Keep Hiking G-Fees – It Will Help Jumbos?

Three decades back GE Financial Services looked at entering the prime conventional market as a securitizer but realized one essential fact: It couldn’t compete against Fannie Mae and Freddie Mac because they could borrow at better rates in the debt market because of the implied government backing of their bonds. (As it turned out that implied guarantee was real.) Anyway, the world has changed a ton since then. The jumbo MBS market is beginning to show signs of new life. Late Friday S&P assigned top grades to a $310 million jumbo deal brought to market by Credit Suisse. We keep hearing reports (unconfirmed) that more deals are underway. Now we can ask this question: will forthcoming and constant hikes in g-fees finally create parity between Fannie/Freddie and the private market. Or is that still a dream?

Origination

Comments (1)

Eventually private investors will re-enter and offer reasonable alternatives. What some need to consider is that my borrowers would perhaps pay more to avoid the ridiculous requirements needed to obtain a mortgage and if that spread isn't too large, I feel confident that private investors may not have to worry about "competing" with subsidized rates from Fannie/Freddie.

We'll be back very soon.

Posted by Phil | Monday, December 03 2012 at 1:57PM ET

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