Should Fannie Mae and Freddie Mac loans be exempt from soon-to-be-released risk retention rules tied to the qualified residential mortgage test? So went the debate in Washington last week. FHA/VA loans are exempt which means issuers of GNMA MBS don't have to worry. GNMA bonds are, in fact, issued by lenders — not the Government National Mortgage Association. But most Fannie/Freddie MBS are issued by the GSEs themselves so what's the debate all about, really? Or is this where the issue of 'co-issuance' rears its ugly head? Does it mean that Fannie and Freddie themselves will have to hold more capital against the MBS they issue? Confused? Join the club…
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