The stormy Miami weather at Information Management Network's ABS East conference on Monday was an apt metaphor for the problems facing the mortgage market.

In a keynote address, James B. Lockhart III, former director and vice chairman of the FHFA and WL Ross & Co., said that two years after entering conservatorship, there has been no resolution on the future of Fannie Mae and Freddie Mac. The government agencies continue to dominate mortgage lending and the private label market has disappeared.

Changing that scenario, said Lockhart, continues to be a challenge because GSEs can price loans cheaper with the benefit of an effective government guaranty. “Fannie Mae and Freddie Mac are cheaper and its hard to make the case for securitization when  the competition can underprice you,” he said.

Lockhart said that it was hard to imagine a reignited private label mortgage market without a more accurate picture of the GSEs' future. “Without resolution on the GSEs we won’t see private label restart and how it plays out will rely on the outcome of the presidential election and the Senate elections,” he explained.

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