The new capital buffer deal has a limited life. At current earnings rates, Fannie will reach the $25 billion buffer cap in about two years, Freddie a little later.
Economists say an increase of 1 degree Celsius in a county’s 36-month average temperature reduces the mortgage approval rate in the county by about 0.9% and the average loan amount by 6.9%.
The Treasury Department envisions a multi-year recapitalization of the GSEs. Secretary Steven Mnuchin told the Senate Banking Committee on Tuesday that the process is already underway.
The GSEs took hits to their net earnings as a result of hedging losses for the third straight quarter. The launch of the uniform MBS pushed Fannie and Freddie into an indemnification agreement.
All eyes are now focused on the TBA market to see if the new single security from Freddie Mac and Fannie Mae creates the expected bump in liquidity and efficiency.
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