Fannie and Freddie pared back their portfolio holdings designated to support future business in the third quarter. Earnings were down from an eight-year high reached in the second quarter. (Includes data chart.)
By raising the income limit for RefiNow and RefiPossible, FHFA has upped the pool of borrowers eligible for a refi by nearly a third. What that does to prepayment speeds depends on the uptake of the programs.
Fannie paused its CRT issuance in 2020 after the FHFA proposed changes to the capital treatment of CRT transactions. Freddie continued to issue deals, but Fannie wasn’t persuaded to return until a proposal by the FHFA in September.
Issuers are still stocking non-agency MBS with GSE-eligible mortgages for investment properties. Lenders and issuers are considering their options following a suspension of limitations placed on the GSEs.
Some of the Trump-era restrictions placed on the GSEs have been put on hold for at least a year. That includes a cap on acquisitions of mortgages for investment properties.
The blueprint would reverse capital requirements set in December, which offered few incentives for the GSEs to complete credit-risk transfer transactions.
Fannie and Freddie, the linchpin of the nation’s MBS market, may never get out of conservatorship. Right? Actually, they might. A pending risk-based capital rule could play a role in the drama.
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