In the QRM Rule, MIs Short Term Winners, but…

The new risk retention/QRM proposals are out and it appears that mortgage insurers might be winners after all – over the short-term, that is. The draft notes that Fannie Mae and Freddie Mac will "be able to satisfy their risk-retention requirement...as long as they continue to operate under conservatorship or receivership." (Translation: all GSE loans and the bonds created from them are exempt from risk retention.) This means Fannie and Freddie can continue to securitize high LTV loans – which means mortgage insurers will have plenty of "new" business to look forward to. (Now, if only consumers would start buying homes.) It's assumed that the GSEs will be around for at least five more years, and perhaps longer even though a handful of new bills were introduced in the House Tuesday morning aiming to kill Fannie and Freddie. For the MI firms the immediate future looks decent but what about longer term? It's impossible to answer that question since no one truly knows what the future holds for Fannie and Freddie and whatever "successor" GSEs replace them. Will there even be successor GSEs?