Christopher Whalen

The only rational strategy for holding MSRs is to be very aggressive on protecting the servicing assets via loan recapture. This is one of the chief reasons that banks have been willing to give up their share in lending and servicing as they collapse back to retail-only lending strategies.

This proposed Libor replacement is an imaginary, backward-looking benchmark dreamed up by the economists at the Fed with no discernible market.

The FHFA director’s move this week to impose an “adverse market fee” of 0.5% on most refinanced mortgages will shift billions out of the hands of American consumers and into the hands of Fannie Mae and Freddie Mac — and their private shareholders.

Whalen: "It is tempting to think that low interest rates will cure all ills in the housing sector, but this view is seriously in error, as we learned in 2008."

Any intention that Ginnie Mae may have had to slow prepayment rates by changing the rules on RPLs seems to be thwarted by the grim economic reality facing the big banks.

FHFA, HUD and Ginnie Mae should let the rate of prepayments on MBS dictate bond prices and market rates.

Not only is FHFA Director Mark Calabria preparing the GSEs to raise capital, but he must also help them decide just what they are selling to private investors in the way of equity returns and risk.

The history of riskier lending over the last half century can offer lessons for today's market.

FHFA Director Mark Calabria stated that he was directing the GSEs to "add liquidity" to the markets, but the actions of the FHFA say precisely the opposite.

FHFA head Mark Calabria and his FSOC counterparts need to sit down with the Treasury and fashion an emergency capital plan for the GSEs.