GSE reform

When it comes to possible new competitors in the secondary market, the heads of the two current outlets more than welcomed the possibility of additional players in their space because of housing finance reform.

The regulator of Fannie Mae and Freddie Mac discussed steps the companies have already taken to limit their risk, as well as efforts to prevent housing market “overlap” with the FHA.

At a House hearing covering a whole host of housing finance reform topics, Fannie Mae and Freddie Mac's regulator said "if the circumstances" call for eliminating investors, "we will."

Allowing the mortgage giants to retain profits resolves a short-term capital shortfall, but how much capital they would need after exiting conservatorship is still the bigger question.

The Trump administration's thinking on housing is filled with conflicts and contradictions, a quilt work of at times irrational proposals that seem to be at odds with the real world of mortgage finance.

The move to alter the government's preferred stock purchase agreements is the first major one under FHFA Director Mark Calabria's tenure to wind down the conservatorship of the government-sponsored enterprises.

While no one is suggesting that the plan will help banks regain the share they've ceded to nonbanks, bankers believe that stabilizing Fannie Mae and Freddie Mac could at least help them keep what they have.

The recapitalization of Fannie Mae and Freddie Mac prior to the 2020 election is unlikely even if the net worth sweep ends, according to a Keefe, Bruyette & Woods report.

The FHFA can go beyond a recent Trump administration report to level the playing field between the private sector and Fannie Mae and Freddie Mac.

Whether Congress and/or the mortgage industry is able to untangle two opposing threads in the Trump administration's plans is anyone's guess.