The GSEs are on their way to paying back the money they owed the government under the original bailout deal made at the height of the financial crisis, making 2018 an opportune time for an overhaul of the housing finance market.
Fannie Mae and Freddie Mac will be allowed to build capital buffers to protect against losses under an agreement between the Treasury Department and the Federal Housing Finance Agency announced on Thursday.
The two government-sponsored enterprises have relied on the “classic” FICO credit scoring model for the past 12 years. But the Federal Housing Finance Agency is weighing whether the GSEs should upgrade to more recent scoring alternatives.
Testing of the common securitization platform is taking longer than expected, but the Federal Housing Finance Agency said it won't delay the 2019 launch of Fannie Mae and Freddie Mac's new single "uniform mortgage-backed security."
Conforming loan limits for mortgages bought by Fannie Mae and Freddie Mac will increase for the second consecutive year in response to the rapid rise in home prices, the Federal Housing Finance Agency said.
Though FHFA Director Mel Watt stopped short of saying he would break with a Treasury agreement that forces all profits of the GSEs to go to the government, he emphasized that it couldn’t continue indefinitely.