Fannie Mae and Freddie May’s Overhaul Reboot Benefits Many Mortgage Players

Fannie Mae and Freddie Mac may have lost their way back to their personal hands. But as things go, some big companies in the mortgage business may get to a better place.

Supreme Court Last week’s ruling The government’s sweep of the housing giant’s interests does not exceed the statutory authority of the regulator, and the fact that the president can easily replace the head of the regulator is a one-to-two blow to Fannie Mae and Freddie May’s stock. Last week it fell by more than 40%. .. This means that the Biden administration can appoint a new chief supervisor instead of maintaining a takeover from the Trump administration, which was trying to free the company from government protection during its term.

But many stocks Wider Mortgage Sector It was actually traded high. For them, the path of Fannie Mae and Freddie May’s overhaul under the previous administration was not always so great for their economy.

In order for government-sponsored companies to prepare to attract private investors’ capital, measures such as raising capital requirements were necessary, but they still needed to increase their profits. For many of the sectors, it was a recipe for higher rates and tighter access to guarantees. At the moment when it became an example of last year, Increased pandemic-related charges The share of mortgage originators has dropped significantly.

Under President Biden, GSE regulators will roll back some of these measures or implement other initiatives with the primary goal of making mortgages cheaper and more widely available. There is a possibility of As GSE cuts fees and expands the types of borrowers and loans, the market size of companies that make many so-called qualified mortgages, such as the types that GSE buys, can grow.


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UWM Holdings

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Proponents of the previous administration’s approach may say that the current state of GSE has narrowed or distorted the market by discouraging the growth of other types of mortgages. Some major banks may have seen their mortgage market share picking up with a smaller government-guaranteed loan footprint, but they also have the benefit of cheaper credit risk unloading.

Mortgage insurance company such as

MGIC Investment

Provides additional credit protection to the GSE Guarantee. KBW analyst Bose George said they might benefit if the Biden administration takes more steps to help homeowners stop default as the pandemic end. Point out that there is no. As the amount of flow through the system increases, so does the insurer. Long-term, but more expensive or constrained Fannie Mae and Freddie May guarantees may have expanded the role of private mortgage insurance.

The volume is already quite large historically, so it is unlikely that a new direction for GSE will trigger a new boom in mortgage stocks. And originators face much more pressing concerns, such as rising rates. Housing supply constraints It narrows the profitability of the loan. Investors weren’t very priced, even with the radical overhaul of Fannie Mae and Freddie May, according to Jeffreys analyst Ryan Kerr. Moreover, Mr. Biden’s complete plans for the entity remain unknown.

But broadly speaking, changing policy towards cheaper or broader services for Fannie Mae and Freddie May is welcomed by many stocks in the mortgage sector, which already handles quite a lot. Let’s do it.

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Fannie Mae and Freddie May’s Overhaul Reboot Benefits Many Mortgage Players

Source link Fannie Mae and Freddie May’s Overhaul Reboot Benefits Many Mortgage Players

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