Fannie Mae-No Politics (FNMA)

[FOFreddie]

Dont Understand Whalen's Point. If the current FNMA Servicer runs into trouble they have to transfer it to a financialy solvent Servicer approved by FNMA. The MSR strip owned by FNMA stays the same - just serviced by a financially strong servicer rather than failed servicer. The real issue is that lower interest rates have caused refinancing and the MSR owned by weak servicers has disappeared when the loan in refinanced. FNMA makes out well either way if the new mortgage is ultimately repacked in a new FNMA MBS - the weak servicer is screwed because they will not be strong enough to service the new loan. What is clear the mortgage market needs the GSE's more than ever - the private label MBS market can not compete at these interest rates and with this level of market volatility. Once refinanced the new mortgages could stay with FNMA for very long weighted average lives if mortgage rates rise over time because it will not make economic sense to refinance.

https://www.investopedia.com/terms/m/msr.asp