Fannie’s new REMIC election for its multifamily MBS will not change their basic structure. The asset will remain as a single-class pass-through security is-sued through a trust agreement.
In testimony before lawmakers, both Treasury Secretary Steven Mnuchin and Federal Reserve Chair Jerome Powell stressed that time and care is needed to raise capital before the GSEs exit conservatorship.
In areas where home price appreciation rises faster than conforming loan limits, Redwood's network of correspondent lenders gives it an edge in the jumbo loan market.
But the stratagem comes with costs. According to FHFA estimates, Fannie and Freddie will face between $1.1 billion and $1.7 billion in additional charges due to the extension. That’s on top of the estimated $6 billion the two have already incurred.
The FHFA went from allowing 18.0% capital reduction for CRT under the re-proposed rule to less than 17.1% under the final version. That means the answer may be “ no.”