NEW YORK–(BUSINESS WIRE)–KBRA Analytics releases a report which discusses the prospects for the reform of mortgage finance government-sponsored enterprises, Fannie Mae and Freddie Mac (the GSEs).
More than 12 years has passed since the federal government bailout of the GSEs by placing them into conservatorship. Today, while they remain under federal control, the GSEs are as prominent as ever, owning or guaranteeing approximately half of the nation’s single and multifamily mortgages.
While KBRA believes the issue of exiting conservatorship will be a low near-term priority for the new Biden administration, we believe important steps have been taken toward that endgame, and investors and mortgage market participants should bear in mind the credit implications of possible outcomes. In any event, we believe the overarching considerations guiding GSE reform will be a strong preference on the part of moderate politicians on both sides of the political spectrum to avoid (1) undue disruption to the cost or availability of mortgages, and (2) the need for additional taxpayer support. Satisfying those conditions will require strengthening the GSEs’ creditworthiness which, we believe, is underway, as well as lengthening the timeline for exiting conservatorship.
Click here to view the report.
KBRA is a full-service credit rating agency registered in the U.S., the EU and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.
Van B. Hesser, Senior Managing Director and Chief Strategist
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