Fannie Mae-No Politics (FNMA)

[obiterdictum]

Thank you action8101.

It would appear that the difficulty is Treasury having to bring as soon as practical to the White House a completed Treasury Housing Reform Plan requested by the President.

Not being a major player in the FHFA, US Treasury or White House administration, it is impossible to directly know what reasoning those government officials have about stopping the net worth sweep without that plan. It is said by officials and reported that the GSEs will be released from the conservatorships and recapitalized. It is widely assumed that the net worth sweep will also end. How and when this will actually happen is not given with any specificity. Calabria said:

An important step on the path to building the necessary capital will be to address the Net Worth Sweep. But it would likely take a very long time to build sufficient capital through retained earnings alone. https://www.fhfa.gov/Media/PublicAffairs/Pages/Prepared-Remarks-of-Dr-Mark-A-Calabria-Director-of-FHFA-at-Mortgage-Bankers-Association-National-Secondary-Market-Conference-Expo-2019.aspx

Reports place the timing for ending the net worth sweep at the end of the year.

So, supposedly, in six months, more or less, the net worth sweep is going to be addressed by Treasury, FHFA, HUD and the White House and then ended with Treasury's consent.

All that is needed to end the network sweep is for Treasury and FHFA to renegotiate and amend the SPSPAs or to void the SPSPAs (or a positive En Banc decision).

Practical facts. Calabria hit the ground running since his confirmation on April 4, 2019. Mnuchin appears to have been dragging his feet on housing finance reform since his confirmation on February 13, 2017. However, it may be that he was waiting to have a Trump administration appointee at the FHFA and the President's specific direction, which was given on March 27, 2019. The President's direction requires Treasury to write and submit a specific Treasury Housing Reform Plan and to do this in consultation with a number of agencies. (See https://www.whitehouse.gov/presidential-actions/memorandum-federal-housing-finance-reform/). The net worth sweep was not mentioned and this plan takes time to produce.

Treasury cannot act until this plan with all requirements is done and approved by the President. This plan is optimistically expected to be ready this month by some and less optimistically by the end of the summer.