News that the GSEs need an infusion from Treasury to cover quarterly losses underscores problems with the government’s 2012 decision to “sweep” the housing giants’ profits.
As policymakers take another crack at housing finance reform, federal leaders and the housing lobby are once again perpetuating the false notion that ending government guarantees would cause the 30-year, fixed-rate mortgage to vanish.
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.
A clear government backstop for the mortgage market would benefit small banks and investors by ensuring a stable and liquid secondary market for securities.
A late addition to regulatory relief legislation would direct the Federal Housing Finance Agency to review credit-scoring alternatives, but some say the provision is redundant.
A Senate proposal calling for a federal guarantee on mortgage-backed securities would only benefit the largest banks and increase the risk of bailouts.
As inflation fears put upward pressure on 10-year Treasury bonds and mortgage rates nationally, borrowers could start to take more notice of what lenders are charging them locally.
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.
