Wednesday, January 22, 2014

US treasury is commenting for FHFA? ODD!!!

Today this was posted by Reuters
U.S. Treasury Department's housing adviser Michael Stegman Said :
Until Congress finds a solution to overhaul the mortgage market, Treasury will aim to transition towards a system in which Fannie Mae and Freddie Mac issue a single security.
"This would reduce the cost to taxpayers and improve liquidity," he said.

We believe that keeping [Fannie and Freddie] in a conservatorship whose
contours and restrictions were defined by emergency legislation is not the best
framework for broadening the availability of mortgage credit over the longer
term. The [companies] in conservatorship have done an exceptional job of
maintaining a deep and liquid secondary market in and following the recent
crisis. However, we believe that continued uncertainty about their political
future will continue to be a headwind impeding access to credit especially for
average families with less than pristine credit. For all these reasons,
comprehensive housing finance reform remains a top administration priority. 

RESTARTING PRIVATE MORTGAGE SECURITIZATION: Mr. Stegman has suggested in the
past that the lower cost of government-backed lending isn't the only reason
privately-issued securitizations have been slow to restart. Other technical
barriers remain unaddressed: 
In the absence of an apparent leader, Treasury plans to coordinate a series
of conversations with relevant regulators, market participants, and other
stakeholders to help accelerate necessary reforms in the non-agency space. 
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Now what needs to be understood is the the Treasury is not in charge of Fannie or Freddie! HERA gives the FHFA that power and only THE FHFA. What else needs to be said is that the security he is talking about is not the Stocks or the corporations. He is talking about the Mortgage Backed Securities (MBS) that the two bundle up into a BOND, and sell it to the BOND market. So I hope this clarifies the statements made by the above speaker.

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