Two significant developments are currently underway that could potentially reshape the Ginnie Mae supply landscape, according to a recent report by Credit Suisse. The first - an Internal Revenue Service ruling last month denying tax-exempt status to seller-funded downpayment assistance programs - could lower the supply. By contrast, the second, HR 5121, a piece of legislation in Congress aimed at expanding Federal Housing Authority's (FHA) ability to make loans, could potentially increase GNMA volume.

With the two developments moving in completely opposite directions, the question that inevitably arises is which of the two will be the stronger force. "We continue to argue that the IRS ruling is likely to have limited impact due to expected delays in implementation," Credit Suisse analysts said, adding that the prospects of HR 5121's enactment into law by year-end have increased sharply given the recent passing of its key elements as part of the U.S. Department of Housing and Urban Development Appropriations Bill.

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