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FANNIE MAE AND FREDDIE MAC JJAN.U- AFERBY. 22001188
reviving the private label market.
3. How to handle the GSEs’ existing debt and MBS. The enterprises’ MBS outstanding totals approximately $4.8 trillion and their aggregate debt outstanding totals $670 billion. With more than $5 trillion of mortgage-securities outstanding owned by banks, government indexed funds, the Federal Reserve and overseas investors, a market “unfriendly” housing reform outcome can have far ranging, disruptive outcomes. Grandfathering legacy debt and MBS may have to be incorporated in reform legislation to avoid market disruption, which could likely add to the government’s liabilities—something opposed by many lawmakers in Congress.
Housing reforms implemented by FHFA
To date, reform of Fannie Mae and Freddie Mac has been driven by their conservator, the Federal Housing Finance Agency, which has implemented the following actions and reforms:
• Mandated that Fannie and Freddie transfer a portion of their credit risk of newly-acquired single-family and multifamily mortgages to private investors, who absorb the rst credit losses.
• Created the common security platform (CSP) to be used by Fannie Mae, Freddie Mac and other MBS issuers
• Created the single-security, which is scheduled for roll-out in the second quarter of 2019
• Raised guarantee fees, mortgage lending and origination policies, and evaluate ways to improve the GSEs’ credit scoring requirements.
• Developed and implemented the Uniform Mortgage Data Program, including the Uniform Closing Dataset, Uniform Loan Application Dataset, Loan Application Dataset, and Appraisal Dataset.
• Updated the enterprises’ housing goals and de ne the GSEs’ Duty to Serve obligations to provide nancing for single-family rentals, rural properties and modular homes.
The leading reform proposals
MBA’s Private Utility Model. Under a framework proposed by the Mortgage Bankers Association, Fannie Mae, Freddie Mac and other new entrants would be operate as private regulated utilities that compete to provide non-catastrophic guarantees. The plan utilizes the GSEs’ Common Security Platform, mandated by FHFA, to be turned into a government-owned corporation that issues MBS for Fannie, Freddie and other private companies.
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