$Fnma #FANniegate

Posted on January 17, 2018
Mortgage Guarantors Should Become Utilities, GSE Overseer Says
By Joe Light
(Bloomberg) — The Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, says new housing finance system should include shareholder-owned companies operated as utilities with regulated rates of return, according to proposal dated Jan. 16.
The proposal, which lays out FHFA’s views on housing finance, was sent to Senate Banking Committee Chairman Mike Crapo, an Idaho Republican, and Ranking Member Sherrod Brown, an Ohio Democrat
FHFA Director Mel Watt tells Crapo and Brown in separate letter dated Jan. 16 that agency wants to provide its views on housing finance “independently and transparently”
FHFA believes there should be at least two “secondary market entities” to promote innovation and competition
The proposal says having too many such entities could promote a “race to the bottom” and that having a regulated rate of return would prevent companies from making mortgages that are too risky
The proposal also says the companies’ regulator should set a “comprehensive risk-based capital standard” ensuring that the firms could survive a severe housing crisis akin to the 2008 crash
Proposal says the companies’ capital and liquidity requirements should be left to the regulator rather than dictated in legislation
The FHFA proposal says the government should provide an explicit, paid-for guarantee on mortgage-backed securities issued by the entities with a mortgage-insurance fund protecting taxpayers
The proposal would also require the companies to transfer mortgage credit risk to the private market but allow the regulator to reduce such transfers when not economically viable
The FHFA’s suggestions would require a level playing field for large and small lenders
In the letter to Crapo and Brown accompanying the proposal, Watt wrote that the points were in response to lawmaker requests for his thoughts on the future of the housing-finance system
“By doing so now, prior to the introduction of any specific legislative proposal, we seek to provide our views independent and transparently to those who have requested them while continuing to provide technical assistance to the Committee and its members on other proposals that may be introduced,” Watt wrote, later adding he still believed “it is the prerogative of Congress, not FHFA, to decide on housing finance reform” Translat
1) GSE RECAP: Volume Sank Lower; Freddie Passed; Fannie Is Thursday
2) Fannie, Freddie’s Vanishing Portfolios Are Quelling Volatility
3) BI Company Research Primer: Fannie Mae
567) Mortgage Guarantors Should Become Utilities, GSE Overseer Says
4) *U.S. SHOULD PROVIDE EXPLICIT GUARANTEE OF MORTGAGE BONDS: FHFA
5) *COMPANIES SHOULD BE CHARTERED BY REGULATOR, FHFA SAYS
6) *MORTGAGE GUARANTORS SHOULD BE PRIVATE, SHAREHOLDER OWNED: FHFA
7) *MORTGAGE GUARANTORS SHOULD BE REGULATED UTILITIES: FHFA
8) *WATT SAYS ANY PLAN SHOULD PRESERVE 30-YEAR FIXED RATE MORTGAGE
9) *FHFA’S MEL WATT COMMENTS IN LETTER TO SENATORS CRAPO AND BROWN
10) *WATT WANTED TO PROVIDE VIEWS `INDEPENDENTLY AND TRANSPARENTLY’
11) *WATT SUBMITS FHFA’S VIEWS ON HOUSING-FINANCE REFORM TO SENATORS

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