GSE reform

Also: Sen. Warren and Wells Fargo spar, FHFA suspends Trump-era GSE restrictions and more.

The White House's firing of Federal Housing Finance Agency Director Mark Calabria sparked immediate speculation about who will run the agency and help chart the future of the two mortgage giants. Potential nominees include ex-Obama administration officials, congressional staffers and members of the Biden transition team.

Consumer advocates and mortgage industry officials are urging Sandra Thompson, the new acting director of the Federal Housing Finance Agency, to undo many policies that her predecessor, Mark Calabria, put in place over the past year.

The Supreme Court decision cleared the way for further revisions to the agreements between the Federal Housing Finance Agency and the Treasury, which could include dismissing the January changes.

The now-interim leader of the Federal Housing Finance Agency would give the mortgage industry much-needed stability following Calabria’s calamities, writes the head of Whalen Global Advisors.

The Community Home Lenders Association has called for suspension of federal limits on the loan volumes that Fannie Mae and Freddie Mac can purchase from individual lenders. The demand came on the same day that the Biden administration fired FHFA Director Mark Calabria and started the process of nominating his successor.

Sen. Pat Toomey of Pennsylvania, the Banking Committee's top Republican, is talking up the prospects of a bipartisan deal to overhaul Fannie Mae and Freddie Mac. But Democratic leaders sound less motivated to change the status quo for the government-sponsored enterprises.

The new rules are disproportionate particularly in light of the GSEs’ recent record of profitability, the director of the Community Home Lenders Association writes.

“Federal Housing Finance Authority Director Mark Calabria’s decisions to date are conservative and imply a slow death for the GSEs and IMBs operating in the conventional market,” analyst Chris Whalen writes.

Also: How 9.3 million renters could enter the purchase market, lessons from Flagstar’s data breach and a possible 15-year plan for Fannie and Freddie.

Relying on retained earnings alone, it would be until at least 2036, if not longer, before government control of Fannie Mae and Freddie Mae might end.

The announcement signals an openness to creating something many GOP lawmakers have long resisted: a federal guarantee of the trillions of dollars of mortgage bonds that Fannie and Freddie issue, a rep for P.A. senator said.

If new housing policy initiatives are not adopted by Congress, the Biden Administration may seek to push the GSEs into receivership, which would damage the conventional market, columnist and analyst Chris Whalen says.

The agency that supervises Fannie Mae and Freddie Mac has pushed for revising an agreement with the Treasury Department allowing the mortgage giants to retain their profits. A deal could be out of reach once Joe Biden takes office.

The agency's request for input will shape how mortgages underwritten by Fannie Mae and Freddie Mac handle appraisals and curb risk.

The proposal builds on guidance the agency gave to Fannie Mae and Freddie Mac earlier this year.

Last year, smaller lenders were put at a slight disadvantage in terms of what they were charged in guarantee fees when they sold loans for cash.

Many have assumed the high court would rule that presidents can fire the Federal Housing Finance Agency director at will. But during oral arguments in a case challenging the agency’s structure, some justices suggested they could stop short of such a decision.

Adolfo Marzol came to the agency after a stint at HUD and a 30-year career in the mortgage industry. He will depart on Dec. 18.

Fannie hasn't completed any credit risk transfers to private investors since the second quarter. Some experts worry the decision — likely spurred by the company’s concerns about a recent capital regulation — could put the mortgage giant on unsteady footing.