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.
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