The improved financial performance of the GSEs largely reflects the impact of CECL. The provisions for losses that would have been made in 2Q20 under the old accounting standard were already accounted for by CECL, which was adopted in December. (Includes data chart.)
After taking big hits in credit expenses and hedging losses in early 2020, Fannie and Freddie reported more normal net income in the second quarter. (Includes data chart.)
Some industry players believe FHFA Director Mark Calabria wants to use an activities-based review of the market to reduce regulations, which many observers think increase the cost of mortgages.
Fannie and Freddie issued a staggering $880 billion of single-family MBS during the first half of 2020, up 78.5% from the first three months of the year. Volume peaked in June as refi activity continued to surge.
Most of the concerns about the new regulation hinge on how much profit the GSEs can make under the bumped-up capital levels. Most industry observers appear to be on the side of “not enough.”
Freddie Mac believes the market for credit-risk transfers may never return to pre-COVID levels because of the potential impact of the pandemic on mortgage performance.
States with shelter-in-place orders accounted for 75% of the single-family home loans securitized by Fannie and Freddie last year, and 81% of jobless claims filed last week. (Includes data chart.)
The hiatus in the net worth sweep added $12.53 billion to the GSEs’ combined net worth over the last six months of 2019, including fourth-quarter profit of $4.27 billion at Fannie and $2.45 billion at Freddie. (Includes data chart.)
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