Housing finance reform

In the continued absence of legislation, Fannie Mae and Freddie Mac’s regulator announced work on a new capital framework.

The future secondary mortgage market entities will receive high investment grade ratings, even as there is no clarity on their scope or form, Fitch Ratings said.

Lenders should not get so desperate chasing volume by originating lower credit non-qualified mortgage products that they are inviting the next regulatory crackdown, said David Stevens, the Mortgage Bankers Association's CEO.

Freddie Mac and Arch Capital are testing a new form of risk-sharing deal to boost investor appetite for low down payment mortgages. But the pilot is raising concerns about "charter creep" because it dictates private mortgage insurance decisions typically made by lenders.

The success of the government-sponsored enterprises' credit risk transfer programs shows that they can be the basis for housing finance reform.

The Supreme Court dealt hedge funds and other big investors a blow Tuesday by refusing to revive core parts of lawsuits that challenged the federal government’s capture of billions of dollars in profits generated by Fannie Mae and Freddie Mac.

Despite a legislative push by some senators and other stakeholders to jump-start housing finance reform, efforts to form consensus over a bill once again are stuck in neutral.

Lenders should be encouraged to hold more credit risk in the mortgage market, rather than having it foisted on Fannie and Freddie.

Housing finance reformers are pushing full steam ahead to get a bill introduced before the political calendar makes passage nearly impossible.

Senate negotiators are working on a bill that would place Fannie Mae and Freddie Mac into receivership and replace them with multiple mortgage guarantors, according to sources.