SIFMA said the Ginnie-like market structure proposed by FHFA isn’t appropriate for conventional MBS. Moreover, the plan doesn’t address the continued misalignment of MBS issued by Fannie and Freddie.
Layton notes that in the first full quarter under the new UMBS regime the Freddie discount fell to just 1 basis point, 80% off its historic average, and dramatically lower than the 10 bp gap in 1Q19.
“Patch” loans, cash-out refinances, investment loans and second family homes constitute more than 50% of the dollar volume of Fannie and Freddie MBS issuance.
Industry observers worry that FHFA’s failure to complete its final capital rule, and Treasury’s delay releasing its plan for housing-finance reform, may push the end of the sweep into next year.
Calabria reports to Congress on the outlook for Fannie and Freddie. Then asks for powers like those of the FDIC and other financial regulators, including the authority to issue charters for new GSEs.
Freddie Mac increased its production of single-family mortgage-backed securities at a time when its two secondary market competitors saw significant declines in volume. [Includes two data charts.]
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