Freddie Mac-No Politics (FMCC)

[Robert from yahoo bd]

1. The CRT's are giveaways that are uneconomical and take away from the profits of the gses.

2. Required capital increases with home price appreciation.

3. The adverse market fee is gone.

4. Early payoffs and reduced loan terms hurt the long term profitability of the gses.

5. FICO scores are bs and can be easily manipulated.

6. Home prices are unsustainable in many parts.

7. Zillow is getting out of the ibuying business. What's the reason?

8. Want more reasons?

I agree that the CRT's are nothing but giveaways to the financial establishment.

With #2 are you referring to MC's "extra capital requirement" when us housing prices increase above an historical benchmark? I heard MC left and there's a new sheriff in town who doesn't exactly see eye to eye with the former FHFA Director.

3 was a missed opportunity to build much needed capital and Sandra and the current administration totally caved to the progressive left of their party and the TBTF banks. Remember that California representative in the hfsc giving MC sh*t over the adverse market fee? Classic MC, "Mortgage forebearance isn't free."

4. In the meantime the unamortized gfees over the life of the refinanced or paid off loan is accelerated to earnings and that increases capital. Also loan balances on new product are increasing yoy at high single digit to double digit rates, this is from todays WP:"Joel Kan, an MBA economist, said in a statement. "Refinance activity was up 7 percent overall, with gains in both conventional and government refinances. Additionally, the average loan balance for a refinance application was the highest in a month."

Reduced loan terms reduce the overall risk of the gses book of business because mortgagors build equity at a much higher rate thus reducing ltv even further.

5. Yes Fico scores have been overly inflated over the last several years. However mortgage underwriters continue to be conservative. From todays WP: "The MBA also released its mortgage credit availability index (MCAI) that showed credit availability increased slightly in October. The MCAI rose 0.1 percent to 125.7 last month. An increase in the MCAI indicates lending standards are loosening, while a decrease signals they are tightening.

"Credit availability inched forward in October, but the overall index was 30 percent lower than February 2020 and close to the lowest supply of mortgage credit since 2014," Kan said in a statement."

6. Agree, however a large cohort of millennials and baby boomers could simply put more money down from their inflated equity portfolios and/or other assets and salaries and wages could rise.

7. Zillows algorithm was mispricing housing assets. I've seen so much incorrect information on Zillow that I usually cut their estimates by 20% to 33%.

8. Yes.