Obstacles like how to deal with the implicit guarantee and excessively high capital requirements make it unlikely that the GSEs will exit conservatorship under Trump, though the chances are higher than before his election.
The debate over how to end the conservatorships of Fannie Mae and Freddie Mac hinges on whether rating services would downgrade the GSEs if they exit without an explicit government guarantee.
Critics argue that, if Fannie Mae and Freddie Mac are released from conservatorship without an explicit government guarantee, MBS investors will demand wider spreads to cover the added credit risk.
Trump has nominated Bill Pulte to be director of the Federal Housing Finance Agency; Fitch upgrades master servicer rating on Mr. Cooper; new ABS issuer.
New capabilities added to Freddie Mac’s basic ML-deal will allow corporate CUSIPs to be converted to municipal CUSIPs without impacting the tax-exempt status of the securities.