year. Many top sellers shifted a little more of their GSE business to Freddie. (Includes two data charts.)
Former MBA president David Stevens believes the adverse market fee has nothing to do with COVID-induced risk. “It’s about building up the capital of Fannie and Freddie,” he said.
RSS