Monday, April 06, 2020 1:43:27 PM
Looking prospectively post conservatorship when FNMA and FMCC will be paying a guarantee fee or committment fee - wouldnt the source of the cash be the UST under the terms of the guarantee? or at least the UST would be obligated to lend funds to the GSE to provide liquidity to the mortgage servicers.?
It is my understanding that mortgage servicers are obligated to advance for delinquent payments and of course FNMA and FMCC are obligated to pay the amounts due in the MBS pools if the mortgage servicers do not advance? Since the proposal is for an explicit guarantee - the UST would be on the hook for both delinquent payments and net default payments. Why should the current shareholders have to assume the role of the guarantor now if the UST will assume the role of the guarantor under the current proposal?
Also - I do not understand why some are saying that the net worth of the GSE's are at risk now. It seems the current issue is one of delayed mortgage payments due to delinquencies and not a collaspe of the housing market where the value of the GSE portfolio is less than outstanding loan balances. Do people think that current homeowners are going to walk away from their houses and from the net equity in their houses in the current housing markets? It seems like a bad time to not have the physical security of a roof over your head. Maybe the housing market collaspes but is there really that big of a concern right now? or is it just a liquidity crisis due to the limited liquidity of mortgage servicers?
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